George Prout
1. David Gaynes, Vice President of Product Development at Signet, is now arguably the most influential decision maker in the diamond jewelry business. I wish I could have been a fly on the wall for the discussions that must have taken place in Akron and elsewhere when he was selling the idea of Ever Us to the Signet Board. Gaynes now has the political power and the funding capacity to fundamentally change the bridal business in America, which means that Two Stone won’t be just a new design initiative. Gaynes will be taking advantage of a critical opportunity to recalibrate the diamond gift-giving imperative to a generation of American consumers who increasingly don’t see a reason to get married, and therefore don’t need a diamond engagement ring. Two Stone is Gaynes’ remarkable response to this societal change, and it’s my understanding that he has made a five-year commitment to the project. Which means that anyone in the industry who ignores his next moves does so at great peril.
2. It’s interesting to note that Signet launched Ever Us with only two basic styles. I suspect this was in reaction to the fact that early adopting male gift givers rarely allow themselves styling latitude. Instead, they are driven to buy precisely what they saw on TV. Recognize that as women now become increasingly involved in the selection process, there will be a proliferation of styling in the category. We advised our customers to go deep in just a few styles of Two Stone in December. Now, it will increasingly be necessary to go wide.
3. Each jewelry manufacturing member of the sightholder community is now frantically expanding their own assortment of Two Stone styles. As just one example, I recently reviewed one sightholder’s line of over 180 new Two Stone styles. There’s an interesting dynamic at work here. Recognize that the Zales brand is now toast… expect all Zales stores to either close, or be rebadged Kay Jewelers, within 24 months. This means that if you’re a supplier of a Zales sku, you’re likely to see that item disappear from the Signet program. So there is this incredible competition going on in which the only way to get traction with Signet is to get sku’s into memo test programs with new Two Stone items. Recognize that all of the initial Ever Us product was on memo. Signet ran out of Two Stone in December. They will not make that mistake again, and there will be tons of product available on a memo basis, in a variety of styles, to ensure not only depth, but also breadth, in the assortment.
4. We know that Signet spent $25 million advertising Two Stone in the 4th quarter. Let’s speculate that they sold about $200 million at retail, which would yield an advertising cost of about 12.5 percent. So, what do you think of the ratio of their advertising cost to sales? Furthermore, in creating a new trend from which their competitors will now also derive benefits, did Signet engage in some kind of unexpected altruistic marketing campaign designed to help the whole industry?
In order to properly answer these questions, consider the psychographic characteristics of consumers who bought Two Stone in December. For the most part, the male gift-givers (as well as the recipients) who bought Two Stone in December fall into a class called “Early Adopters”. In any social group, the early adopters are critically important as leaders who drive trends. From this perspective, Signet’s $25 million expenditure drove a lot more than short term revenues. It also captured consumers who will now fill a critical role in establishing the trend. Which means that a 12.5 percent advertising expenditure is now a gift that will keep on giving, funneling consumers into Kay, Jared, and Zales stores, and away from competitor stores (including yours). So if you didn’t jump into the Two Stone mix in a big way in December, and carve out a sector of early adopters in your local community, you’re now behind in the trend, and likely to fall further back unless you now commit disproportionate advertising dollars to catch up.
5. In tracking our customers’ Two Stone sales and reorders, an interesting phenomenon has occurred. Normally, when forecasting sales of an item in multiple total weights, I use a ratio as follows: ten 1/4 carat total weights, to five 1/2 carat total weights, to one 1 carat total weight. It’s significant that Two Stone sales came in very different proportions. Given the past eight years, in which low price points dominated Christmas purchases, it was such a pleasure to see two-thousand-dollar retail one carat total weight Two Stone rings selling as soon as they hit our customers’ shelves. Might this signal a return to generally higher price points? I’m not sure, but I do know that Two Stone definitely increased the average retail sale for those who promoted it, and will likely continue to do so.
The way you react to the Two Stone trend now will shape the future trajectory of your business. If you miss this, you will miss something extremely valuable. For many jewelry store owners, Two Stone represents the best horse you’ll ride between now and retirement. So when Two Stone again reverberates this Valentine’s Day, as women who didn’t get one ask for what their early adopting friends received at Christmas, you will still have a chance to jump on the consumption wave. Just be sure you fund it adequately, so you don’t get lost in the shuffle!
Class dismissed!
George Prout is Vice President of Sales and Marketing for Gems One Corporation, and can be reached via e-mail at marketing@gemsone.com, or at Gems One’s New York office at 800-436-7787.
