Diamonds and Rubies and Pearls, Oh My

“Toto, I don’t think we’re in Kansas anymore!” Those prophetic words from Dorothy Gale in TheWizard of Oz should resonate with jewelers, especially those who count bridal jewelry as a cornerstone of their business. The jewelry industry is in a state not so different from Dorothy’s house being picked up by a tornado and plunked down in a strange new landscape: razor-thin margins on diamonds, gold over $600, and platinum pushing $1,300 an ounce.

Can you spot the Tin Men, Scarecrows, and Cowardly Lions in the retail jewelry sector? Before you start naming names, don’t be so sure you don’t fall into any or all of these stereotypes, the ones where the characters lack heart, brains, and courage. It’s time to tear a page from the great wizard’s playbook and start to take stock of ourselves and challenge the status quo. Are you the kind of retailer you wanted to be five years ago? What kind of retailer do you want to be five years from now? Are you constantly challenging yourself and your store to improve, or are you sitting around hoping a house doesn’t land on your head?

Read JCK‘s September issue on the “State of the Industry” (or access the story on www.jckmagazine.com and print it out) and highlight everything that applies to your business. Smart people from inside and outside the industry are saying the same thing: Wake up, question every assumption, challenge the norms, innovate, and do it sooner rather than later.

The buoyant economy of the past few years masked the fact that many traditional jewelry sales channels are living on borrowed time and have been for a while. Easy credit and readily available loans are pushing the entire industry into the poppy fields that put Dorothy and company to sleep. Yes, overall sales of gold and diamonds have improved, and Swiss watch imports are still breaking records, but they’re fueled by the growth of “new” channels of distribution (big box retailers and the Internet) and at generally lower price points and with smaller margins. (The average U.S. gold jewelry transaction fell from $90 to $75 in the past decade, according to World Gold Council research.) Sales of other discretionary-income goods are growing at much faster rates than jewelry. We may be on the yellow brick road, but we’re getting clobbered by the trees in the forest.

We’re harvesting what we have sowed. What does it say about the jewelry industry if large U.S. retail jewelry chains actually promote $79 and $89 pairs of diamond studs as their lead Mother’s Day item? What possible good can come of this? (Hint: It’s counterproductive to build foot traffic when you make a poor impression on a bunch of new customers.) Think of what this says to prospective customers about the quality of the rest of the jewelry we’re selling. We’re dumbing down our own image—and the image of the product we sell—to unheard of levels. If you aim low, you won’t hit high.

You need the courage to turn up the marketing volume and ask for the business. You have to use your brains to do research and know the right product for you and your customers at price points that support your ability to stay in business. You need to share your passion for the exquisite and show your heart, or else you’re just merchants flogging charcoal chips masquerading as diamonds set virtually in tin. At this rate, it won’t be long before retail jewelers are selling feathers, wooden beads, and shiny bits of low-end colored stones strung on a cord.

It’s not all gloom and doom. Everything worked out for Dorothy and her companions once they realized they believed in their own hearts, could think for themselves, and had the courage of their convictions. Retail jewelers need to be Wizards of Ahs, not a bunch of Cowardly Lions afraid of their own tails. So follow your heart, use your head, and have the courage of your convictions as you click your ruby slippers and negotiate the 18k yellow brick road on your way to the Emerald City.