There was a telling moment at the recent JCK Las Vegas show
that confirmed the generational shift taking place in the jewelry industry.
“The jeweler’s career path used to start with the GIA, then
you did an apprenticeship, and then, after a few years, you were ready to do
something,” noted Michael Pollack, the owner of Denver-based Hyde Park
jewelers. “Today, I’d encourage young people to hone...their technical [IT]
skills before they get the gemological background.”
Pollack’s comment, which came during a panel discussion on
the role of independent jewelers in the market, was more nuanced than he may
have intended. His advice to young jewelers summed up the challenge facing the
sector: Adapt or die. The old way of selling — relying on (declining) mall traffic
and promotional advertising — is no longer sustainable.
For that reason, it seems the industry continues to contract
as stores close at a faster rate than new ones are opening. Some 1,269 US-based
jewelry retailers discontinued their operations in 2016, and only 214 opened,
according to the Jewelers Board of Trade (JBT). Similarly, in the first half of
2017, the rate of closures far outpaced the number of stores that opened, JBT
reported.
While a small proportion of the discontinuances were due to
bankruptcy or merger, the vast majority were jewelers simply closing up shop.
They’re doing so, in part, because baby-boomer jewelers have been unable to
recruit their kids into the family business. And that’s left a generation of
baby boomers selling to millennials, who speak a different language altogether.
It isn’t just independent jewelers struggling to adapt to
changes taking place at retail. The majors are contending with the same
challenges.
Signet Jewelers — the parent of Kay Jewelers and Zale — saw
disappointing sales during the holiday season and again in the first quarter.
The company admitted it had been caught unprepared for the spike in online
selling during the holidays. It has since invested heavily in improving its
omni-channel offering.
Meanwhile, Tiffany & Co.’s sales have declined as
consumers shift to more affordable price points, and the brand has failed to
resonate with millennials. Management is trying to address that. The company
brought in Lady Gaga as a brand ambassador and is focusing more on fashion
jewelry. It also appointed celebrated fashion designer Reed Krakoff as its
chief artistic officer, and more recently named Alessandro Bogliolo — a former
executive at Bulgari and Diesel — as its new CEO.
But where the big chains have the marketing dollars to boost
their brand awareness, the independents have the flexibility to engage with
consumers on a far more intimate level. And therein lies their opportunity.
Millennials, believe it or not, have a strong sense of
community as they seek out authentic experiences from their purchases —
especially those that hold sentimental value. Independent jewelers can position
themselves as an integral part of the community, providing the compelling personalized
experience that consumers are craving.
They can develop that through their social-media engagement
and by meshing their online offering with their in-store experience. In this
area, they have flexibility to operate in a way large corporations don’t: While
each Instagram post may require approval from layers of management at a public
company, independent jewelers have the luxury of trial and error.
If something doesn’t work, try to understand why and do it
differently next time — that was the advice that Amy Morino, vice president of
brand marketing experience and partnerships at American Express, gave during
the panel discussion.
Millennials are looking for inspiration on social media, and
jewelers can provide it in a way that builds trust for their brand.
“Those who can mesh their gem knowledge with the
tech-savviness the younger generation brings, and at the same time show their
involvement in the community, have a good chance to restore growth,” Morino
said.
Already, independents are reversing their downward spiral,
having outperformed the majors during the 2016 holiday season. Jewelry retail
sales grew 0.7% during the season, with independents showing growth of 1.4% in
December, De Beers CEO Bruce Cleaver reported, citing MasterCard Spending Pulse
data.
It’s a trend Rapaport expects to continue as savvy jewelers
develop omni-channel capabilities with social-media strategies in place,
providing bespoke, customized services and products that will carve them a
position in their community — and the market.
Those that aren’t taking those steps will fall by the
wayside. And the majors that cannot do so with the same flexibility and
personal touch will continue to lose market share. In an age of unprecedented
retail disruption, it helps to be nimble.
Image: Lady Gaga behind the scenes of the Tiffany & Co. Legendary Style campaign shootArticle from the Rapaport Magazine - August 2017. To subscribe click here.