The prolonged recession has affected the jewelry industry in numerous areas, and one of the biggest is pricing. Deep discounting used to be the domain of jewelry chains and mass merchants, but today many independent jewelers also discount to appease cost-conscious consumers who have learned to seek out sales.
But other jewelers are defying the trend. While acknowledging they may lose a few sales to discount-happy shoppers, they believe alternate strategies will pay off when the economy turns around.
According to retailing expert Jeff Taraschi, president of IGL Ltd., St. Petersburg, Fla., independent retailers can implement other strategies to retain existing customers and attract new ones. These include offering custom work and custom services, free watch batteries for the life of any watch purchase, trade in/trade up programs, trunk shows, and unique collections with built-in appeal such as a collection for special anniversaries.
The Internet provides other opportunities. For example, Taraschi says retailers could run e-mail campaigns to alert customers to the arrival of new merchandise, or even hold an online design contest where people vote on new merchandise.
He also suggests holding seasonal seminars with the store owner as the expert offering consumers advice on the latest jewelry designs and how they relate to fashion and accessorizing. These are most effective if linked to major red-carpet events like the Academy Awards or other occasions such as fashion weeks.
One key to maintaining sales, margins, and market share without resorting to discounting is to focus on clienteling, says industry trainer and consultant Janice Mack Talcott, owner of Janice Mack & Associates, Olympia, Wash.
Talcott notes that many retailers fail to reach out to customers on a regular basis despite ample opportunities. “Most stores think of clienteling as cold-calling,” she says. “But when done right, it is very specific, targeted to cleanings several times per year, special occasions, special offers, events, and other things to get them into the store. It’s all about making them feel special.”
Holly Wesche, owner of Wesche Jewelers, Melbourne, Fla., grew up in the family business and retains the no-discounting philosophy her parents espoused. “My parents didn’t believe in discounting, and I don’t believe in it either,” she says. “You do it once, and the customer expects it all the time.”
Wesche acknowledges it’s been difficult to stick to this policy in the current economic environment, since some customers try to bully her and her associates into slashing prices. Instead, Wesche has implemented alternatives to appease price-conscious customers. She introduced affordable lines that use alternative metals to gold and platinum, such as the Rebecca line from Italy that features pieces in stainless steel with gold and bronze accents; the Lorenzo line of sterling silver jewelry with colored stone accents; and Belle Étoile, a line of sterling silver jewelry with enamel. These high-fashion pieces offer a big look but range in price from about $50 to $400.
Wesche Jewelers also carries the Sarah’s Hope line, affordable pieces designed to fund micro loans for impoverished women around the world and help them overcome poverty through small-business ownership. The charitable component of the collection usually rules out any notions of discounting.
The store also revamped advertising and marketing to demonstrate that it’s sensitive to economic conditions. Its December print ads usually feature a diamond piece from one of its pricier lines, but this past holiday season a key pendant with a starting price point of $59 was featured. The company’s radio ads and other marketing programs stress that Wesche Jewelers offers plenty of affordable items. “When you’re a luxury jeweler, the perception people have is that they need $2,000 to walk in your door, and that’s just not true,” Wesche says.
Wesche also capitalized on her buying trips to Antwerp, Belgium. In 2009, she sent a letter to 800 of her customers, letting them know that because of the poor global economic environment, the store would be bringing back diamonds at the best prices they’ve ever seen. By promoting them as a “deal of a lifetime,” Wesche sold some very big diamonds.
Like many retailers, Wesche Jewelers has seen sales of higher-ticket items slack off during the recession. The store picked up some of the slack by buying gold. During its monthly Gold Rush events, the retailer pays 20 percent more on old gold for that day only. During its Summer Gold Rush party, Wesche Jewelers partnered with local businesses to provide customers with free smoothies, sandwiches, cookies, chair massages, and other amenities. Sales associates wore “Got Gold?” T-shirts, and Wesche gave away a $500 gift certificate. The company heavily promoted the event and did a live radio broadcast from the store. At the store’s Holiday Gold Rush party, Santa was there to give out candy canes.
“We averaged about 200 people in the store for each of these events,” Wesche says. “We made good money, people had a great time, and we created a lot of good will in the community.”
Jenny Caro, who owns Jewelry by Design, in Woodbridge, Va., with her husband, John, does a healthy custom-design business, another “no discount zone.” The store also carries brands like Hearts On Fire and Pandora that they aren’t allowed to discount.
“Just knowing they can’t discount these things gives our employees selling confidence because it’s not just about price, and they can focus on other closing methods,” Caro says.
Caro offers lots of silver to appeal to customers looking for bargains, and she created special sections for popular silver brands such as Pandora, Elle, Chameleon, Breuning, and Andrea Candela. “We are a female-driven self-purchase store, and our exciting, fashionable silver lines offer price points customers are comfortable with,” she says.
Perhaps the company’s most successful initiative aimed at price-sensitive customers is its extensive estate jewelry section and innovative gold-and-silver-buying program, which are related. The metals-buying program offers customers nearly twice as much if they apply the money to the purchase of a new piece of jewelry rather than take the cash. Customers also get higher credit if they apply the money toward better items like Hearts On Fire. The retailer cleans up the higher-quality items it receives from consumers and puts them up for resale in its estate section.
Results have been exceptional. Estate jewelry was the retailer’s top-grossing “vendor” last year, when sales grew by 30 percent-without discounting. “By making it much more worthwhile for customers to trade in their old gold for new jewelry rather than just getting cash, they walk out of the store with a new piece of jewelry and we have formed a relationship with them,” Caro emphasizes.
Kevin Armstrong, owner of K.F. Armstrong Jewelers, Bennington, Va., has a strict no-discounting policy built on the idea that cheaper doesn’t mean better. “A lot of people come in these days asking for discounts, and it’s tempting,” Armstrong acknowledges. “But we don’t want to lower the perceived value of our merchandise, and we don’t mark things up to give room to discount like others do. We try to create a sense of good value for the customer in everything we offer, including products, services, and special orders. We believe this is what keeps them coming back-not price. We also educate them to show them why something they bought on discount in another store isn’t the same value as what we sell.”
K.F. Armstrong also distinguishes itself from competitors with custom orders, a retooled Web site, and new ads that focus on humor and pop culture. A holiday print ad featured a girl trying to get away from her boyfriend-who’s trying to propose-because he “didn’t speak to Kevin first” about which ring to buy.
Armstrong has implemented a gold-buying program that offers customers the choice of cash or store credit; expanded his selection of silver bracelets; holds special events, such as a diamond remount event and a loose gemstone promotion, to bring people into the store; beefed up direct mail efforts to customers via e-mail; promotes aged goods as a “Jewelry Sale Collection” of exceptional value rather than through typical discounting measures; revamps cases and décor on a regular basis; and repurposes older merchandise as much as possible, reselling in cases rather than melting it down or selling it as scrap.
“This economy has challenged us just like everyone else,” Armstrong says. “But we have a lot of pride in what we do, and we don’t believe that discounting is the answer. Our philosophy of focusing on providing customers with good quality at good prices has worked for us for more than 17 years, and we’re sticking with it.”