Manufacturers/Designers Opening Their Own Retail Stores

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.

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.

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).

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.