Retailers have to understand the Internet if they want to appeal to tomorrow’s consumers, Australian retailer Garry Holloway of Pricescope.com argued in a presentation on “Harnessing the Latest Technologies to Break Through.”
“I still run a regular retail business, and I don’t think the industry is going to completely disappear, but I think in five years’ time there will be one-third fewer independent retailers,” he said. “Obviously the Internet is one of the main reasons.
“You have to change what you do, or you are going to become a dinosaur,” he warned. “People who say they are not going to change, I suggest that you sell out, and buy Blue Nile shares.”
He added that in many ways things look good for the industry, since more people are getting engaged. But “these young people who are getting engaged, they grew up with the Internet. It is how they communicate,” he said. “Younger consumers are going to visit a Web site before they visit anything else. That’s just the way young people are these days.”
He said retailers who have Web sites need to have ways to communicate with their customers, such as chat functions. “Instant communication is so important,” he said. “For young people, [typing] is talk, it’s chat. Waiting three days for an e-mail reply doesn’t cut it anymore.”
He noted that Internet sites like Blue Nile are affecting margins, and retailers had to either lower margins or find a way to justify their current margins. In his store, for example, Holloway usually asks customers what they think a “fair price” is. “We generally get 10 to 15 percent more than the Internet, but we get to keep the customer and get his family too,” he said. “We see that as a fair trade-off.”
He quoted surveys that say U.S. women spend an average of 1.2 hours a week shopping online, and they’re not just shopping, they’re buying. “Consumers are feeling more and more comfortable with shopping online,” Holloway said.
He noted that many online retailers “are actually more profitable than many jewelers.” He advised jewelers to “know their enemy” and “learn as much as they can about the Internet.”
He added, “I am on excellent terms with my strong local Web competitor. Ask people who your local competitors are. We know that in San Francisco, Boston, and Washington, D.C., Blue Nile is a very big name, but there may be other names elsewhere.”
He advised staff to read the tutorials on places like Wikipedia, Blue Nile, and Pricescope. “If consumers walk into your store with their sheets of papers, and you contradict everything they say, you may come across as stupid, even if you happen to be right,” he said. “If you think you can badmouth the Internet, tell them they are getting ripped off, I would suggest that’s not true. Smart consumers are getting good information off the Internet.
He advised retailers to participate in Web forums, which let people learn “hip new design and diamond terms” as well as find different kinds of information. “You need to know more about diamonds than the best-educated consumer to keep the children of your best clients as customers,” he said. “I have learned more on the Internet, and asking people questions on the forums, than I have in all of my gemology courses.”