Digging into JCK‘s archives, I stumbled upon the July 1984 issue, which contained a feature article that began like this:
From Hartford, Conn., to San Diego, Calif., discount competition has become a daily reality for thousands of jewelers and other independent retailers. A recent poll of jewelers coast-to-coast by this magazine found out that almost one in five says price-cutting competition is “very severe,” while another 37 percent list it as “severe.” What really hurts them [jewelers] is the plague of phony discounting that’s arisen next to the legitimate discount. It does nothing for jewelry’s good name that this form of competition has forced some jewelers to adopt phony pricing themselves.
Sound familiar? Today, as websites like Groupon, Blue Nile, and their flash sale cousins gain more influence in the marketplace, what are jewelers doing to keep up? Is discounting still an issue in 2011? Why not borrow a page from the industry, c. 1984, to help solve the problem?
Here are the tips that JCK offered 27 years ago to help jewelers reevaluate pricing strategies:
- Examine your store’s target market and the competition’s target market.
- Do some research to get a clear idea of the customer you want to go after.
- Go to a university and see if you can get a class to do a study of your market as a term project.
- Emphasize value—and provide it (i.e., department assortments/expert service/extended store hours).
- Convey the message to the marketplace by putting a good ratio of your cash into your ad budget.
- Be a better businessperson. If you can’t afford to be price-competitive, find a better way to do what you do.
The feature also had a sidebar that compared jewelry markups compared to other industries. In 1984, jewelers’ average gross profit margin was 46 percent, which translated into a markup of 85 percent. At the time, that figure was either consistent with or better than garment and restaurant businesses. Do you think that still applies today?