Rapaport Magazine

Cutting Out the Middleman

As buyers seek greater personal contact and shop more online, many jewelry brands are bypassing wholesale in favor of selling directly to consumers.

By Lara Ewen

When it comes to consumers, connection is key, and over the past few years, that connection has increasingly been direct. More jewelers are selling their own brands straight to shoppers — whether online or at their brick-and-mortar locations — rather than distributing their wares wholesale through multi-brand retailers.

And people are buying. In 2021, some 60% of Americans shopped at a direct-to-consumer (DTC) brand, according to the 2022 Direct-to-Consumer Purchase Intent Index from PR company Diffusion. While that number is down from 79% in 2020, it still represents a significant market share.

Furthermore, branded fine jewelry is on an upward trajectory, says the June 2021 State of Fashion report by luxury magazine The Business of Fashion and research firm McKinsey & Company. That report predicts a compound annual growth rate of 8% to 12% from 2019 to 2025 — approximately three times faster than the growth of the total market.

The numbers highlight a trend in fine jewelry — and in fashion generally — of developing deep relationships with consumers, and the McKinsey report suggests that trend will only grow: “Competition between established luxury jewelry brands, fashion brands, and new direct-to-consumer companies will heat up as players compete to win customers who are turning toward brands that reflect their distinct points of view.”

The missing link

Of course, some brands have known this for years.

“We started with vintage and antique, and we realized we were missing something,” says Elizabeth Doyle, cofounder of New York jeweler Doyle & Doyle, which opened in 1998. “We could not get what our clients wanted.” She launched her store’s Heirloom by Doyle & Doyle collection with the aim of offering accessible price points. “We try to do vintage and antique in a way that feels new and fresh. We wanted our branded merchandise to match that.”

Brian Gavin, CEO of an eponymous online store and a brick-and-mortar showroom in Houston, Texas, made the decision to start a DTC line 13 years ago, having just parted ways with his previous online company, White Flash. The fifth-generation diamond cutter tapped into his family’s years of experience in the jewelry business to build his new brand. “There’s an immense history here,” he says. “De Beers has history, and we claim history, too, especially in a market like this, where there are so many choices. Consumers know our history and our company.”

Yet until fairly recently, smaller companies like Doyle’s and Gavin’s had to rely on retail partnerships to create relationships between themselves and consumers.

“For the last 20 years, only powerful brands could go direct to consumer,” says Marie Driscoll, managing director of luxury and fashion at consulting firm Coresight Research, which specializes in retail and technology. “Part of the benefit of being in a department store was being discovered. Now you can get discovered online or discovered in hotel lobbies, and there are a lot of digitally native brands. Consumers are using online for shopping and are comfortable with discovery there.”

“There’s a limited supply. Customers won’t see it everywhere else. And I can control the pricing”

Connecting on the web

The pandemic further accelerated the move to online buying, notes Driscoll. “[Brick-and-mortar] stores were closed, and even when they reopened, there’s been social distancing. Stores like Tiffany & Co. are large [spaces], but many stores are not, so you don’t necessary feel safe in them.” On top of that, she points out, “there are [digital] advances where you can virtually try things on, and you can work one-on-one.”

Capitalizing on digital connections has allowed a lot of smaller companies to compete online.

“People have gotten so much more comfortable buying products they haven’t seen,” says Doyle. “Virtual appointments became a thing, and people loved them. It’s expanded the location of our clientele dramatically. Now the majority of our clients are not New Yorkers. And the sales on the site have gone way up. Our branded merchandise has gone up even more than our vintage, because we have more of our branded inventory in lower price points, and we have more giftable items.”

Gavin, too, credits the web with expanding his client base.

“People see us as a brand, not a store,” he says. “I think with a store, you’re servicing clientele within a certain area. The medium of the internet allowed us to build a brand.”

Online diamond jewelry sales overall have doubled statistically in the last four years, according to Mike Simoncic, managing director at Alvarez & Marsal Consumer Retail Group. That bodes well for fine-jewelry brands considering a DTC move.

“Clearly the pandemic drove everyone to more online buying, but it especially carried forward in jewelry,” he says. “And consumers are doing a significant amount of research online before they go to a store.”

