No business like showroom business

Not all that long ago, jewelry retailers believed that the internet — and its related technologies, such as mobile — would be the end of traditional stores. In fact, the term “showrooming” was once seen as negative, and referred to the practice of customers browsing in person and then finding the best price online. But times have changed, and savvy retailers have turned the tables on old-fashioned ideas about the separation of brick-and-mortar and digital shopping. That’s where the new definition of showrooming comes in.

Today’s model

Modern showrooming is a space for consumers to get hands-on experience with a product they will purchase at a later time — not unlike traditional automobile dealerships.

“A showroom is a store space for showcasing products and options, and creating an experience where [customers] can purchase a product which is then shipped to them,” explains Ben Smithee, CEO of The Smithee Group, a consumer consultancy specializing in millennial marketing. “[It’s designed] to sell product, but not carry inventory.”

One example is Blue Nile’s webrooms, which allow customers to look at engagement rings and fine jewelry before buying them online. The physical locations offer access to Blue Nile’s in-store selection, plus online access to the full catalog via tablet.

“[Webrooms are] staffed by our non-commissioned [salaried] diamond and jewelry consultants, [who] answer questions and help with purchases,” says Amanda Winters, public-relations manager for the digitally native jewelry retailer, which has opened six US showroom locations. “Shoppers can decide if they want to order on tablets in the webroom, or go home and order at their convenience from a PC, tablet or smartphone.”

A good fit

For diamond-jewelry retailers, the concept is appealing. “We’re starting to see examples of showrooming,” says Michael Brown, a partner in A.T. Kearney’s Consumer Products and Retail Practice, where he heads both the omni-channel team and the mass, discount and big-box sector team. “For example, Tiffany is able to get a piece from any store in its network. If a piece isn’t in one store, they can get it to another.”

But the concept isn’t perfect for every retailer, he concedes. “Your moderately priced rings will need immediate fulfillment [since they’re available as-is]. But not higher-end stores that lean more toward custom [pieces, which take longer to finish anyway].”

Custom and engagement pieces, Smithee believes, are particularly well suited for a showroom-style store.

“If I were a custom jeweler, I would create a showroom focused on taking product from mind to market,” he says. “Showing customers how we choose stones, and the CAD [computer-aided design] process, like what [jewelry supplier] Stuller is doing. And then customers have their finished product delivered, or they can come into the store and get it. This will also work for independent designers, because instead of having a 1,000-square-foot space, they can have three separate 200-square-foot showroom locations.”

There are also other advantages, especially when it comes to inventory. In addition to eliminating the need for large retail locations to carry stock, says Brown, showrooming’s small footprint requires retailers to be more selective in what they carry, which can keep them from hanging on to outdated pieces. “There’s a reason not to be overburdened with inventory that doesn’t sell,” he adds.

Taking the pressure off

The gap between conventional retail and showrooming in the jewelry industry isn’t that wide, according to Smithee.

“The current sales floor is already set up like a showroom, so it’s more of a mentality shift,” he says. “The front end of the business will look the same, but the back end will change. For retailers, they could even rely on manufacturers and brands to drop-ship [ship directly to the consumer or store, rather than via the usual distribution channels].”

Still, traditional retailers may not see the benefit of showrooming, which Winters believes is a mistake. “It’s really about putting the customer first,” she says. “Whether they choose to shop on their computer, mobile device or in one of our webrooms, we want to make sure they get an easy, pressure-free experience.”

In other words, it’s about meeting shoppers on their terms, “without high-pressure sales tactics and needlessly inflated prices, whether they are on a device or in a mall,” Winters notes.

Smithee sees the shift to showrooming as a natural progression for the jewelry industry, rather than a sea change.

“Jewelry stores are already not showing every single size and every single sample,” he says. “You’re already talking about [an] experience, and not ‘How quickly can I box this up for you?’ And a true showroom is an experiential place.... It’s not about the room. It’s about the show.”

If you’ve got it, Flont it

Don’t call Cormac Kinney, founder and CEO of Flont, a jewelry-industry disruptor. That said, he acknowledges that his year-and-a-half-old jewelry-rental company is changing some of the rules.

“We’re disrupting the trend of e-commerce,” he says. “We’re creating a channel that’s designed to help brands and retailers.”

Flont’s service proposition is simple: It offers an edited selection of 60 designer and limited-edition fine-jewelry brands, and for a fee of either $299 for one month, or $249 monthly for three or more, members are allowed to borrow $7,500 worth of jewelry each month.

For Kinney, a software entrepreneur whose wife is jewelry designer Mimi So, the business is a way to recapture the tactile nature of jewelry from the digital channels that have distanced consumers from it.

“If you look at Amazon, you know that a large segment of consumers want to use their computers and phones to buy things online,” he says. “But jewelry is a high-touch sale. Our goal is to put jewelry into the hands of the consumer and help them learn. See what craftsmanship is. Make it easy to borrow jewelry, and get it when you need it.”

He hopes to find customers who may have fallen through the cracks of today’s jewelry-retail propositions. To that end, he’s partnered with companies such as Inspirato, a luxury residence-sharing firm, by gifting every company member one month of Flont. He’s also looking to partner with jewelry stores so Flont members can borrow from their local retailers. Additionally, he wants to sell his software to larger chains, such as Tiffany & Co., that might want to begin their own sharing business.

Many of his 10,000 borrowers eventually become buyers, says Kinney. “Retailers think that if someone can rent, why would they buy?” he comments. “But Harvard Business School found that [fashion-apparel rental service] Rent the Runway brought new clients into the industry. They said the women are borrowing the outrageous fuchsia dress, and buying the little black dress.”

flont.com

Image: Blue Nile

Article from the Rapaport Magazine - April 2018. To subscribe click here.