There's no end in sight for Ketchikan jewelry boom

Posted: Monday, July 07, 2003

KETCHIKAN - Jay Mahtani, owner of the Gold Rush jewelry store across from Ketchikan's downtown dock, courts cruise ship passengers with gold nugget jewelry, glittering diamonds and tanzanite. A veteran of the jewelry market on the Caribbean island of St. Thomas, he plans to open another shop on Ketchikan's Main Street this summer.

Where cruise ships go, jewelry follows, he says.

"Wherever there's a cruise ship port, there's a lot of jewelry, liquor, perfume and curios, T-shirts and souvenirs," he said as the last ship of the day pulled out of town on a recent Tuesday. "This is not the end of it. Before this is all done with, you'll see another 100 stores."

The number of jewelry stores has increased dramatically in Ketchikan over the past several years as empty storefronts fill with watches, precious stones and gold.

The growth is hard to miss. Gross sales totals for jewelry and curio stores grew from $26.7 million in 1999 to $33.9 million in 2002, according to the Ketchikan Gateway Borough Finance Department. The number of cruise ship visitors increased from about 540,000 to 680,000 in the same period.

An informal count late last month found 38 separate jewelry stores downtown. A generation ago there were only a handful. In some cases, new stores have replaced former downtown landmarks such as the Fo'c'sle Bar, the Pioneer Bar, Jimbo's Korner Kafe and the Union Rooms Hotel.

The influx of jewelry stores has baffled some local residents, but the connection between cruise ships and shopping is nothing new. Rick Domanski is a promotions manager for the Fort Lauderdale, Fla.-based PPI Group, which runs a shopping and lecture program on Holland America and Carnival cruise ships in Alaska.

"It actually goes back to the days of colonialism in the Caribbean," he said. "Different islands were going from one (colony's) possession to another; it was very volatile. Certain ports would be free ports, where they just said, 'Look, in this port nobody charges anything and we can all trade.' Out of that came duty-free shopping."

In time, duty-free sales of luxury goods such as jewelry, perfume and electronics grew in Caribbean ports. When cruise ships started coming to Alaska, the businesses followed, he said.

But the influx of new business is making some local merchants nervous.

James Ellis, a manager at Julie's Fine Jewelry and Gifts, said the market has changed drastically over the past few years. The family-owned business, which used to be called Nancy's, opened in 1965.

"It changed because we went from five local jewelry stores to a conglomerate of Caribbean and local jewelry stores," he said. "It really makes it hard for us little guys to compete with these bigger stores."

Borough Finance Director Al Hall said he has heard reports that some stores aren't paying local sales tax, though his office hasn't been able to substantiate the charges. The borough plans to audit a wide range of businesses this year, jewelry stores included, he said.

Former Ketchikan resident and Wrangell historian Pat Roppel cautioned in 2000 against letting out-of-state companies exploit Alaska during a joint meeting of Museums Alaska and the Alaska Historical Society in Ketchikan.

"When your downtown is taken over by shops that don't have anything to do with the people that live there, your town loses a sense of community," she said in a phone interview.

Domanski, of the PPI Group, said his company understands those concerns and tries to promote local businesses to passengers.

"We feel that it's very, very important that the program is reflective of the Alaska merchant," he said. "We have turned down many ... people who would like to be in the program because we feel it's overkill. We're not interested in every guy who wants to sell tanzanite."

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