This is the July 4th week, and it (finally!) affords me the opportunity to sit back in a nicely air-conditioned office and think about 2014 as it passes mid-year. The jewelry business continues to be roiled by changes that are hard to translate into action plans.
They used to demand geographic exclusivity on some lines. Now that is hard to do when retailers are increasingly showing the lines on their web sites, and even where they are not selling on-line, they do create cross-border competition.
So now they try to demand exclusive designs, but that only works if there is enough sell-through - often hard to achieve.
They ask for memo or right of return. But such programs require careful planning on both sides and careful execution. Most suppliers and retailers are poor at running such programs.
Internet retailing is growing steadily at double digits and mostly captures retails under $500. But that is where retailers build traffic, loyalty and relationships that translate into bigger sales later on.
Buying gold and gems from consumers has meant survival and solid profits for many retailers, but the big wave of consumer selling jewelry back to retailers has passed. For too many retailers, it has been a lost opportunity to build business by not devising solid marketing plans that satisfy consumers' potential desire to exchange old pieces for new pieces, or offering services that make them happy to be selling.
All of this, and much more, is happening at a time when the number of independent retail jewelers in the US continues to steadily decline. Very successful jewelers are closing their stores because the owners are retiring and there is no way to sell the business. Where there is no succeeding generation, or a plan to pass on the business to long term employees, the only option is liquidation. Mass market jewelers may face some real barriers of scale. (Sterling will now have to feed about 3,000 stores.) All of that should translate into a smaller number of jewelers selling a slowly growing market.
But now, the rules are very different. Understanding and building market position and generational appeal will be everything. Now we need uniqueness, customization and personalization, social awareness. Somehow, get a bigger slice of the pie! But while that used to be "easy as apple pie", we now have a market that forces jewelers to think about what pie they are after. Maybe it's rhubarb. or pumpkin, or a favorite, blueberry a la mode. Chocolate please. Oh, wait. Better yet, can you make that chocolate cream pie. Oh, you don't have that. Too bad.
Ah, the retailer's dilemma.
- The summer trade shows seemed to be well-attended and active. But orders were smaller than anticipated, especially for mid-market suppliers. Retailers are buying carefully and ordering less (understandable), but as a result vendors are seeing the costs of exhibiting getting harder to justify.
- No industry-wide efforts are being made, or proposed, to market jewelry to the public. This comes at a time when surveys show that younger consumers are more excited about buying the latest electronics than buying jewelry.
- Big time consolidation continues. Sterling buys Zales. Chow Tai Fook buys Hearts On Fire. And the head of Alrosa foresees contraction in the diamond sector. Fewer dealers, fewer cutters. We have already seen a big piece of that in India. Part of that is rapid technological development, part is banking becoming much more difficult, and part is continuing imbalance in rough vs polished prices. A big part is looking ahead to years of declining production.
- Phillipe Mellier and Stephen Lussier spoke calmly and at length at the JCK Show about how well things are going (in particular for Forevermark), and how the industry must make far greater efforts to use and promote brands. Need I say more? Sounds like De Beers of old.
- Many retailers attended our panel at JCK, which I was pleased to moderate, which covered five major issues facing the industry. Those that I got to speak to afterwards essentially focused on the same question - what do they do in the coming years? They see many changes already, but are confused and uneasy about what to do next.
They used to demand geographic exclusivity on some lines. Now that is hard to do when retailers are increasingly showing the lines on their web sites, and even where they are not selling on-line, they do create cross-border competition.
So now they try to demand exclusive designs, but that only works if there is enough sell-through - often hard to achieve.
They ask for memo or right of return. But such programs require careful planning on both sides and careful execution. Most suppliers and retailers are poor at running such programs.
Internet retailing is growing steadily at double digits and mostly captures retails under $500. But that is where retailers build traffic, loyalty and relationships that translate into bigger sales later on.
Buying gold and gems from consumers has meant survival and solid profits for many retailers, but the big wave of consumer selling jewelry back to retailers has passed. For too many retailers, it has been a lost opportunity to build business by not devising solid marketing plans that satisfy consumers' potential desire to exchange old pieces for new pieces, or offering services that make them happy to be selling.
All of this, and much more, is happening at a time when the number of independent retail jewelers in the US continues to steadily decline. Very successful jewelers are closing their stores because the owners are retiring and there is no way to sell the business. Where there is no succeeding generation, or a plan to pass on the business to long term employees, the only option is liquidation. Mass market jewelers may face some real barriers of scale. (Sterling will now have to feed about 3,000 stores.) All of that should translate into a smaller number of jewelers selling a slowly growing market.
But now, the rules are very different. Understanding and building market position and generational appeal will be everything. Now we need uniqueness, customization and personalization, social awareness. Somehow, get a bigger slice of the pie! But while that used to be "easy as apple pie", we now have a market that forces jewelers to think about what pie they are after. Maybe it's rhubarb. or pumpkin, or a favorite, blueberry a la mode. Chocolate please. Oh, wait. Better yet, can you make that chocolate cream pie. Oh, you don't have that. Too bad.
Ah, the retailer's dilemma.
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