If you’re a regular reader of this column, or you’ve ever worked with me on advertising and merchandising plans for your company, then you know how much time and effort I put into understanding trends. Any student of our business can identify key trends that shaped specific periods (S-link tennis bracelets, Y-necklaces, Three Stone, Circles, etc). What ultimately separates the winners from the losers is the capacity to understand the forces that create these trends, so that you can properly anticipate and react to them.
In the past, DeBeers was a key driver of most of the significant styling trends in our business, owing to their powerful TV advertising expenditures each year in the fourth quarter. Tiffany has also historically been important, since merchandisers at both the retail as well as the manufacturing level are reluctant to miss a trend that Tiffany creates. But increasingly, the Major Chains, with their huge TV budgets and substantial market penetration throughout the country, have become the most reliable drivers of gift-giving trends. So if you can anticipate what they – and their suppliers – will be pushing, you’ll have a pretty good sense of what’s likely to be in demand in December. And if you get really lucky, you’ll hit on something that all of them will be promoting at the same time. And in the upcoming Christmas cycle, that’s exactly what’s going to happen, so I hope you’ll forgive me if I admit to being a little extra excited about the upcoming Fall Season.
The story of the “Next Three Stone” (by that I mean the next big jewelry fad) starts with the granting of a global patent to a Japanese company about 8 months ago for a special mounting that allows a diamond to vibrate inside a frame. You’ve probably seen jewelry made with diamonds that have been drilled, and then are suspended by a wire or a slender cord so that they remain in constant motion. The effect is quite lovely, but the whole idea was never embraced by the Sightholder community, or the major retailers, because of a strong reluctance to destroy a perfectly good diamond by drilling a hole in it. But now, this new mounting allows for the same dramatic visual effect, without having to drill the diamond. And the company that’s making it is selling the patented magical finding in huge quantities to the Sightholder community, a fact that I became aware of during my trip to the Hong Kong Show in March.
At that time, there was a predictable race for product development, as the Sightholders were falling all over each in a frenzy trying to tie up open-to-buy dollars for these “Dancing Stone” pieces (yes, that’s the amazingly lame name the Japanese company calls their beautiful idea) with each of the majors. And by my writing of this in mid-April, virtually all of the majors appear to already be locked up with this new product, with launches scheduled throughout the summer, so that by the fourth quarter, it will be in thousands of stores, and will be the focal point of millions of dollars of advertising.
There are a number of reasons to believe that the consumer response will be extremely strong. First, and perhaps most important, the only way to advertise this jewelry is in TV ads, because static images don’t show the movement of the diamonds. This is really important. My favorite Christmas gift-giving consumer is a psychographic segment I call the “Clueless Male”. He really doesn’t know anything about jewelry, and he’s deathly afraid of buying the wrong thing, so he’s very easily persuaded by the TV ads that will be running on NFL football games in late November and early December. And you can count on it, the majors will be pounding away with ads aimed at the Clueless Male featuring this product category. So when he enters the marketplace on about Dec. 12, what do you think he’s going to be looking for? Even better, if he has a natural predisposition to see you, because his wife prefers to get gifts from your store, you’re going to get a shot at selling him what he’s looking for, provided, of course, that you properly anticipated the trend, and have it (otherwise, you can send him to one of the majors).
Second, the look created by the moving diamond is definitely pretty, but it also has a strong emotional component. The diamonds in the jewelry mounted this way move because of her heartbeat, so as you might imagine, the brand names that each of the majors will select will possess an emotional component that will resonate in the same way that “Past, Present, and Future” did for three stone.
I suspect it’s also beneficial that the diamonds the majors will be using will necessarily be a step up from their normal fashion grades, since highly imperfect, off-color stones don’t possess the same sparkle when they move. This will allow you to promote this category at competitive prices, since the grades that you are more comfortable with will allow you to hit the same price points as the majors (since they’re going to be trapped using I1s instead of their more common choice of I2s or I2/I3).
Any study of other fad items in our business for the past 20 years suggests that each had a periodicity of about three years. The first year is characterized by early adopters buying into the fad, accompanied late in the season by clueless guys following the herd driven by TV ads. There is typically a shortage of the fad item in the first phase, such that by about Dec 20th you’ll have men going from store to store looking for it, and not finding it. Think of this scenario as “Tickle me Elmo” for adults.
The shortage for this “Dancing Stone” class of products will be exacerbated by the fact that the Japanese company isn’t licensing the mounting. They’re selling it, which means that only they are casting it, so no one will have enough when it takes off. In fact, there are already concerns being voiced by my friends who are selling the majors that there won’t be enough of this product to go around, a fact that may create a “Perfect Storm” of demand in late December, as well as a terrific promotional opportunity when the “Echo Bounce” phase of the trend occurs at Valentine’s Day.
Remember – hundreds of thousands of women will be receiving this jewelry on Christmas morning, so what do you suppose their friends will be asking their boyfriends or husbands for in mid-February?
By next Spring, the shortage will be over, and the majority of stores that didn’t know about this trend (and who lost out in December) will finally be stocking it. Price points will start to come down during the second half of the year, and while demand will be even stronger during Christmas of 2014, supply will also be much stronger, so the opportunity for massive profits will be gone.
And then during the third year, we’ll see price points for the product collapse, everyone will have it in silver (and maybe even stainless steel), and then we’ll all be looking for the next three stone…again.
How many should you stock for the Fall? I don’t know the specifics of your company, or your market, but from what I’m seeing, I have a very strong suspicion that I can predict how many you’ll have left on Dec 26th. It will be the same quantity of Circle pendants you had left on Dec 26, 2005…the same quantity of Three Stone rings you had left on Dec 26, 1999…indeed, if you were in business twenty ago, the same quantity of s-link tennis bracelets you had left on Dec 26, 1993…NONE!
Here’s the way to look at this. Neither your company, nor the companies who typically supply independent jewelers, possess the funding capacity or advertising firepower to create a national consumption wave. That power resides solely in the hands of folks like DeBeers or Sterling. But if you know the wave is coming, then you and I do have the spending capacity to build a surfboard. We just have to understand the nature of the incoming wave, and be prepared to ride it.
During Christmas of 2013, the surf’s definitely going to be up, because the wave is definitely coming. There has already been so much money committed to this by the majors and the Sightholders that the real question isn’t whether the wave will appear. The question is: How tall will it be? If your suppliers aren’t on the cutting edge – and don’t have this amazing new product – call us. As long as we don’t have an exclusive relationship with a retailer in your market, we’ll be happy to provide you with the right merchandise and the advertising tools so that you, too, can ride the wave.
George Prout is Vice President of Sales and Marketing for Gems One Corporation, and can be reached via e-mail at email@example.com , or at Gems One’s New York office at 800-436-7787.