Over my years covering the trade, I’ve heard about a lot of grand ambitions. But the notable thing about the very big plans for bridal jewelry manufacturer Ritani—which is now embracing a clicks-and-bricks model—is that they are backed by big money, notably Cantor Fitzgerald’s investment arm, Cantor Ventures.
On May 30, Howard Lutnick, Cantor’s famed chairman and CEO, appeared at a Vegas reception to promote the brand. In an exclusive interview with JCK, Lutnick made no shortage of startling pronouncements about his vision for Ritani, which he intends to take public. “We are going to make this company worth a lot of money,” he exclaims. (One of the ways Ritani is trying to entice retail partners is by offering them shares in the venture.) “I think the combination of wholesalers and retailers will make us one of the largest distributors of diamonds in the United States and in the world,” he says at another point. “That’s just simple math.”
Whatever happens here, the thinking behind this new concept offers some interesting insights into how outsiders view the jewelry business. Lutnick got involved with Ritani because of his friendship with the principals of the Julius Klein Group, which formerly owned Ritani (and retains an investment in it). He had long heard about the problems in the diamond industry.
“Retail store margins have been eroded by Blue Nile,” he says. “But Blue Nile was not giving the customer the service levels they wanted. Both models seemed challenged.”
So they conceived a hybrid—a model where Ritani is sold online, but the brand is serviced through a network of independent retailers. Those jewelers receive a commission on every item sold in their area, whether or not they were involved in the sale. Variations of this model have been embraced by a number of jewelry names, including Hearts On Fire and Kameleon. But Ritani may be the first to build a business on it.
“A global wholesaler combined with serviced-oriented local retailers is a really cool business model,” Lutnick says. “Wholesalers and retailers have a natural push and pull. We want to maximize the value of both.” It also says something about how important independent jewelers remain that Lutnick couldn’t think of a similar model in any other industry.
Another intriguing twist: The business is headed by Brian Watkins, a former vice president of Blue Nile, who is now a born-again believer in “clicks and bricks,” at least for jewelry.
“Ninety percent of [diamond] customers start online,” Watkins says. “But then only 10 percent buy there.” That’s because, he thinks, the Internet doesn’t work that well for jewelry. He remembers one time he had to return a diamond by mail. “It was really nerve-wracking,” he says. “It’s so much easier to just return it to a store.”
Of course, another possible way forward is for Ritani to build its own locales. But Watkins stresses that’s not in the cards. “We could never be as important in the community as some of these local retailers,” he says.
Lutnick argues retailers should think of the concept as a win-win, noting that it will lure people to retailers who regularly shop online. “A customer just walked into your store,” he says. “That’s huge value. Google’s whole business model is based on lead generation.”
Ritani certainly seems to have sunk a lot of money into designing a state-of-the-art website featuring high-definition video; it’s a site, Lutnick notes, that would be too pricey for a small retailer to design. Watkins declined to comment on the company’s marketing budget, but that component will obviously be critical. While Ritani already has some name recognition, including more than 700,000 Facebook fans, it will take some time to make into an e-commerce name. It also has its sights set internationally; it’s in close to 40 countries.
Lutnick stresses the company is in this for the long haul, and intends to be a force to be reckoned with. “Blue Nile is a first-class customer experience,” Lutnick says. “But they are just selling to you once and never dealing with you again, where we are the long-term relationship company.”