Welcome to Las Vegas! The excitement is contagious, and everyone is hoping for a great show. But considering all the progress—3-D printing and ethical sourcing are now mainstream instead of just buzzwords—that our industry has seen in the past 12 months, much still stays the same, which is fine by most. After all, our industry is one of the oldest trades in the world, and change comes slowly. Very slowly.
Over the past year, between running a business and managing my responsibilities with the Women’s Jewelry Association, I’ve attended myriad industry meetings, conferences, and trade shows, and I have come to understand that something weighs heavily on the minds of many: How can new talent thrive when buyers won’t buy their lines, oftentimes because their open-to-buys are already earmarked for large, successful brands? How can new manufacturers invest in technology or staffing when their margins are continually squeezed by the largest retailers and produce millions of dollars of inventory to test an idea that could well end up in a massive pile of return-to-vendor?
Under the most challenging economic conditions in decades, and without reliable credit lines, retailers have had to find new ways to survive, including cutting staff and expenses, selling off slow-moving inventory for little to no profit, sticking with their tried-and-true best vendors, and shifting to memo strategies. Today, store owners big and small are getting a large portion of their financing in the form of consignment goods from designers and manufacturers; their marketing budgets are largely made of co-op dollars, courtesy of large brands that effectively reduce merchants’ risk and inventory. But in the process, retailers inadvertently become more and more like their direct competitor next door, all carrying the same 10 brands while still trying to compete with each other. Discounting becomes inevitable, leading to further loss of profitability.
These pull brands are successful and have achieved the privilege of defining their own business terms, requiring high-six-figure minimum annual asset purchases and large amounts of case space. In fact, the more money the brands make, the less consignment they do, to the point where some do none and raise their minimums (meaning even fewer buying dollars and space for everyone else). These pull brands invest heavily in marketing, building name recognition and consumer interest, which becomes the foot traffic that is vital to the livelihood of retailers. (That’s why they are called pull brands.) But how are the other designers—whom the shows happily take big checks from for booth space with costs that mirror a mortgage—supposed to compete when every player in industry is seemingly poised to play an expensive and harrowing game of survivor with them? How are today’s industry successes lending a hand to those of tomorrow? The banks sure are not helping them, either.
While the consignment business is part of our new reality—the new normal—memo is now requested from anyone with a new idea who is trying to break into this industry or introduce a new line. And as we prepare for the Vegas shows, where the industry gathers to see what’s new, and we read in the media that the top store buyers are excited to see new trends and original designs, the reality of what newbies really hear is:
- “I am not adding new lines.”
- “I don’t make appointments with new designers.”
- “I will try to pass by.”
- And my favorite: “I only work with pull brands.”
How can this industry that says it values hard work, initiative, and ingenuity—often from immigrants and artists who have overcome great obstacles to become successful—not acknowledge that something needs to change?
I propose that industry leaders across the categories—designers, manufacturers, gem dealers, retailers, bankers, media, and trade shows—share the responsibility of rewarding entrepreneurship, creativity, talent, ingenuity, and good business planning. Of course, there are already many helpful industry initiatives in place through JCK Industry Fund, Jewelers of America, the Manufacturing Jewelers and Suppliers of America, WJA, the Jeweler’s Resource Bureau’s Future of Design Competition, the American Gem Trade Association, the Contemporary Jewelers Design Group, American Jewelry Design Council, and the Diamond Empowerment Fund, but more help is needed. I am hoping that our captains of industry will create a channel (perhaps like the Robin Hood Foundation, known for its venture philanthropy that uses the expertise of the successful to provide grants and operating support for start-ups) to recognize those who truly merit support and opportunity, and to give talent the shelf space and conditions needed to break through, or, more realistically, to squeeze through the horribly narrow funnel industry has created.
This letter is an open invitation to have a broader discussion about giving support where it’s needed in our industry. I hope to receive feedback, ideas, and solutions from many of you so we can address this inversion of values. This business funnel must be broadened, hopefully with the support of successful brands and the retailers that helped them get there, the manufacturers that supply their goods, the banks that eagerly finance them, the private equity firms that invest in them (and then cash out), the show organizers that profit from their exhibition gambles, and the media that profits from their ad dollars. We are all truly in this together.
Wishing you all a great show with fantastic new business.
Sincerely, Andrea Hansen
The Style 360 blog is your editorial source for the newest jewelry, trends, market analysis, trade show insights, designer profiles, and more.