Lately I’ve been trying to figure out what it takes to be successful as a jewellery retailer or independent designer today—particularly in the U.S.
Many independent retailers have complained that business is in decline. Family owned jewellers continue to close their doors in US at a rapid pace, partly due to slowing sales, but also because the demands of the job are too much for small operators (eCommerce, social media marketing, specifying inventory) and partly due because children want to do something else with their lives.
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Meanwhile, independent designers, who I have the most contact with, have their own issues. Whether they work with independent retailers or luxury department store chains they complain that the cost and difficulty of doing business with them has become onerous. They have to provide their pieces on memo and deal with all marketing costs. The cost of quality gems and equipment is also rising so these designers have to learn to be more resourcing when buying and producing product.
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These are not new complaints. But with the lack of stability in the global economy and the changing buying habits of consumers, it just exacerbates the situation.
Despite these issues there are those who are doing well and there are some reasons why this is the case.
Being big seems to help … a lot. Once Signet Jewellers purchased Zale Corp., it became by far the largest specialty retail jeweller in the U.S. with 1,400 locations serving low, middle and upper market consumers. This size brings a lot of advantages. It has leverage when negotiating prices with manufacturers because of the volume they buy. It can eliminate redundancies and use technology to further increase efficiencies when managing inventories.
While the above advantages control operating costs, the most important advantage, I think, is the ability to spend on marketing and advertising. This is what helps to increase sales.
For example, as I previously wrote, Signet’s “Ever Us” two-diamond ring promotion that was used for several of the company’s brands, including Kay, Zale and Jared in the US, was the biggest new launch in the company’s history—doing well in all the stores that carried the program.
Most importantly, it crosses over gift giving categories so it’s a promotion that can be used year round. It is one of many promotions, including celebrity partnerships and diamond branding, used by Signet for its retail brands.
Independents and regional chains who try to compete with Signet on the same level will find it an uphill climb. The way independent jewellers can distinguish themselves is with specifying product that is unique and unusual.
This is where designer brands come in. But jewellers are looking for a sure thing. Those designers who started their business in 1980s and 1990s and have strong brand recognition are doing well. Those who are newer have a much more difficult time convincing retailers to carry their product. Several established designers told me they said they couldn’t make it if they started now.
I don’t know if I have the answers but retailers who are struggling have to do something different than what they are used to doing. That includes taking on new designers and promoting them.
Designers who have difficulties selling their work to retail jewellers also need to look at selling directly to the consumer.