Revamping retail

For Andrea Hansen, a Blue Nile ad that ran during the 2015 holiday season perfectly captures the problem with jewelry retail. In it, a young man is looking at engagement rings through the window of a mom-and-pop store when a cringe-worthy salesman in a cheap suit bursts forth asking if he needs help. The gent promptly flees, and the point is made.

“The store experience is horrible!” declares Hansen, an industry consultant and founder of business development firm Luxeintelligence.

The data reinforces her opinion: US-based jewelry shops continue to close their doors — their number shrank by 4% in 2018, the Jewelers Board of Trade (JBT) has found — even though sales of watches and jewelry worldwide are growing by as much as 6% each year, according to McKinsey & Company research. Online jewelry sales account for about 5% of revenues, McKinsey estimates, and experts expect that figure to inch upward at a modest rate only because consumers still largely want to handle the merchandise before purchase.

In other words, even though physical stores still have a significant role to play, they’re losing market share — and therefore, so are traditional jewelers that rely on them.

McKinsey doesn’t sugarcoat its advice in its “The Jewelry Industry in 2020” report: “Jewelry players can’t simply do business as usual and expect to thrive; they must be alert and responsive to important trends and developments or else risk being left behind by more agile competitors.”

Insiders are vocal about what retailers need to change if they want to evolve. Their advice: Curate offerings, restock seasonally, get creative about engaging customers, and utilize technology.

Make it more fun

The physical store is not just a product showcase; it becomes a space that is equal parts education, workshop and entertainment. It can’t just be someone on one side of a counter selling to someone on the other, says Hansen. “People should come to the product in a different way.”

Retailers might consider renaming gemologists “fashion advisers,” suggests Marty Hurwitz, co-founder and CEO of MVI Marketing. That’s not to downplay the knowledge and expertise necessary to sell jewelry, but new titles like this can inject some much-needed fun into the customer experience. In-store cafes, trips, and a chance to meet designers and see their processes can also get clients more engaged with the products they’re coming in to buy.

Staffers, meanwhile, should be well-trained and personable, he says. They should articulate need over carats, addressing why consumers are shopping rather than just the parameters of the purchase. And if a retailer wants to attract a more diverse customer base, it should have a diverse staff. “We need more women and multiculturalism in stores,” asserts Hurwitz.

Turning to technology

Having a dynamic online presence rich in stories is a must for retailers, as is engagement through social media — especially since consumers often research purchases online first. “There are still some independents who don’t have a website,” Hurwitz remarks.

Overall, technology makes your product more widely accessible, as Hansen has observed in firms like travel marketplace Airbnb and ride-sharing service Uber. “They use technology to make products available in broader geographic areas,” she explains.

This is why she sees promise in Gemsone Concierge, a video-conferencing service for creating bespoke jewelry. Shoppers and jewelers have consultations with computer-aided design (CAD) artists in real time, saving store owners the expense of having an in-house bench jeweler and CAD designer. Gemsone is already in use at hundreds of independent jewelry stores.

Hansen also points to membership-based businesses like wine clubs as having “completely upended the traditional retail-store-centric process.”

‘Serve up less, not more’

Other suggestions for improving the customer experience include buying products that appeal to the clients rather than store personnel, and discounting seasonal inventory to make way for new collections like department stores do, continues Hansen.

Author and industry columnist Peter Smith urges retailers to develop a clear sense of self, citing cosmetics vendor Sephora, eyewear company Warby Parker, and men’s apparel brand Untuckit as examples.

“They are not all things to all people,” says Smith, who is also president of diamond jewelry brand Mémoire.

Another piece of advice he offers: Stop thinking that keeping clients in stores longer will lead to sales. Shoppers today want to get in and get out. Just be sure the experience is emotive, your best-sellers are always in stock, and the staff is wired to sell and legitimately excited to welcome clients.

Smith also advises against having too broad a range of offerings, instead recommending a curated selection. On the internet, algorithms “serve up less, not more, and they give me the best options for me,” he says. Brick-and-mortar businesses, he believes, should do the same.

Finally, retailers need to accept demographic changes. Young people have become a considerable consumer force, women play a role in the bridal purchase, and couples aren’t always a man and a woman.

