If a jeweler returned from the 1950s, would he recognize the retail landscape that jewelers have to deal with today? Probably not. The consumer of the 21st century is a different beast to what they would have encountered, and technological developments, the development of the shopping mall at the expense of the strip, and Internet selling have all changed the environment almost beyond recognition – some of these changes for better and others, it might be argued, for worse!
The fundamentals of retail haven’t changed however. The need to offer value for money and good customer service are still as alive and well as they were fifty years ago. Competition may be fiercer, but for the small independent jeweler factors like trust and expertise are as sought after now by the buying public as they were back then. It’s just harder to realize this when every marketing dollar seems to be spent on proclaiming that biggest and cheapest are the factors that count.
Increased competition is nipping at margins and product lines – and it’s not about to get any better soon. But for the independent jeweler, those mantras of trust and expertise need to be focused on the product line where it becomes the most important – diamonds.
1. They are the area where reputation matters the most
Ask any diamond buying customer what their biggest concern is when they purchase and they will generally tell you that they don’t fully understand what they are buying and have to trust the honesty of the seller for at least part of the selling process. There is still that mysterious, romantic air about diamonds – that’s why people love them. Yes, we now have bulk discounters selling them and yes, there are Internet traders who didn’t exist ten years ago, but if all other things are equal, most customers will tell you that they would feel a lot better about the decision if they have known the seller for a time – and it helps set the mood of the buying a little better if you’re not standing next to the lawn mower section getting bumped by a shopping trolley with a 3 year old kid in it. Hardly the most romantic way to choose that special purchase! Independent jewelers will always have that reputation of trust and integrity to rely on and this needs to be the basis of any independent jewelers approach to their business.
2. They are what we will rely on when the bead market goes soft
…and it will go soft. The bead market in Australia has benefitted from the phenomenon sooner than most, but already the signs of a slowdown are happening. This year, the Australian bead market is down 25% on 2009. This will most likely happen in the US in due course. Will there still be a bead market? Who knows, but it is unlikely to continue offering the level of sales that it is currently.
When this happens, the retailers who have forgotten how to sell anything else will be the ones to suffer. Diamonds have previously represented nearly 48% of industry sales for independent jewelers. That figure is currently 42% – helped partially by the GFC and partly by the increased popularity of the bead market. When the financial situation improves and the fascination with beads begins to wane then diamonds will again come to the fore.
3. There is an opportunity to tailor a product that is unique, and not a commodity
You’re not selling gasoline or water. This is a not a commodity. Yes, they shop for the carat weight, cut and clarity they want, but if it’s sitting in an ugly ring they don’t want to know about it. There are as many different ring styles as minutes in the week. If they fall in love with your unique design they will be hard pushed to find it somewhere else. If they try and shop around they will soon realize that if they don’t want to pay your price they will have to settle for something that is going to look at least a little different – and if she has already fallen in love with it, she won’t want to be disappointed. This fact provides you with the protection of offering something that you can’t just buy at any corner store and the chance to command the sort of supply and demand margins that this product deserves. Can you do this with other products? Ask yourself, when were you last able to offer a unique watch that couldn’t be found anywhere else?
The bead market is all good news and if you’re not making money from it, it’s time you were. But things don’t last forever. Let’s get ready to get back to the basics of diamonds. There are some things that never change.
David Brown is President of the Edge Retail Academy, an organization devoted to the ongoing measurement and growth of jewelry store performance and profitability. For further information about the Academy’s management mentoring and industry benchmarking reports contact Carol Druan at firstname.lastname@example.org or call 877-569-8657.