JEWELLERY EDITORIAL

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2016/08/23

{ BLOG }

The retail landscape in the US is changing at a speed few could have predicted. How it will look in even the near future is anybody’s guess.

 

Photo Credit: ShutterStock

 

Macy’s, one of the largest department store retailers in the US, announced it is closing 100 of its 728 stores. If there’s one thing that can be predicted, it is that the dominance of big department stores is coming to an end. Stores that sell everything for everyone are too big and lumbering for the quick, personalised ways that consumers are buying products.

 

Meanwhile, in the jewellery industry, the Jewelers Board of Trade reported that 442 jewellers, wholesalers and manufacturers in the US and Canada have closed in the second quarter, up from 335 in the first quarter and more than double the number of closures seen in the second quarter 2015.

Click HERE to read the news reference

 

So far this year, 577 jewellers have decided to close up shop, which is a 55 percent increase over the first two quarters of 2015. Wholesale closings rose from 68 to 121 year-over-year while manufacturer closings increased from 26 at the halfway point of 2015 to 79 this year.

 

In Canada, jewellery retail chain, Ben Moss Jewellers, announced that it was closing all of its 54 stores. The company is currently running going-out-of-business sales.

 

A radio station in Vancouver, Canada asked me to discuss the retail landscape and I had trouble putting it into a sound bite. There are just so many changes and all of the answers being provided by industry “experts” are just too simplistic. I’ll now throw my simplistic answers into the mix:

 

* Younger people (Millennials and those who are younger now reaching adulthood) are not interested in fine jewellery. This is too simplistic an answer. Fine jewellery is an expensive proposition and it requires a certain level of refinement. Increased wealth and refined tastes should bring people into jewellery. As we get older, our tastes change.

 

* Young people have no money. This is more the issue. Young people like nice things as much as anyone of any age. They are willing to pay for these things if they have the money. However, Millennials are graduating with record college debt and they are having trouble finding solid gainful employment.

 

* The Internet, eCommerce and social media. There are more places to buy jewellery these days and they have cut into the sales of the traditional retail sector. Many in the industry either won’t or can’t adjust with the times. They’d rather complain.

 

* Attrition. The sons and daughters of jewellery store owners want to do other things with their lives. They don’t want to continue in the family business and that’s a major reason why so many independent jewellers are closing.

 

* Signet Jewelers. The dominance of the company in the US and Canada cannot be overlooked and it is squeezing independents and regional chains.

 

* The economy. Things have improved greatly since the global recession of 2008/2009. However, economic growth has been uneven. Overall, while people may be employed they are making less money and they don’t feel their jobs are secure.

 

* Change in consumer patterns. There are demographic changes among young and old, rich and middle class; there’s also a change in the perception of buying in the US. People are just more careful about what they buy.


Disclaimer: The opinions expressed by the blogger and those providing comments are theirs alone, and it does not necessarily reflect the opinions of JewelleryNetAsia, UBM Asia Ltd or any employee thereof. JewelleryNetAsia is not responsible for the accuracy of any of the information supplied by the bloggers. 

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2016/08/22

{ BLOG }

A 1 percent increase in gold jewellery demand to 25.9 tonnes in the US marked the 10th consecutive quarter of year-over-year growth for the market, the World Gold Council said Monday (August 15).

 

Photo Credit: ShutterStock

 

The WGC, in its quarterly gold jewellery report, credited increased sales for Mother’s Day gifts for lifting the market into positive territory.

 

In the first half of 2016, jewellery demand reached a seven-year high of 48.6 tonnes. It was the strongest period since 2009 despite a more subdued consumer environment ahead of the presidential elections, the WGC said.

 

“Growth in jewellery and watch sales comfortably outstripped that of general retail sales for much of the year-to-date, although the comparison was slightly flattered by weak gains in early 2015,” the WGC said. “Consistent, if moderate, economic growth and improving employment levels are supporting demand, although enthusiasm in the sector can be expected to wane over the coming months as the elections draw nearer.”