“Jewelers are still selling to the man and [to] baby boomers — it’s pathetic,” says Hurwitz. “We’ll only see more attrition without changing the way we do things.”

Here are three companies that are thinking outside the box to move their businesses forward.

Buchroeders
Leading with loans

Buchroeders in Columbia, Missouri, was founded as a jewelry store in 1896, but its owners opened a loan service in 2009 in the form of Diamond Banc, a separate company that provides a steady source of estate jewelry. The idea is the brainchild of millennial Mills Menser, who purchased the store from his father in 2007. Two years later, when jewelers were buying gold over the counter, Menser’s clients asked if they could borrow money from him, giving him the idea to start offering loans.

“Pawn shops are often set up to end up with the product, but we saw an opportunity to loan against equity in possessions,” says Menser. “Our interest is the interest we collect, and their interest is getting the item back.”

Called jewelry equity lending, the concept is similar to home equity loans. It’s asset-based lending strictly for jewelry, something few non-jewelry businesses have the expertise to do. “Traditional bankers don’t understand jewelry’s worth,” explains Menser.

One way Diamond Banc differs from pawn shops is its payment options. Pawn shops traditionally require you to pay back either the full loan amount plus interest in one lump sum, or just the interest every 30 days. At Diamond Banc, there’s a third option of paying the monthly interest plus incremental payments toward the principal sum, like a traditional loan. In addition, clients can borrow against their already paid-down principal, re-advancing the loan like a line of credit. As with a pawn shop, the client forfeits the item after a few months of non-payment. But Diamond Banc does offer a loan amount equal to its buying price for the item, while many pawn shops offer less.

The initiative has paved the way for Buchroeders to become a big buyer of secondhand goods, including high-end purses and accessories, which it sells at a Diamond Banc shop-in-shop. Eight Diamond Banc locations exist in the US.

Talia Jewelry
The store as studio

At Talia Jewelry, shoppers can make their own jewels through a patented, interchangeable charm system. Israeli designer and goldsmith Tal Man co-founded the business — named for herself and her oldest daughter, Lia — with her life partner, Ronen Berka.

Talia is a departure from Man’s tradition of making gold-intense one-of-a-kinds, instead offering heavy sterling and gem-set charms that interlock vertically on rods that can hold three, four or five of them. Customers get the whole trio of rods with their initial purchase so they can opt for different lengths, choosing from the 300 or so charms currently available. The charm-laden rods then string onto necklaces as pendants. The idea was born of Man’s boredom with fashion purchases as they aged and as her moods shifted. She pondered how to keep items — including jewelry — fresh, taking some inspiration from Lego kits. Berka was instrumental in perfecting the engineering.

The pair celebrated the debut of their first store at Brookfield Place in New York just weeks before Thanksgiving. The space is an open-air studio where shoppers mix and match components to create their charms. On-site design specialists are there to help, and shoppers can order items not in-store from the website via iPads.

“In our modern world, we expect all products and services to be catered to our individual wants, needs and moods,” Man told the press at the store’s opening. Speaking to Rapaport Magazine, she adds, “Talia keeps changing with you, because you are the creator.”

Luxe Custom Collective
Getting personal

For Luxe Custom Collective in The Woodlands, Texas, personalized jewelry is the core of the business. Proprietors Jeri Slater and Alicia Nicholas offer bespoke pieces — largely engagement rings — under the name of Dannini, as well as custom décor like rugs, lighting and furniture. They also have a wine club and in-store bar, with comfy seating (which you can order) alongside iron doors and Italian-made umbrellas.

The store opened in August and has become a destination for affluent shoppers who want unique finds. It came into being when Slater and Nicholas, who were working in independent offices by appointment only, realized they shared clients. Slater had once exhibited Dannini at the Couture jewelry show, thinking she would sell her works wholesale, but felt deflated when most retailers only wanted to order her most understated styles. Working directly with consumers has allowed her to flex her creative muscles.

One memorable commission is a ring she once created for a judge, melting down some gold coins he’d received from his father and given to her to make the piece. Sadly, the judge died within a year of acquiring the ring, but his daughter came to Slater to tell her how much he’d loved it. “He told her it was the best piece of jewelry he ever received,” Slater recalls.

Article from the Rapaport Magazine - December 2019. To subscribe click here.