Say Bye-Bye to the Good Old Days

By Rick Bannerot -- JCK Online, 3/1/2009 2:00:00 AM

After attending the Centurion Show in Arizona, where I talked to other attendees, went to seminars, participated in roundtable discussions, and listened to keynote speakers, several things are apparent. One and all painfully felt the recent holiday season, and the only certainty is that the future is filled with more uncertainty. The industry, as we knew it, is no more. The good old days are over.

How did the jewelry industry get into this predicament? One key element is that in pursuing reduced costs and streamlining the pipeline from source to retail counter, the role of the wholesaler has been essentially eliminated, to the detriment of the entire jewelry business. We have eliminated the middleman/referee/buffer zone/interpreter. In this process, we have lost industry wisdom and experience. Relationships between vendors and retailers are more strained, despite the cordial words, mild blandishments, and double-cheek air kisses.

Margins continue to shrink, and chargebacks—originally developed by department stores with their clothing vendors—are not only rampant but also demanded, regardless of the reason, by jewelry retailers. Foreign currency rates are more volatile, and commodity prices continue to rise and fall precipitously. Additionally, bankruptcies, mergers, layoffs, tight credit markets, 401(k) losses, and decimated retirement portfolios chip away at the last vestiges of standard business practices.

The jewelry business has sold much of its soul to the world of bean counters and merchants. We are in the middle of our winter of discontent, and it is unlike any other period in recent memory.

Bling, a word that should be banished from every jeweler's vocabulary, was notable for its near absence in Tucson, and rightly so. The extermination of conspicuous consumption by predatory banks and the flawed business practices of some of the world's most respected businesses should have been a clue to the corrupted values our Western cultures pursued with irrational exuberance. Instead, the jewelry industry desperately clung to conspicuous consumption like a drowning passenger grips a floating deck chair, selfishly failing to innovate with fresh product, creating no new distribution methods, and turning our backs on contemporary sales training techniques. Little wonder we are floating among the wreckage.

However, there were fresh designs at salable price points at Centurion. Quality standards were solidly in place, and jewelry was colorfully bright, carried significant eye appeal, and radiated excellent perceived value. Vendors and retailers were sitting down with service providers to discuss new e-commerce strategies and ways to do better business on the Web—now more than a threat to their business, but an economic reality. It was an excellent example of Darwinian principles at work.

There was a palpable shift in attitude of the participants over the course of four days in Tucson. Like a boxer shaking his head to clear the cobwebs after a sharp right cross, participants on both sides of the negotiating table started to get down to business and work out new strategies and tactics for doing business together. Time and again you heard the words partnership, cooperation, and common good being used.

The survivors started to reach out to each other and help one another into the remaining lifeboats. By the time the Pointer Sisters performed “Jump” on the last night, a new wave of warmth and energy could be felt among those gathered under the tents in the desert. All was not lost, and in cooperation and selflessness, a spark of hope was ignited. As painful as this correction is, maybe this awful-tasting dose of medicine is what we need to heal ourselves. Let's hope that, sometime soon, we can look back at February 2009 as the collective mental bottom of this economic morass and the beginning of a new paradigm in jewelry sales. Together, we can make it through and be better for it in the long run, if we can continue to find new ways to communicate as partners and peers in this business, not just competitors for the almighty proceeds of bling.

Rbannerot@aol.com

Author Information

Rick Bannerot is a luxury goods and jewelry marketing consultant in Stamford, Conn. He has held key advertising and marketing positions with World Gold Council, Mayors Jewelers, Hill & Knowlton Public Relations, RolexWatch USA Inc., and Kenyon & Eckhardt Advertising.