Like many other jewelers, the economic crisis of 2008 triggered a round of soul-searching for the people at Lee Michaels Fine Jewelry.
“We started looking at how we were going to evolve,” vice president Scott Berg says. “This isn’t the first time we have been through something like this, and we felt that we either had to move forward or die.”
So the eight-store Baton Rouge, La.-based chain decided to do what others had done: branch out into gold buying. But Lee Michaels did it differently. Instead of taking in scrap at its main stores, in 2009 the company opened up a separate gold buying retail chain under the name Louisiana Gold Market.
“We wanted to keep the businesses separate,” Berg says. “We didn’t want to tarnish the brand that we built for 25 years, but we wanted to use the expertise we had.”
Louisiana Gold Market now comprises eight stores throughout Louisiana—one of which goes under the nameplate Baton Rouge Gold Market—the same number as Lee Michaels stores.
The two businesses have no connection, Berg says, except on the back-end.
“We have advertising relationships that we use and leverage off,” Berg says. “We have relationships with the mall properties. But as far as personnel, branding, anything else, it’s completely different.”
All of which means, at a time when the industry is contracting, Lee Michaels has significantly expanded. The company now numbers 18 storefronts—eight of its traditional stores, eight gold buying outlets, and two Pandora concept boutiques.
“We will probably have our best year in our history this year,” Berg says. “It’s about diversification, about trying to continue to look ahead and innovate.”
He notes that all the money from the gold buying chain is now re-invested into Lee Michaels.
“It’s allowed us to take on a new store in San Antonio,” Berg says. “It’s allowed us to take more risks in our core business.”
“Around here, we always say, ‘Stick to your knitting.’ Our core strength has always been customer service. So this allowed us to take that and leverage it in a different business.”