 

The US was one of only two bright spots (the other being Iran due to the removal of international economic sanctions) in an otherwise difficult environment as record high prices for gold led to the lowest demand for gold jewellery since 2010, the WGC said.

 

Global gold jewellery demand declined 14 percent year-over-year for the second quarter of 2016 to 444.1 tonnes, led by the two largest gold jewellery markets in the world – India and China, the WGC said. Jewellery demand in the first half of 2016 fell by 185.5 tonnes year-over-year – out of which 149.4 tonnes was due to the combined weakness in India and China.

 

The dollar value of gold jewellery demand for the first half of 2016 was the lowest since 2010, at US$36.3 billion.

 

The high price of gold has led to a substantial increase in gold recycling. In the first half of 2016, gold recycling generated 686.7 tonnes of supply, the highest first half total since 2012.

 

“We recently conducted a large-scale survey in which high gold prices were cited as the most important factor influencing the decision to recycle gold jewellery,” WGC said in its report. “Among the respondents in India and China who had ever sold gold jewellery, a high gold price was the most common reason cited for doing so (27 percent and 43 percent, respectively).”

 

The Gold Demand Trends report added that “price volatility can further magnify this effect.”

 

In India, “paltry import numbers and steep local discounts were omens of a disappointingly weak quarter,” WGC said. Official imports of gold were cut in half to below 100 tonnes (the lowest amount since 2013).

 

The WGC said India faced three key issues:

• A sharp jump in the gold price

• Weaker rural incomes

• Government regulation

 

In China, second-quarter gold jewellery demand fell 15 percent to 143.5 tonnes due to high prices, low economic growth and weak consumer confidence. As a response, gold recycling activity reached a nine-quarter high. In addition, changing consumer tastes in China had an impact as consumers are shifting to fashionable, unique, highly designed 18-karat or gem-set pieces as opposed to traditional 24-karat gold jewellery.


Disclaimer: The opinions expressed by the blogger and those providing comments are theirs alone, and it does not necessarily reflect the opinions of JewelleryNetAsia, UBM Asia Ltd or any employee thereof. JewelleryNetAsia is not responsible for the accuracy of any of the information supplied by the bloggers. 

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2016/08/19

{ BLOG }

Mark Vadon founded Blue Nile in 1999 during the infancy of the Web with the premise that choosing an engagement ring can be a simple process and can be done online. Within 10 years, it became one of the largest diamond and diamond engagement ring retailers in the US and one of the early high-growth eCommerce darlings.

 

blue nile

 

Time moves fast these days and 17 years later, Vadon is no longer with the Seattle-based company and there’s a new set of dynamics to deal with. Among them are:

 

* More competition online;

* The explosion of social media;

* The continued dominance of specialty jewellery retailer, Signet Jewelers; and

* A business model that is maturing.

 

All of this is affecting turnover. For example, its second-quarter 2016 financial report on Monday (August 8) noted that sales were flat compared to a year earlier at US$113.8 million. Operating income for the period ended July 3 totalled US$3.3 million, representing an operating margin of 2.9 percent of net sales, compared to US$3.4 million in operating income and 3 percent operating margin for the second quarter of 2015. Net income fell slightly to US$2.1 million, compared with US$2.3 million for the second quarter of the previous year.

 

The flat sales were led by an unexpected 4.4 percent decline in US engagement net sales for the second quarter of 2016, decreasing to US$62.6 million, the company’s core business. Harvey Kanter, Blue Nile chairman, CEO and president, said the decline was driven by lower average sale prices and prices points.

 

“Engagement ring sales were actually strong for the quarter until we hit June (when) we saw a deceleration in unit sales that dramatically impacted the quarter,” he said during a conference call with investors. “We’re still assessing what happened but the drop off was broad across geography and product category, such that we can’t discount macro issues given that June was an exceptionally volatile month for the US and the world.”

 

The good news, Kanter said, is the high end of the business (single sales of more than US$25,000) performed better than it has over the last several quarters.

