Buying Paper or a Diamond?

U.S. Retail

By Lara Ewen

As fall approaches, jewelers are coming off a slow summer but an otherwise strong year. Customers, especially in the bridal business, are back, and they’re buying the best stones they can afford. That said, many are doing their homework, and are more educated about diamonds than ever before. Retailers have to make sure they listen to their customers’ needs while managing their expectations, and balance customers’ preconceived notions by giving them a jeweler’s expert advice.

CERTIFICATES’ ROLE

When it comes to making sales these days, laboratory certificates, commonly called certs, play a crucial, big role, though some labs have a better reputation than others. Mindi Robuck, co-owner of Michael’s Jewelers in Anchorage, Alaska, said that using specific labs is important for her customers. “If customers are coming in, it’s a big step for them, and they’re nervous. Having that certificate gives them confidence in what they’re buying,” said Robuck. The retailer uses only American Gem Society (AGS) Laboratories and Gemological Institute of America (GIA) certificates because, Robuck explains, “those two labs are strict in their grading.”
   Certificates are not only important for customer confidence, but also for staff. “We have an in-house brand that comes with certificates, and we use AGS and GIA certificates,” said Rick Beaulieu, president of Springer’s Jewelers, with two stores in Maine and one in New Hampshire. But, he emphasized, “We’re not selling the certificates; we’re selling the stone. Having the certificates is a confidence thing for our sales staff more than anything else.”
   Some customers, however, don’t care who certifies a stone if the price fits their budget. “Certifications are important,” said Fernando Schlaen, general manager at Richard’s Gems and Jewelry in Miami, “because they give customers peace of mind with their purchases. GIA is the certificate of choice, but we have to have other labs for people on a budget, who are okay using other labs’ certificates. But for well-educated consumers, GIA is the only way to go.”
   Demand for certs has increased because a lot of customers are doing their research in advance on the internet. “If you do not address the issue of certifications with customers, you won’t make the sale, because certifications are so pervasive,” said Pen Fix, owner of Dodson’s Jewelers in Spokane, Washington. “And if you don’t address the pitfalls of some labs, you won’t make the sale, because you can have one lab saying one thing and another lab saying something else. Young people are very much aware of this because they shop online. They’re buying the paper, along with a diamond, and we have to acknowledge the reality of that. But we also look for important values beyond the lab. The lab reports don’t tell you everything about a diamond, or why it’s beautiful.”
   Steven Tapper, vice president of Tapper’s, with three stores in Michigan, agreed. “Almost every diamond we sell is certified,” he said. “That gives the customer a level of comfort and trust. There’s some thought that GIA is more stringent, but most customers want to have a great experience, so I don’t sell the paperwork, I sell the experience. I respect the gemological aspect, but are we selling a piece of paper or a diamond? We’re selling a diamond.”

GOING STRONG

The year has been going especially well for businesses that focus on bridal and engagement sales. “2012 has been nice and busy and steady,” said Robuck. “We’re up from 2011. We’re primarily bridal, and people are always getting engaged.”
   In the Northeast, business also has been robust. “2012 has been fantastic,” said Beaulieu. “Compared to 2011, we’re up substantially. We’re close to where we were in 2006. The bridal business has been strong.” Tapper agreed that bridal was going well. “We have a new store, and we’re seeing a nice uptick there,” he said. “At the two stores that have been in business longer, it’s challenging, but people love to shop, especially for engagement rings.”
   Hard work is paying off for Fix. “In 2011, we ended up having a strong fall and a strong Christmas, but since then, it’s been soft,” he said. “We’re still up for the year, but we’ve been working hard at it.”
   For some stores, the only dark spot this year has been a slow summer, but that’s to be expected in some parts of the country. “So far, 2012 has been good, and better than 2011,” said Schlaen. “I think the first four months of 2012 were better than I expected them to be, but the past four months have not been as good. Then again, in South Florida, the summer is the slowest time of the year.”

ELECTION JITTERS

The election is also on everyone’s mind. “Now, it’s about just getting through this election,” said Beaulieu. “I don’t care who wins. Some people will be happy and some people won’t. After the election, business is going to be strong, but there is going to be a lull between now and then.”
Still, it’s not as bad as it could be. “My forecast for the rest of the year is that it’s going to be partly cloudy,” said Fix.