Finger on the pulse

Being able to identify specific consumer needs and pivot quickly to meet them keeps DTC brands nimble, says Driscoll. “Direct-to-consumer brands have a relationship with the consumer. They get immediate feedback, and they know who their customer is. They see what consumers buy and what they search for.”

Indeed, Doyle does all her marketing via social media and says the customer interactions help her build her brand. “It’s a continuous feedback loop. They’re telling us what they like, and we’re learning.”

Shoppers’ relationships with multi-brand stores are different, observes Driscoll. “A buyer in a department store has a wide variety and assortment, but a lot of it doesn’t sell.”

In that vein, Simoncic believes the decision to go DTC should be based on demand. “The question ultimately is, does a brand have power to drive traffic to your store?” he says. “Retail used to play the role of the trusted adviser and the intermediary between consumer and product. But the digital environment replaces or augments the need for that, and the role retailers play is really not needed in the same degree, now that the producer of the product can share directly with the consumer [and] get product directly from the manufacturer.”

For many consumers and brands, it also comes down to value, he adds. “Taking out the middleman markup, the manufacturer can get a higher markup. The experience of the consumer is that they’re getting more for their money.”

Calling the shots

Another big benefit for brands is the control DTC gives them, says Doyle. Having her own consumer line means she gets to determine her message, price point and market saturation.

“The last year we wholesaled was 2013,” she recalls. “To tell the truth, we never really tried. It’s a lot of work that we’d rather put into our core business.” Now her brand purposefully produces in small batches. “There’s a limited supply. Customers won’t see it everywhere else. And I can control the pricing.”

Still, keeping price points steady is a challenge. “We try to keep prices really fair, so sometimes the profit is tight,” admits Doyle. “We don’t want our prices to fluctuate. We don’t have sales or change our prices.”

Gavin is less concerned with price points, but agrees that wholesaling wasn’t worth the effort. “We wholesaled in the past, but now we are the only place [that sells our jewelry],” he says.

Of course, being solely responsible for his brand comes with other complexities. “You have to finance it yourself, and you have to control it and make sure the branding message is always on target,” he explains. “Will everyone pay the price we ask? No. But not everybody buys a Porsche. We’re for the diamond geeks, the diamond-philes who want that perfection.”

“The medium of the internet allowed us to build a brand”
Brian Gavin

Moving with the times: Anna Sheffield

Anna Sheffield started her fashion jewelry line, Bing Bang, 20 years ago, “when I first got out of art school,” she recalls. “It was my first rodeo. Back then, you didn’t start a brand and open a store. You built an alliance with a retailer like Barneys.”

When she launched her first website in 2008, retail was turbulent, and her sales suffered. “A lot of department stores were closing. I saw Bing Bang go from high volume to something else.”

So she decided to shift her company’s infrastructure. “We went from wholesale to having a website,” she says. When she later launched the Ceremonial collection from her new, eponymous fine-jewelry label, “it was fully hinged on direct-to-consumer.”

Being independent is sometimes challenging, she acknowledges. “My scale and pace for growth is specific to my budget. I have to pick and choose my battles, even with manufacturing. We need marketing, visual merchandising, and inventory. And human resources is such a huge part of it.”

Still, even the bumps along the way have been educational. For instance, her web developer once accidentally published her private showroom address online. “People started just showing up,” she says, laughing. “But at least that showed demand. That was the seed for me to open a brick-and-mortar store [in New York].” She has since opened another store in Los Angeles and done pop-up events across the country.

Sheffield aims to cultivate more high-end clients. Some of her customers are “really willing to invest” in expensive pieces, she says, “and I want to make showstopper jewelry.” She’s also focused on sustainability and community-building through her Future Heritage Fund, which supports nonprofit organizations in New Mexico.

Her best advice is not to take too much advice. “If people tell you what to do, take it with a grain of salt. Do what feels right, even if you fail. I’ve had whole collections I was dying to make that didn’t fly. Sometimes you find yourself completely off the map, but I love that. I think I strive for that. I love being in that space, being in that no man’s land.”

Images from left: Elizabeth and Pamela Doyle; Brian Gavin; Anna Sheffield


Article from the Rapaport Magazine - April 2022. To subscribe click here.

Comment Comment Email Email Print Print Facebook Facebook Twitter Twitter Share Share
Tags: Lara Ewen