 

Blue Nile is making adjustments, aggressively pursuing sales of fashion jewellery and spreading internationally. This is paying off for the company. For example:

 

* US non-engagement net sales for the second quarter increased 5.9 percent to US$30.4 million, compared to US$28.7 million for the second quarter of 2015.

 

* International net sales for the period increased 6.4 percent to US$20.8 million. Excluding the impact from changes in foreign exchange rates, international net sales increased 9.4 percent.

 

In the US, the company is going brick-and-mortar, opening retail stores, called “Webrooms.” There are currently three of these retail outlets in the US and two more expected to open this year. Kanter said its first Webroom in the Roosevelt Field Mall in Garden City, NY is more than year old and has “exceeded our expectations,” adding, “Our goal is to achieve financial metrics that are equal to or better than the overall company’s performance, and this is happening in Roosevelt Field.”

 

Kanter described the other two Webrooms performance as “promising.”

 

These changes are creating a diverse portfolio but the company’s challenge is maintain its core business, engagement rings, which accounted for 70.5 percent of Blue Nile’s total sales in the second quarter, compared to 71.9 percent in the prior year.

 

“We have some meaningful wins but I will acknowledge upfront that these results are short of what we expected,” Kanter said.


Disclaimer: The opinions expressed by the blogger and those providing comments are theirs alone, and it does not necessarily reflect the opinions of JewelleryNetAsia, UBM Asia Ltd or any employee thereof. JewelleryNetAsia is not responsible for the accuracy of any of the information supplied by the bloggers. 

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2016/08/17

{ BLOG }

In the scheme of things, an Olympic gold medal is more than just the materials and design. Its value in fame and future earnings could be incalculable, even priceless, depending on the athlete and sport.

 

The Rio 2016 Olympics gold medal. Photo credit: Rio 2016/Alex Ferro
The Rio 2016 Olympics gold medal. Photo credit: Rio 2016/Alex Ferro

 

But the medals do command an intrinsic value that can be measured. What can’t be measured (in addition to fame and fortune) is the design and innovations used in making the medals.

 

The fact is there is a just tiny bit of gold in the Olympic gold medals. What they do represent, in addition to the values and spirit of the Olympics, is inspirational design and sustainable practices.

 

A total of 2,488 medals were produced for the Rio 2016 Olympics (812 gold, 812 silver and 864 bronze) by the Mint of Brazil. All of the medals are the same size and weight, with a diameter of 85 millimetres and a weight of 500 grams. This makes the Rio 2016 Olympic medals the heaviest in the history of the Summer Olympics and tied with the 2012 London gold medal for the largest medals in the history of the Summer Olympics. At least three Winter Olympic medals were larger and heavier.

 

Each of the 812 Olympic gold medals for the Rio Olympics is plated with six grams of gold (the minimum required by the International Olympic Committee) with 99.9 percent purity. The remaining 494 grams is made of silver with 92.5 percent purity (the standard for sterling silver), according to the Mint of Brazil, which produced all of the gold medals. The purity silver standard also is a minimum IOC requirement.

 

Based on recent gold and sterling silver prices, the “podium value” of the gold medal at the Rio 2016 Olympics is approximately US$564, in line with the 2014 Sochi Winter Olympic Games (about US$566). However, it is a nowhere near the approximate US$708 record price of the 2012 London gold medal, due to the record high prices for gold and silver at the time.

 

If the entire medal was made of gold it would be valued at nearly US$22,000, which is why 1912 was the last time all-gold medals were awarded.

 

Each of the 812 silver medals contains 500 grams of sterling silver. The podium value is about US$305. Each of the 864 bronze medals contains 475 grams of copper (95 percent) and 25 grams of zinc (5 percent). Its podium value is reportedly less than US$3.

