Rapaport Magazine
Markets & Pricing

Memo still popular

The consignment model lets jewelers stock a more varied range of goods. Meanwhile, classics and custom are solid sellers.

By Lara Ewen
When it comes to keeping inventory fresh, the decision of whether to do business on memo has proven to be a matter of personal preference among retailers. While most agreed that memo was almost always the model of choice for loose diamonds, opinions differed when it came to branded product. Still, shoppers have been customizing even branded, finished pieces, retailers reported, since every customer wants something special.

Up-front or pay later?

For some store owners, keeping a balanced inventory assortment means availing themselves of all the purchasing options at their disposal.

“We do a mix of memo and up-front purchases, with a strong emphasis on memo,” said Jessica Rossomme, director of operations at Mucklow’s Fine Jewelry in Peachtree City, Georgia. The consignment method allows her store to experiment beyond what it might traditionally purchase as stock, she explained. “Developing that strong relationship with our memo vendors gives us access to both the entirety of a line for special requests, and [the opportunity] to view options without obligation.”

Waterfall Jewelers’ two stores in Michigan have a mix of memo and purchased product, according to co-owner Joe Strong, and each option has its benefits and drawbacks.

“You get a little better pricing by buying [inventory] outright,” he said. “But most of our diamonds are on memo.”

Memo is better for cash flow, Strong noted. “You could have half a million dollars [worth of memo items], and that frees up a half million dollars in cash for other things.”

Still, some retailers prefer to purchase their inventory outright.

“I don’t personally like doing business on memo,” remarked Keith Hurdle, owner of Hurdle’s Jewelry in Boulder, Colorado. “I think you have to handpick your merchandise. Pay for it. You’re more invested in trying to turn the product at that point. With diamonds, that’s a different story. But I don’t like memo from a designer. It just doesn’t sit well with me.”

When he buys outright, Hurdle — who primarily works with smaller designers — gets to choose the pieces he wants. “With lot of these companies, when they want to do a big memo, and they pick what they want you to have. By picking what we want, it may be two or 10 pieces from one particular vendor, or 50 from another vendor.”

What clients crave

The majority of Rossomme’s clients are interested in design and price point over brand name.

“Usually, the purchaser has something in mind when they walk in the door,” she said. “[But] as much as they may fall in love with the style, if the price is far outside what they had in mind, that factor tends to make the final decision.”

Classic styles such as diamond studs and plain silver continue to be most popular in her store, which caters to a more conservative customer. Customization can be a selling tool, she added. “Some clients love this option, as they feel more a part of the creation process. But others are overwhelmed by the choices.”

For retailers, the inventory mix identifies the store in a customer’s mind.

“You’re the brand,” said Strong. “When they come into your store, they’re going to listen to your expertise. That helps sell brands within our store.”

Basics such as stud earrings, in-line tennis bracelets, and simple classic pendants were selling well for Strong, as was bridal. Classics like solitaires were popular as well, and lab-grown was on the rise.

“There’s no way around it,” he said. “Lab-grown is huge right now. Even things that we normally never stocked in lab-grown, now we have to get it in, because that’s what people are asking for.”

Strong also carries some unbranded products, but most of his offerings are branded. “It gives [customers] a little more confidence, buying branded things,” he said. “Not only for the name, you know, but also, they associate brands they’re familiar with, with quality and value.”

Finding the right designs

One big inventory challenge, said Hurdle, was finding unusual designs. “There’s a lot of copycat out there. Somebody gets hot, and everybody else jumps on the bandwagon. So to find somebody who’s distinctive and unique is getting harder.”

Strong agreed. “You have a couple of vendors that will lead the way, and then everyone kind of follows suit,” he said. “Then each brand has a little niche within that design. But if something’s working, someone’s going to copy them.”

By the numbers
  • In June, Swiss watch exports to the US market increased 18% year on year to CHF 324.6 million ($335 million).

  • The global luxury industry grew by almost a fifth at the start of 2022. Sales increased by 17% to 19% year on year in the first quarter; at constant exchange rates, the growth was between 13% and 15%.

  • Revenue for US jewelry sales rose 16% year on year in June. Online surged 98% compared to 2019, with brick and mortar advancing 11%.

  • The number of crimes against US jewelers rose 17% in 2021 to 1,687 events, compared with 1,438 in 2019. However, the value of losses declined 31% to $70.1 million.

  • In June, sales of clothing and accessories — including jewelry — rose by only 0.2% year on year. Revenues for the segment slipped 0.4% from May.

Sources: Federation of the Swiss Watch Industry, Bain & Company, Mastercard SpendingPulse, Jewelers’ Security Alliance (JSA), US Census Bureau

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

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