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Commentary: The Business

Jeff Unger: Return to Buying within Your Means

Let’s get back to cash and away from extended credit before we become the next sub-prime crisis.




THE WHOLE CREDIT CRUNCH and $700 billion bailout for Wall Street got me thinking: Who’s backing the jewelry industry? Have you tried to get a loan or increase your line of credit from your bank recently? I’m sure they were very friendly. Not.

Most banks want nothing to do with our industry. The merchandise is too liquid for their liking, and the margins are now too thin for them to have confidence in lending funds.

So, who is backing the retail jeweler? We are! The wholesalers and manufacturers are keeping retailers afloat with extended terms and yearlong dating. We’re starting to look like Rooms to Go, with no payments until next year. But is this good for the industry? Retailers like getting a no-interest loan. And it works if payment is received as termed, but as we enter an uncertain holiday season, many

Vendors still have retailers paying them off from last year. Throw in stock balancing on product that’s been in your store for a year without payment, and your vendors have an even lower margin on their sale. Vendors are in need of sales as much as retailers are in need of product. But many vendors have extended themselves beyond what any bank would lend to a retailer or vendor. We are a fine example of “sub-prime” lending. Can’t get the money from the bank? Get it from the vendor. Retailers have a tendency to forget that inventory is money.

So, where are we going? If history is any indication, some vendors who continue to give extended terms to anyone with a storefront will fall. Do the names M. Fabrikant and LID ring a bell?

The smart vendors and retailers will survive. My late uncle who started my company once said, “Business with no profit, is no business.” This thought is more important than ever in this economic period. The retailers who have survived on inventory they don’t own will soon see empty cases. Those vendors that gave extended credit to weak retailers will see an empty mailbox come January. Or worse, stores will close, taking their inventory with them.


Our industry can’t survive without vendors and retailers. But to be strong we must get out from long, extended terms. We must turn our business back into a strong cash industry and get away from longterm dating and memos. Stores need to buy within their means and vendors need to stop pushing extra inventory. This is not good for anyone in the long run.

Jeff Unger was the president and co-owner of B & N Jewelry (d.b.a. Alisa Unger Designs) and a long-time INSTORE contributor. He passed away in February 2019 after a valiant 10-year battle with cancer.



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