When my hubby and I started making jewelry, we did some designer things... which take considerable time and effort, but weren't selling a lot. So we decided to try the craft show route to make some regular cash. And we made a LOT of production jewelry... [and I still have lots of it] ... we found that the craft shows were too hard on two old farts like us, and people just didn't buy enough for us to break even with the cost of doing the shows. Now I can't say whether we'd have made enough money doing things this way if we had an offline storefront, because I think half of the battle is getting someone to look at the piece, handle it, try it on, etc., however, that would have involved a lot of overhead. The point is, EVERYBODY it seems like does this kind of production jewelry (not to mention the crafters that buy the stuff from Taiwan or somewhere LOL), the market is flooded with it, and no body wants to pay much for it. We have to compete with Walmart and all the other lower cost places... and in my opinion it just doesn't pay off. You have to keep up with the fads, and if you make a mistake, you could lose big.
So you ask yourself, why do I make jewelry in the first place? You said, "I think that the whole idea of making the unique handcrafted jewelry is that people will have something that they cannot find in a department store". I think that nails it. I feel the same way. And I don't think you'd be happy making production jewelry.
I have to wonder why your DIL thinks you aren't successful? If the way you are doing it makes YOU happy, that's what counts.