The Power of the Private Label

“Our store brand is our face in the market, the one we want people to know. So we try to do as much as we can to support it with our private labels, blending them with the store's strategic interests and advertising.”

So says Virginia Beach, Va., jeweler David Nygaard. Like many jewelers, he uses private-label products—made by or for the jeweler and bearing the store name or trademark—to successfully imprint his store brand in consumers' minds. As he told the Virginia-Pilot in July 2006, “A jeweler needs a strong identity to separate [himself] from the pack.” Nygaard tells JCK that he believes in supporting that identity by “our own brand's qualitative distinctions, rather than being value driven, like chains and mass merchandisers.”

His strategy has been successful enough that, over the last two years, Nygaard expanded from one store to six.

St. Louis jeweler Michael George has sold his own branded products since the late 1980s. “Private-label is significant, because we're putting our name on something, setting us apart from other vendors,” he says. “It enables consumers to look at us with a different eye, to see we don't have what everyone else has. There's prestige and advantage in having your own named line instead of someone else's branded product, whose pricing you can't control, making you less competitive.”

“When one shops in a mall, it seems every store comes from the same cookie cutter, with variants of the same merchandise,” notes Alan Grunwald, president of Belair Time, a leading manufacturer of private-label timepieces. “But independent jewelers are different. They offer unique products and personalized service. They need to tell that story, and private branding is the avenue to do so.”

Self-branding is something major retailers have done for generations. What are “Cartier” and “Tiffany,” after all, but private-label brands of jewelry stores successfully impressed on the public consciousness through their products and marketing. More recently, regional jewelry chains have set themselves apart with proprietary lines, diamond cuts, and products. More independents also see the value—and profit—in that. A 2004 JCK national survey of hundreds of jewelers found that two out of five had private-label products, and three out of five expected their sales to keep growing through this decade.

Private-label merchandise supports a store brand with exclusivity, prestige, and quality control, say jewelers.

Exclusivity is a significant competitive advantage. As jeweler Sandi Dahlquist, Poulsbo, Wash., notes, “Other stores don't have it, and it can't be price shopped.” That brings in customers, both regular and new. Says Elizabeth Parker, of Curt Parker Jewelers in St. Louis,“Our CAPI jewelry is signature pieces you can only get at our store. People who see it on friends and want it must come here for it.”

Consumers want items that are different, not generic, says Oklahoma City jeweler Arthur Gordon, who makes his own award-winning trademarked jewelry. “They see the same things everywhere, because more jewelry manufacturers sell the same designs under different names to guild stores, major chains, and mass marketers. We prefer to have things unique to us, that associate us in customers' minds with beautiful designs they can't get elsewhere.”

Private-label exclusivity also helps watch retailing. Grunwald says private-label watches fit neatly into store branding. “With the right high-quality watch, a private brand can protect a jeweler's profits while enhancing the store image,” he says. “Nothing is more embarrassing for a jeweler than to sell a brand-name watch to a customer who later sees it for less elsewhere. Such customers can be lost forever if they think the jeweler isn't competitive, and they may think twice when it's time to purchase a special diamond or expensive bracelet.”

Grunwald says the Internet is devastating to jewelers selling brand-name watches because it makes it easy for consumers to price shop. “Private-label watches, though, can't be price shopped, which protects the jeweler's margin,” he notes.

He also believes private-label watches are subliminal marketing tools. “How many times a day does someone look at his watch? If your store name is on it, how often does the wearer see it? When it's time to buy jewelry, who will that person think of?”

Private-label merchandise also helps jewelers address quality issues. “Many people are looking for quality in jewelry and not finding it, because many jewelry manufacturers use mass-production methods or have items made overseas, and the quality control isn't there,” says Arthur Gordon. But, with private-label wares, notes David Nygaard, jewelers have “more control, from quality to the ability to better service what they sell.”

Many jewelers say the attention they give to products with their own label ensures that customers get more for their money. “We don't use cheap materials in our jewelry,” says Elisabeth Parker. She also notes that eliminating intermediaries keeps costs down. “When someone spends $1,000 on our CAPI jewelry, they get a better value.” The CAPI label has several thousand original designs.

For such reasons, many jewelers are doing less with commercially branded jewelry and watches and more with self-labeled products.

San Antonio jeweler Ted Resnick, of Reznikov Jewelers, has manufactured jewelry of his own design stamped with his RFJ logo for 17 years. “We prefer to promote our own brand,” he says. “In a town with 300 jewelers, it helps set us apart. We're noted for using the highest-quality gemstones and materials, which also sets us apart.”

Nygaard's private-label Passion Fire pieces are designed in-house and manufactured outside. Passion Fire, which grew out of his Hearts Amore and Ageless Fire Ideal-cut diamonds, is “designed to be fast-selling, with triple markup, and three to four turns, leveraged with marketing and advertising,” he says.

MSG Jewelers in St. Louis recently added a private-label line of 18k white gold and diamond rings, manufactured for it and hallmarked with its name and logo in the ring shanks. “More jewelry manufacturers are offering jewelers private-label jewelry,” notes owner Michael George.

The store has also sold for 17 years MSG Originals, one-of-a-kind designs it guarantees won't be duplicated. They include ready-for-sale items and designs awaiting a buyer. They're marketed through in-store displays and promotions and occasional ads.