A panel of leading retailers and one supplier tackled industry issues, from the Internet to synthetics, at a “Jewelers of America Executive Roundtable” at the Las Vegas Convention Center Saturday morning.
Regarding the Internet, Ofer Azrielant, CEO of Andin, said the threat was a bit overstated. “When I came to this country, people told me the business would be taken over by catalog showrooms,” he said. “I am a great admirer of Blue Nile, but they account for less than 1 percent of the industry.”
He noted that the prices on the Internet are similar to those in “wholesale clubs,” but people focus on the Internet because it is “sexy.” But he noted that a growing number of consumers use the Internet to gain information before they buy. “The Internet is a different kind of medium, because it involves dialogue,” he said. “In the future, advertising will change from a monologue to a dialogue.”
Terry Burman, CEO of the Signet Group, said so far the greatest impact of the Internet is on gross margins. But he said the Internet is just “another low-priced channel of distribution, and jewelers have faced low-priced channels of distribution constantly.”
He also predicted that the Internet “will accelerate consolidation in the industry.”
Peter Engel, president of Fred Meyer/Littman, said the Internet is a “challenge to us as far as pricing, but I don’t think we, in the brick and mortar business, can compromise our prices.”
Beryl Raff, executive vice president and general merchandise manager for JC. Penney, noting her teenage daughter’s affinity for the Internet, said that “younger consumers look at things differently than we do,” and “in five years, we are going to say, I can’t believe how much things have changed.”
She noted that today’s consumers are interested in education and a better in-store experience. “We could find ourselves in a situation where consumers know more than the person behind the counter,” she said.
John Green, president and chief executive officer of Lux, Bond and Green, said that jewelers have to look at the Internet as an opportunity. “It is a marketing vehicle like no other,” he said. “When people Google ‘diamonds’ in Hartford, Conn., we are probably not coming up first, so we are not doing our jobs.”
Esther Fortunoff, executive vice president of Fortunoff, said consumers still use the Internet mostly for research. “Having a 17-year-old, she still goes into clothing stores, to see how the clothes fit,” she said. “In jewelry, you don’t want to look at an image to see what a piece looks like.”
But she said that, because pure-play Internet sellers don’t have to collect sales tax, brick-and-mortar retailers are at a disadvantage.
On the subject of “business accountability and responsibility,” the moderator, Jewelers of America chairman Matthew A. Runci, noted that the industry was grappling not only with the conflict diamond issue but also with parallel campaigns like “No Dirty Gold” and campaigns from Asian nongovernmental organizations about working conditions.
He noted that teenagers today have greater social awareness. “Causes matter in what T-shirts they buy, what sneakers they wear, what celebrities they model themselves after,” he said, noting that 74 percent of “Millenials” said that they pay more attention to companies that are interested in social causes.
Burman noted that the industry needs to stay ahead of the issues. “All we have to do is look at the fur industry to see an industry that lost consumer confidence and never really recovered,” he said.
He said the industry is more effective when it acts together. “We can develop our own consumer confidence pack, but we believe that any consumer that is not satisfied with the answer they receive from any jeweler is a customer that is lost to us in the future,” he said.
Fortunoff praised the work of the World Diamond Council in handling the blood diamond issue, and “explaining it in a way that salespeople could understand.” But she noted these are complicated issues. “The small part we play is by talking to our suppliers,” she said.
Green noted that the industry would always be a good target for NGOs. “They are not going to go after olive oil, they are not going to go after underwear, they are going after jewelry, because it is a sexy business,” he said. “We want to go on the offensive, rather than be defensive about it.”
He said his company is taking a greater interest in these issues, even looking at the kind of paper it uses for its catalogs. “We really need to let consumers know we are aware of what’s going on in the world,” he said.
Raff noted that, while these issues were important, it was difficult for a big company like hers to properly train all its sales associates to answer these questions. “The Internet is a good place to talk to consumers about issues like this,” she said.
On the subject of synthetic versus natural diamonds, most of the panelists said they were not interested in stocking lab-grown gems at present. But most felt there was room for a variety of different products in the marketplace.
Noting that many people consider her the “queen of moissanite,” Raff said that consumers look at these products differently. “I don’t think anyone’s business is so great that they can’t afford a new product category,” she said. “The biggest danger is in misrepresenting the product, but as long as people treat these products the right way, there is no danger to the diamond business. There is nothing as emotional as a diamond, nothing will replace that emotion.”
Green noted that, for the time being, synthetics are not for Lux, Bond and Green. “Fancy intense yellow synthetics are selling for $4,000 a carat,” he said. “I can’t see a woman being too happy when her boyfriend spends $8,000 on a synthetic diamond.”
Burman agreed that, so far, his company’s view is not to sell any diamonds that aren’t natural. “We do sell lab-created colored stones, but we look at them as more of a fashion issue,” he said. “Diamonds are symbols of love, stores of value. We believe it says something about [us] when we stock diamonds that are not natural.”
Azrielant, meanwhile, called Charles and Colvard, the producers of moissanite, “the greatest marketers that ever lived. They created a synthetic form of something that no had ever seen before,” he said. “I’m for anything and everything the consumers will buy.”