Today’s retail climate has created new challenges for stores looking to survive. Rapaport Magazine explores what’s affecting jewelry retailers the most, and how the industry can overcome the most pernicious of these challenges.
1. Unwillingness to embrace omni-channel
Digital retailing has changed the way consumers approach their shopping journeys, but many retailers have been loath to embrace mobile and online platforms. That’s led customers to seek out more tech-savvy competitors.
“Today’s customers want to shop where and how they want,” says Kathryn Money, vice president of strategy and merchandising at Brilliant Earth — an ethically sourced bridal and fine jewelry retailer that originally opened online and has since expanded into brick and mortar with seven showrooms nationwide. “Retailers need to provide an omni-channel experience that serves customers through multiple touchpoints, and that is seamless, convenient and engaging.”
2. Inability to connect with millennials
Millennial customers are not responding to traditional jewelry the way their parents did. They’re looking not just for alternate stones, such as colored gemstones and lab-grown diamonds, but also — and importantly — more meaning in the items they purchase. Retailers need to find ways to reach these clients in a way that appeals to their need for connection.
“Younger consumers are not interested in collecting possessions,” says Michael Brown, a partner in A.T. Kearney’s Consumer and Retail practice and head of its global consumer and retail omni-channel team. “They are more interested in experiences.”
3. Clinging to outdated relationships
What worked 25 years ago may no longer be working today. Detrimental behavior can include focusing on older customers instead of actively looking for new customers, or even hanging on to relationships with employees, vendors, reps or brands that no longer suit your store.
“While loyalty is an admirable quality, loyalty at the expense of business health and survival is not,” says Kate Peterson, president and CEO of retail consultancy Performance Concepts in Montgomery Village, Maryland. “Clinging to no-longer-productive relationships out of respect for long-standing history is the kiss of death for many businesses.”
As retailers search for ways to stay afloat, the decision to offer discounts and bargain-basement prices to woo customers often gets weighed against the need to brand their stores as bastions of high-end merchandise. Analysts say retailers needn’t choose, though. There is a middle ground, according to Liz Chatelain, owner of Austin, Texas-based MVI Marketing Ltd., a marketing and consumer research firm for the global gemstone, jewelry and watch industries.
“The best answer is to be price-driven with higher-end branded product,” she says. “The consumer who wants to spend $2,000 on a fashion diamond or colored-stone pair of earrings would purchase faster if they got a deal, but deals are a slippery spiral.”
Relying on discounting can prove problematic. “The price-driven discount paradigm is both frustrating and unwinnable,” says Steve Quick, owner of Steve Quick Jeweler, which has three Chicago-area stores. “Someone else is always willing to discount more deeply. Sadly, we [retailers] are doing ourselves a great disservice with the ‘sell it at any cost’ mentality that has taken hold in the industry.”
Quick believes it’s important to find a path between being price-driven and catering to a high-end clientele. “You can make your business stand out and become memorable,” he says.
Regardless, says Brown, “you have to embrace uniqueness. You can do this at either the upper end or the lower end, but the key is aligning with the values that your customers embrace.”
Creating an experience matters, he continues. “The younger generation is looking for an Instagrammable moment. What’s the picture that she or he is going to take in your store that helps the experience come together? If the experience is differentiated enough, brick-and-mortar stores can command even higher prices than online stores.”
It can help to think not in terms of price, but in terms of value, suggests Peterson.
“Value is less about the product than it is about how the product addresses their personal needs,” she explains, adding that retailers also need to understand their market.
“If [your identity] is about selling low-priced items, the goal is to sell the best available at that price point,” she says. “If your identity is built around a particular fashion, such as ultra-contemporary or high-end traditional, the goal is to stay true to that.”
Branding has been an industry buzzword for years. However, some retailers question whether it’s better for a store to be its own brand, or to rely instead on promoting well-known jewelry lines.
“The biggest reason many retailers give for carrying recognized brands is that the brands, at least according to their sales reps, draw traffic to the store,” says Peterson. “Unfortunately, with very few exceptions, such as Rolex, Disney, Pandora, and Yurman in a former life, that traffic draw has proven to be a myth. It’s most often the retailer who puts their local reputation and marketing money on the line to build the product brand in their local area. Once a brand gets a foothold in a market, the brand takes over control of the relationship and begins to dictate the terms.”
Major brands will often dictate the in-store experience, too, she continues, and that creates conflicts for salespeople in an environment where the focus is supposed to be on the client’s needs and interests.
That’s why focusing on store-as-brand may be a better long-term strategy, manysay.
