Getting a Fair Share of Luxury Spending
By Huw Daniel, president, Platinum Guild USA -- JCK Online, 10/1/2007 2:00:00 AM
Every purchase of a $900 flat screen TV and $2,500 designer handbag raises the question, “Why wasn't that a jewelry purchase?”
Perhaps we need more aggressive marketing programs, exploring new niche target markets via small-scale tests, like baby-boomer bridal remounts, push gifts, or same-sex commitment jewelry.
What customers say is not always what they do; hence many spend far more than they said they would for a house, a car, or a vacation. Platinum Guild International's nationwide and ongoing mystery shopping program shows customers too often aren't buying their first choice in platinum engagement rings and wedding bands—but not because they're not prepared to pay for it. The reasons are the in-store selection is too limited, or they were shown a cheaper alternative first, trading down to a lower ticket sale, not what they wanted.
A simple e-mail to an engagement ring customer six months later may be all it takes to convert an engagement ring sale into a higher-value three-ring sale.
Many worry that increasing transparency is undermining diamond margins. True, but that misses the point brought home to me by a reputable buyer at the recent JCK Las Vegas show. She told me at least 30 percent of her bridal sales must be in platinum, because she can't make her numbers through lower-price unit sales. In other words, margins and dollars are in the setting. Remembering that bridal is a zero-sum game—ideally, a onetime purchase for the happy couple—to whom are we doing a service by selling anything other than the best? Not the couple and not our industry. PGI's research shows owners of platinum bridal jewelry are prone to buy more, so platinum bridal can be a springboard to incremental high-ticket sales across the customer life cycle.
Back on Main Street, Louis Vuitton doesn't worry about charging $2,500 for a handbag destined to last a season or two. The raw material–to–price equation, an obsession in our industry, never enters the discussion because it sells value, not price. Value comes from the beauty of the piece and the powerful reputation of the brand, and lives in the realm of perception and aspiration.
By focusing on the emotional value of an object, and how it is going to be used, we don't need to burden the customer with our concerns about rising and fluctuating material costs. After all, what purchase is more emotional than a ring that says “I want to marry you,” and two bands that say “I do”? By shifting the focus of the sale from the price of the parts to the emotional value of the whole, the jewelry industry has a better chance of getting its fair share of those luxury dollars currently finding their way to other doors.
