Rethinking Gold

Now that gold has broken the $675 an ounce barrier for the first time since 1980, you should reassess the role gold jewelry plays in your merchandising mix, and make sure you understand gold's brand characteristics.

“Gold” is not a singular concept in the consumer's mind; it assumes different attributes based on karatage, sales environment, advertising, and customers' incomes.

Gold jewelry ranges from the cheap and cheery world of 10k Disney character charms found at discount malls and jewelry kiosks to the rarefied elegance of a 24k handmade necklace by Gurhan found in the finest department stores and high-end retail jewelers. Advertising ranges from newspaper circulars promoting “50% Off!” to ads in luxe publications like Town & Country. Gold jewelry is segregated into categories, and marketing efforts for gold's three basic U.S. karatages (10k, 14k, and 18+k) need to be as different as GM's marketing for Saturn, Buick, and Cadillac.

Ten-karat gold is the new costume jewelry, a disposable commodity purchased for looks, not value. Consumers of 10k tend to be younger, less-affluent women. If this doesn't describe your key customer, consider upgrading your karatage assortment. If you're a small independent store, try carrying some 10k, but look for fresh, fashion-forward designs in 14k gold jewelry to differentiate yourself from commodity gold sellers. Try 14k product that's big and bold but lightweight. Leave newspaper ads touting “50% Off!” to the chains and bigger retailers. You can't compete on price; you must offer better product, sales help, and contemporary designs.

Fourteen-karat gold is the American sweet spot, usually found among quality Japanese watch brands like Citizen, less-expensive premium Swiss watches like Movado, and modestly priced colored stone and diamond jewelry in malls and shopping strips. Macy's, Kay Jewelers, and midsize independent retail jewelers typify 14k sales.

In stores selling 14k product, sales help is usually available, but product knowledge is limited because staff turnover is higher than at guild stores. Your key gold consumer, according to World Gold Council research, is a middle-age, middle-class woman who prefers yellow gold. The typical consumers of 14k white gold are slightly younger women in the middle to upper-middle class.

The heart of 14k gold jewelry sales is sentimentality with a touch of fashion. Wedding rings, lockets, and charm bracelets should be in every jeweler's inventory, as should good-quality omega, Figaro, wheat, curb, and rolo chain necklaces and bracelets.

Gold jewelry in 18k and higher is usually associated with brand-name jewelry designers like Roberto Coin and Alex Sepkus or premium Swiss watch lines like Breitling and Omega. Hamilton Jewelers, with stores in Princeton and Lawrenceville, N.J., and Palm Beach, Fla., and Bergdorf Goodman in New York are examples of stores that typically carry 18k gold. Salespeople usually are well trained and have many years' experience.

Women who buy 18k gold tend to be more affluent and fashion-forward than their 14k counterparts. Retailers of 18k designer products should collaborate with key brands on cooperative advertising in local and regional editions of fashion and lifestyle publications while developing their own catalogs and direct-mail pieces.

Small, middle-tier, and upper-tier independent retail jewelers need to increase the quality of their inventory to help differentiate themselves from department stores, chain jewelers, and discounters. The key opportunity is pushing fresh design and good variety at point-of-sale while avoiding blanket discounts. Conduct sales training with materials from World Gold Council and gold jewelry manufacturers. Group gold karatage product consistently in cases, and call attention to branded product by decorating cases and windows with names and logos of designers and manufacturers. Develop plan-o-grams and window concepts that highlight new gold selections. Maintain an aspirational tone to messages about gold. Finally, target affluent gold enthusiasts—they understand that gold is one of life's great luxuries.