Auction houses have become full-service jewelers in their quest to lure private buyers. They’re also taking pains to overcome bidders’ anxiety
When Edward and Jessica decided to marry, they discussed at length how much to spend on an engagement diamond. They made the rounds of local jewelers, and then visited a fine arts auction house to check out diamonds coming up for auction. While there, they left a bid.
It’s not. Couples shopping for diamond engagement rings are among the fastest-growing clientele at Sotheby’s Arcade sales in New York City, says Ann Limer Lange, the arcade’s director of fine jewelry sales. In fact, auction houses around the country are pursuing private buyers in increasing numbers.
To attract these buyers, the formerly cash-and-carry auction houses now offer the same services as top-quality retailers: gemological evaluations, appraisals, ring sizing, pearl stringing and jewelry repair. Prices often (though not always) are far below comparable retail levels.
And we’re not talking small dollars: a day of auctioning “normal” jewelry at a major auction house routinely brings in $1 million to $5 million. (By comparison, Christie’s and Sotheby’s report sales of $20 million to $40 million at each of their “Magnificent” and “Highly Important” jewelry sales [auction parlance for world-class jewels.])
The rising importance of the private buyer makes auction houses a formidable competitor to retail jewelers.
The new customer: Jewelry auctions – even in crème de la crème circles – used to be forums where basically no-frills estate liquidators could sell jewels to dealers who had their own private or retail clients.
While this remains the main business, most auction houses today also merchandise their fine jewelry to bring in retail jewelers’ dream customer: the sophisticated, well-heeled professional who loves jewelry.
For example, engagement ring shoppers at Sotheby’s are generally young, well-educated and looking for diamonds well above a carat. Most have comparison-shopped at retail stores, says Lange, so they have a good idea what they want. And at Sotheby’s Arcade, they’ll find all loose diamonds to be auctioned on display in one showcase for easy comparison. The diamonds cover a wide range, from $1,500 to $25,000 and quite often more. (The Arcade has six sales annually.)
“Sometimes, these shoppers have to come back two or three times before their bids are successful,” says Lange. But they understand the process and are patient.
Motivation & merchandise: Price and professionalism are the main reasons why engaged couples want to buy their diamonds at auction.
On the first point, Lange lists diamonds at slightly less than wholesale in the Sotheby’s Arcade catalog in hopes of keeping dealers interested. Loose stones often sell for half or less than comparable goods in retail stores, she says. Finished jewelry can sell for as little as a quarter of retail store price, though some better pieces carry a reserve (minimum price).
“Add to that the professionalism and trust people have in Sotheby’s staff and you can see why our business is growing.”
Auction executives are very selective about what they offer. Distinctive period jewelry – Art Deco, Art Nouveau, Retro – and signed pieces by name designers and jewelry houses top the list. Some learn to “follow” certain designers.
“People want something unique and they don’t always see it in retail jewelers’ showcases,” says Gloria Lieberman, who heads the jewelry department of Skinner Galleries in Bolton, Mass. “People who have money are very willing to spend it if they find something attractive and unique.”
Skinner is one of about five auction houses with a strong international client base for jewelry. It has developed a healthy niche for distinctive period pieces and jewelry designed by artists such as Max Ernst, Pablo Picasso and Andy Warhol. Prices range from $1,000 to $10,000. “Where else can you get ear pendants designed by Alexander Calder or a Picasso pendant?” asks Lieberman.
Private shoppers have risen from 5% to 35% of the jewelry clientele at Skinner since 1980. That’s why it and other auction houses have launched jewelry service centers to size clients’ rings, change the length of bracelets, remount gemstones, restring pearls and even clean jewelry. “In essence we’ve become a full-service jeweler,” says Lieberman.
Removing barriers: Auction houses consider private buyers such an important part of their businesses now that they hold wine-and-cheese parties, lectures and traveling exhibits to attract them.
These gatherings give auction house representatives a chance to break down some barriers, the biggest of which is the mystique of bidding. Many would-be buyers believe the myth that the slightest twitch or itch will be mistaken for a bid, say auction executives. Many buyers also fear auctions because they don’t know how much to bid.
Butterfield & Butterfield of San Francisco, which sold some $6 million worth of jewelry last year, reaches prospective buyers and eases their fears through a lecture series. “We explain not only about the jewelry and how it’s made, but also about the bidding process and how auctions work,” says Taryn Miller, jewelry director.
In addition, prospective buyers are invited to attend an auction to watch the proceedings before actually participating. “If they are interested in a piece, I suggest they leave an order bid with the office before the sale, instead of jumping into bidding,” she says.
If buyers turn into serious auction-house shoppers, they may turn to a consultant for advice. “We can help clients focus on what they want,” says Pamela Harris, a former Christie’s vice president and now a New York dealer and consultant. “For example, if they collect Art Deco jewelry, we can help them find complementary pieces or help them in forming a collection.”
Consultants also can offer advice on pricing, guide clients through the bidding process or bid on their behalf.
Inside changes: Auction houses also have made some internal adjustments in their effort to attract more private buyers. When François Curiel arrived at Christie’s New York as jewelry director 20 years ago, the clientele was strictly dealers. “All of the jewelry was shown in boxes, and buyers had to take the pieces out to look at them,” he recalls. “I reorganized the presentations, displaying jewelry on stands and in showcases like a jeweler’s shop and grouped like lots together to help private buyers make a selection.”
Later, Christie’s added information about the great jewelry creators and designers whose pieces they were offering and indexed them in the back of the auction catalog.
Then Christie’s and other auction houses began to hold previews of jewelry sales in key cities to attract attention. “Our first exhibition was in Palm Beach,” recalls Curiel. “Many of our potential clients vacationed there, and we thought this setting would be less intimidating for private buyers.”
Curiel’s efforts began to pay off at the 1984 auction of jewels from the estate of Florence Gould, heiress to the Jay Gould fortune. The hugely publicized event drew private buyers who helped to swell proceeds to $7 million – twice the expected total. A few years later, the Duchess of Windsor and Countess du Boisvrouvray sales put auctions at the front and center of the jewelry world.
Today, says Curiel, about 40% of all private buyers are from the U.S. (Italians, once the largest private buyers of jewelry at auction have dwindled in recent years as their country has faced political and economic problems.)
Auction houses + retailers: Retail jewelers who feel the sting of competition may find the sword can cut both ways. Retail jewelers can work with auction houses in or outside their area to add distinctive pieces to their own inventories. (“Don’t forget, the low prices that some pieces sell for are also available to retailers,” says Lange.) Retailers also may consign pieces that might be too high-priced for their own clientele, say auction executives.
“We’re a resource for the industry,” says Lange. “We are available to everybody.”