The manufacturers and designers are not making enough money to stay in business so they think they can open a retail operation to fix things. They are all doomed.

One of the reasons Josephs in Des Moines Iowa does not support any designers is we saw this trend with Tiffany. Tiffany built their local followings by supplying strong independents with their line. Tiffany eventually opened up in those local markets taking sales away from the independents who established them in market. When Josephs opened an 18,000 sq ft superstore in Des Moines Iowa, we made the decision not to any designer merchandise. Since opening we have increased sales each year and enjoy healthy margins. The business model relies on a good reputation in the community for honest value and quality jewellery as well trained sales associates who do not need designer gimmicks to close a sale. We promote our three stores in Des Moines as the Josephs brand and do not dilute he message by promoting additional messages (exception Rolex).

Although opening of retail stores by manufacturers/designers is not a surprise to me, I believe that it is the (unwritten) responsibility of all manufacturers/designers to keep the interest of their retail partners in the forefront - not just for the short term but for the longer term. Designers/manufacturers depend and should be thankful of the partnership with the retailer partners to help build our brands and hence I believe us designers/manufacturers if treading into the retail must make sure that our designs, prices, retail locations etc does not affect our retail partners. If there is any doubt about negatively affecting retail partners such activity must at all costs be avoided.

Just about every industry that deals with consumer products is driven by the manufacturer’s brands, electronics, computers, clothing, cosmetics and watches. Brands compete through retailers. In most other countries where jewelry is sold the retailer is generally the manufacturer. In the US there are very few brands like Yurman & Rolex that can protect their margins, retailers drive the industry and in the last 5 years margins have dropped below a sustainable level to stay in business. Additionally the biggest majority of retailers don’t pay well further reducing margins. Look at how many retailers manufacture jewelry through contractors & casters. Expect changes from each side, pick the suppliers whose business models are value added and sustainable. Expect that Sterling Jewelers will become a sightholder in 2008.