The COVID-19 coronavirus pandemic came during what had already been turbulent times for the retail industry as e-commerce had increasingly replaced traditional brick-and-mortar, forcing many big box retailers to shut down. In the midst of industry-wide change, Germantown-based Kesslers Diamond Center Inc. had continued to rely heavily on in-store purchases as the main source of its revenue.
The COVID-19 coronavirus pandemic came during what had already been turbulent times for the retail industry as e-commerce had increasingly replaced traditional brick-and-mortar, forcing many big box retailers to shut down.
In the midst of industry-wide change, Germantown-based Kesslers Diamond Center Inc.had continued to rely heavily on in-store purchases as the main source of its revenue. Founded in 1980, the retailer sells engagement and wedding rings as well as high-end jewelry, some priced well into the thousands. “Generally speaking, most consumers want to touch it and feel it and it’s hard for us to do that even through the website or over the phone or sending pictures back and forth,” said Joe Gehrke, president of Kesslers Diamond Center Inc.
But when state restrictions on nonessential businesses forced the jeweler to temporarily close its seven Kesslers Diamonds store locations (six in Wisconsin, one in Michigan) and lay off all but 18 of its 130 employees, the company needed to adapt. Kesslers launched its e-commerce site in early April, accelerating initial plans to roll out the platform later this year. The site has already brought in a number of orders, said Gehrke. Also earlier this month, the jeweler did its first-ever virtual appointment with a client via FaceTime.
In addition, curbside service has been available for customers picking up orders rather than having them shipped, or for dropping off repairs.
Gehrke said the company is taking this time to "build some muscles" that it can continue using when business is back up and running, especially with ongoing uncertainty about post-pandemic consumer habits. “We have to meet clients where they want to be met,” he said. “And if that means coming into the retail store to purchase new jewelry, we’ll take care of them. If it means having a chat conversation and texting pictures back and forth, we can do that. If it means doing a virtual presentation or them just fulfilling (the order) themselves on our website, I think we have to be flexible.”
As for the business itself, which has already lost more than $1 million in revenue this month as a result of the COVID-19 crisis, the future is also uncertain. Gehrke is optimistic Kesslers can survive without closing any of its stores, but that will partly depend on how long the shutdown and its impact drags on.
"If this goes into Christmastime, i would give you a totally different answer because that's a really important holiday for us," he said.
Like many small businesses, Kesslers applied for and was granted a loan through the Small Business Administration's Paycheck Protection Program as part of the federal government’s $2.2 trillion coronavirus relief package. The PPP was depleted of its funds almost a month after the CARES Act was passed, but an agreement made Tuesday on a $428 billion aid package will replenish the SBA's loan program.
The PPP loan is totally forgivable under the conditions that 75% of the funds are used for payroll expenses for an eight-week period.
That's a tough pill to swallow for Wisconsin's nonessential businesses that are shut down until May 26 under Gov. Tony Evers' extended Safer at Home order, and as a result, don't have much work to give employees.
"In order for us to get it forgiven, we have to hire everyone back and it's just counter-intuitive because the activity level needed right now is pretty scarce," said Gehrke. "It forces you into some really odd decision-making from a small business perspective."
Gehrke said having immediate access to some capital is helpful during this economic crisis, but given the PPP's current "one-size-fits-all" conditions, the loan likely won't be totally forgiven and the business will end up in more debt than expected. Restaurants are in a similar predicamentas they have severely limited operations or shut down indefinitely due to COVID-19.
"It's almost like, the more that this pandemic has negatively impacted your business, the less benefit of forgiveness you're going to get out of this program," said Gehrke.
He's hopeful the federal government can implement a means test for PPP loans, determining levels of forgiveness on a case-by-case basis.
Ultimately, Gehrke said he knows one thing for certain about his industry that gives him hope. "Love always prevails," he said. "Love and relationships and love are something that are important regardless of economic backdrop." Get more news and insight in the March 30 issue of BizTimes Milwaukee. Subscribe to get updates in your inbox here.