 

The sourcing and production methods for the medals were described as “symbols of sustainability and accessibility” by Rio Olympic officials. More than 30 percent of the silver used in the production of the medals is recycled from mirrors, waste solders and X-ray plates. The gold is mined entirely free of mercury. More than 40 percent of the copper used in the production of bronze medals came from the industrial waste of the Mint of Brazil through a process that was developed internally.

 

The front of each medal has the Rio 2016 logo framed by laurel leaves (which were given as awards for the ancient Olympics). The reverse reveals the traditional etching of Nike, the Greek goddess of victory, in the foreground and the Greek Panathenaic Stadium in the background. In a bit personalization, the name of the event in which the medal was won is engraved by laser along its outer edge.

 

The obverse and reverse sides of the Rio 2016 Olympics gold, silver and bronze medals. Photo credit: Rio 2016/Alex Ferro
The obverse and reverse sides of the Rio 2016 Olympics gold, silver and bronze medals. Photo credit: Rio 2016/Alex Ferro

 

It took more than 100 employees in various fields—including, art, sustainability, engineering and production—to design and manufacture the Olympic medals. So while their monetary value is nominal, their true value is in the design and sustainable innovation that went into making each medal.


Disclaimer: The opinions expressed by the blogger and those providing comments are theirs alone, and it does not necessarily reflect the opinions of JewelleryNetAsia, UBM Asia Ltd or any employee thereof. JewelleryNetAsia is not responsible for the accuracy of any of the information supplied by the bloggers. 

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2016/08/16

{BLOG}

Pokemon Go is an augmented reality game created by Nintendo using a smartphone’s GPS and camera to find hidden graphics. Launched in the US, Australia and New Zealand in early July, it is now being rolled out in parts of Asia. In brief, a player turns the world into a hunting ground through their camera. The player’s avatar is displayed on a live map in real time. While looking at the map or a live view, different characters appear. The goal is to capture them. PokeStops are visited to receive game accessories and PokeGyms train and battle pokemon. These places must be visited in real life and are scattered nearly everywhere. Enthusiasts point out that the game sends young people outside where they get exercise and fresh air, something gamers rarely experience. Critics relate hundreds of stories about people so engrossed in looking at their phones that they walked into traffic and walls, and even fell off cliffs. There are also cases of Pokemon Go-related car accidents.

 

So what does this game have to do with jewellery? For starters, luxury Swiss watchmaker, RJ Romain Jerome, plans a limited edition of 20 Pokemon DNA watches to be released later this year. Last year, they released a Super Mario Bros. watch and sold out a limited run of 85 at US$13,000 each.

 

Retail businesses are cashing in on Pokemania as well. For a very small fee, Lure Modules can be purchased that attracts Pokemon to a nearby location for a 30-minute period. Some retailers report high traffic counts during this time.  You can sponsor Poke lure parties coupled with special deals to take advantage of the increased traffic.

 

But is it for you? This game primarily attracts younger players and children. This may not be an appropriate demographic for a high-end jeweller. But keep in mind, the kids are often accompanied by parents so there may still be selling opportunities. If you sell a lot of inexpensive, kid-friendly jewellery, this may be a good marketing concept.

 

If you want to ride the Pokemania wave without actively participating in the game, there are still some options. A line of Poke-inspired jewellery may be a good seller. Do it now and do it fast because no one knows how long this fad will last.

 

If you plan to develop a high-tech shopping experience with your own, in-house augmented reality as I discussed in previous articles, you can take a lesson from the Pokemon phenomenon by creating a treasure hunt in your store. Your customers can use their phones to find special virtual coins or symbols hidden in your showcases that are good for prizes or discounts.

 

Pokemon may be a game and it may be short-lived but it demonstrates the power of augmented reality. Download the app, give it a look and see what kind of ideas you can create to incorporate this technology into your business. 


Disclaimer: The opinions expressed by the blogger and those providing comments are theirs alone, and it does not necessarily reflect the opinions of JewelleryNetAsia, UBM Asia Ltd or any employee thereof. JewelleryNetAsia is not responsible for the accuracy of any of the information supplied by the bloggers. 

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