There seem to be two different approaches to the marketplace as many retail jewelers respond and react to today’s economic conditions. One camp is firmly set on cutting back on marketing and advertising costs and trading down in price and quality in what they sell to their customers. This strategy seems to be the dominate play. Retailers are rightfully cautious about what type of jewelry their customers will purchase and what sort of price they will be willing to pay. For these jewelers the JCK show will represent a chance to find products that represent a better fit for the type of value (quality and price) their customers are going to be looking to pay for in these economic times. This merchandising strategy still purchases many of the same designs, but the designs are made up with less total material cost. That is why I refer to this as trading down. The item still constitutes the same design and style, but it is less expensive.
The second approach is the exception in today’s marketplace and refers to the retail jeweler that is going to sell more value through trading up. Trading up refers to offering jewelry that is higher in quality and price and is supported with even more sophisticated added value services. These jewelers are targeting the upper-end income individuals who have always been capable and interested in purchasing luxury jewelry . . . even in these tough times. Some of these customer types just need the encouragement and support that this is an appropriate time to purchase luxury goods . . . including high end jewelry. These companies are spending the same or more on advertising and marketing. They are continuing to expand their capabilities to provide upscale product presentations and understand the necessity of delivering outstanding luxury product shopping experiences. Their in-store marketing is based on creating impact and excitement that is very exclusive.
Both concepts still require a store environment that engages shoppers and makes people want to try on jewelry. And both approaches must present jewelry that meets their customers’ own individual approach to fashion and personal expression.
When selecting your purchases at this year’s show be sure that the products you purchase are ones that your sales staff is competent in selling. The need to continue to provide an outstanding shopping experience is also based on the face to face exchanges that shoppers have with store personnel. Now more than ever, make sure your marketing, merchandising and sales are all cohesive and complementary. What you promise in an advertisement is what you must deliver in the store shopping experience. Whether you decide to trade up or trade down, the real key will be how effectively the merchandise inspires your store’s current customer base to make a purchase and how effectively the merchandise can be sold by your store’s current sales staff.
Most of us have had our purchase habits influenced in one way or another during these challenging economic times. Even those customers who have not been negatively affected by the economy still need positive encouragement to make those conspicuous consumption purchases. Don’t assume that your customers aren’t feeling that this may not be the right time to buy luxury goods. Of course many of your store’s shoppers are going to make a purchase . . . with the right encouragement and the right buying environment and the right sales presentations of the right merchandise in the right price ranges.
The key is to know the right type of merchandise to purchase before you ever pack your bags for the show.
Understand what price ranges and what type of products you need to have available to offer to your current customers. Examine your current inventory and ask yourself if there are products not represented in price ranges that customers would purchase.
Figure out what selling price you need to achieve and what sort of margin you need to earn. Go to the show looking for these specific types of products and don’t let yourself get sidetracked with products which speak to you as a jewelry connoisseur rather than your targeted customers.
Don’t start with the suppliers’ price and then think about mark up. That is the quickest way to not get your right margins and profit.
Start with the right price that you need to sell at and then find the jewelry merchandise that is offered by suppliers that will allow you to earn the margin you need.
Everyone needs more product turns these days. However, using the old methods of buying and pricing won’t get you where you need to be. Start out by identifying what sort of items you want to sell and at what price points. Then go to the show and keep searching until you find the right products, with the right eye value, in the right designs that your current customers are looking to purchase; products that offer you the right margin and profit.
Stop by my presentation on Visual Merchandising on the Thursday the 28th. We will address positioning products by price range in your display counters among other topics.