“It’s important to brand your store and your experience,” states Brown. “The value you bring to your customer is unique, and you want the relationship to be to your store. And for the younger generation, it’s not about brands, it’s about experience. They’ll say, ‘Everyone has this brand. What’s special about my ring?’”
Branding the store also helps retailers differentiate themselves from other local jewelers.
“We mostly try to brand ourselves,” says Tamara Toms, general manager of Carreras Jewelers in Richmond, Virginia. “That’s in part because we purposefully avoid brands that every other store in town sells, and in part because 50% of our business is estate goods. So we accentuate the positives in selling Carreras Jewelers as the brand.”
Brilliant Earth’s Money agrees, and says branding a store can help define the in-store experience more clearly. “Retailers need to develop their own branding to ensure that customers develop a direct relationship with the store and have a clear understanding and appreciation of the experience they should expect when shopping with you,” she says.
Of course, there are exceptions, notes Peterson. “There are certainly stores that have built their business around brands,” she says. “But the most successful stores I’ve seen are the ones that have put their effort, energy and resources into building their own brand.”
No jewelry store can sustain growth without expanding its customer base. Clients from 25 or 30 years ago are fading out of the retailer’s grasp as retirement, children’s college costs, medical issues, and even death create a shrinking client base. That means stores need to turn to younger customers — often millennials — in order to survive. But many retailers struggle to connect with an age group they don’t understand.
Quick believes the first step to bridging the millennial gap is to stop using the word. “Eliminate the word ‘millennial,’” he says. “They’re not crazy about it, and who can blame them? When was the last time you heard it used in a glowing description?”
He also calls on retailers to stop treating younger customers like children. “They’re not so different,” he says. “We’re just not accustomed to having young people demanding the best of us. Their level of sophistication is comparable to more seasoned clients. They’ve traveled and seen a lot. They’ve also been taught to be suspicious of all the techniques we use to sell to them. They do not want or like the idea of being sold to.”
Quick says millennials like his son, Christian, 28, don’t even see themselves as susceptible to sales tricks, because they do their research. “He believes he makes informed choices based on the world of information he has at his fingertips,” explains Quick, stressing that being honest, transparent and authentic is critical.
And remember, he adds, it’s about the journey, not the product. “They want an experience. Provide one. Let your guard down long enough to allow them to see you. And above all else, listen. Everything you need to create a lasting relationship will be revealed if you listen closely.”
It’s also important to recognize, obviously, that not all millennials are the same. “In my experience, they very much resent being lumped into one large group,” says Peterson. “The story is important, but it’s their story that matters, not the product or the store’s story.”
Finally, retailers need to be online. “You have to be where they are, which is on social media,” says Mary Leipertz, marketing director at Carreras Jewelers. “You have to be consistently present on social media and not afraid to spend money on boosting your posts. Tell them a story and make it relatable to them.”
In today’s retail world, there’s no separation between physical and digital commerce.
“Although a customer may eventually buy something online, they want to see it and touch it,” says Brown. “Retailers have to have multiple channels with a flow of customers between them.”
Money seconds that advice. “E-commerce should not be viewed as something separate,” she says. “It’s most effective when it’s an integrated experience for the customer.”
In fact, the future of jewelry retail will depend on it, according to Peterson. “I’ve heard estimates that say if a store is not e-commerce-enabled today, it has no more than five years left to get there or risk obsolescence.”
While digital matters, local influencers are equally important. “We work with style bloggers in the area,” says Leipertz. “The bloggers end up doing a story on their visit, which we repost to support them.”
That kind of symbiosis works well for everyone. “If you’re a local retailer, local influencers are critical,” asserts Brown. “Using them and encouraging them to talk about their experiences also helps create Instagrammable moments.”
Chatelain agrees. “Local influencers are a great way to get new content to the websites,” she says. “School staff, politicians, celebrities, artists and even other businesspeople like brewmasters can help bring excitement to jewelry stores.”
With so many changes in retailing and consumer demographics, does the jewelry industry need to look outside itself for help in order to survive? No, says Chatelain.
“Outside people have not done well trying to improve this industry,” she maintains. “We’re still a bit of a cottage industry, and outsiders underestimate that.”
That said, the industry needs to change if it’s going to survive. “If the jewelry industry as a whole continues down the path it has been on for its recent history, it will probably do itself in completely,” says Quick.
Still, there is hope. “As long as the jewelry industry is comfortable being dynamic and adjusting when needed,” says Money, “it will be able to keep up with the constantly changing marketplace.”
Image: ShutterstockArticle from the Rapaport Magazine - November 2017. To subscribe click here.