The demise of the independent retail jeweler has been forecast pretty much on an annual basis during the 30 some years I’ve been associated with the business. The competitive challenges to independents include department stores, discount stores, credit jewelers, catalog showrooms, chain jewelers, Wal-Mart, Sam’s Club, Costco, TV direct marketers to the consumer, and lately Internet sellers of jewelry.
All these competitors have one principal positioning point in common: lower prices compared with the independent jeweler. Rarely are quality differentiators presented, let alone discussed, at the point of sale. We know that quality differences cost money and are usually reflected in retail selling prices. The question is: How does the in-dependent compete if price is such an important element in the sales process?
An interesting corollary to this question is: How do the other jewelry sellers make up for theoretically lower margins?
For the independent the answer is selling quality, service, expertise, history, tradition, and stability and getting personal referrals from family and friends.
For the others the answer is quality differences: lower-quality diamonds and gemstones and thinner shanks and prongs. These subtle differences result in lower prices from suppliers who have been beaten up on pricing, quality, their margins, and other service support elements. All these together provide the basis for price discounting or comparisons with independents.
Talking with a consumer recently, I became aware of one chain’s service policy of charging $100 to periodically check the prongs of the ring she had purchased. Once or twice a year the customer returns the ring to the store for cleaning and prong checking. The ring is sent to the chain’s service center to check the prongs and clean the ring. Typically this process takes four to six weeks.
These kinds of practices among your competitors present wonderful opportunities for you to win new customers. I made a few phone calls for the consumer and provided her with the names of three local jewelers who would check the prongs and clean the ring at no charge. If repairs were necessary, charges appropriate for the work were quoted in advance. The result was a very happy consumer and indepen-dent jeweler who got a new client.
Independents need to have their antennae raised and turned on when they talk with consumers who are coming from another store. Questions about how they were treated and what they were told provide great opportunities for developing new clients.
It also makes sense to rethink any policies that result in turning away a chain customer or any customer who bought a product at a different retail location, which some jewelers do. Building a growing business starts with introspection and competitive analysis to develop competitive opportunities. In the present environment, these points are critical to survival, not to mention growth.
Responding to competitive challenges is the reason independents have survived over the past 30 years. It’s also the reason independents will survive even this, the nastiest business environment in our lifetimes.