Note: This is the second in a three-part series. For Part 1, “The case for custom design,” see JCK, May 1996.
In an increasingly competitive marketplace, more and more retail jewelers find custom design a way to offer a unique and value-added service. But an informal JCK poll suggests this proliferation of custom-designed product hasn’t hurt designers’ or major manufacturers’ sales of finished jewelry.
Manufacturers such as Carla Corp., Andin International, DiLaro, I.B. Goodman, Andrew Meyer Jewelry and others say their sales haven’t suffered. In fact, Andrew Meyer, president of the company that bears his name, says jewelers who do some of their own manufacturing make better customers because they understand the problems manufacturers face. Judith Conway agrees with Meyer that retailers who make some jewelry are more understanding customers.
Aya Azrielant, president of Andin International, says a major volume retailer deciding to manufacture its own line of jewelry offshore could hurt manufacturers. But independent retailers doing custom benchwork hasn’t affected Andin’s sales at all.
Nor are smaller designer companies particularly worried about competition from their retail customers. Designer Paul Klecka sees the relationship as synergistic, with designer and retailer competing together to capture luxury dollars.
Designers also feel confident that their workmanship and brand names are strong enough to withstand a little competition from their customers. “We’ve put a lot of effort into building the Paul Klecka name into a strong brand image,” says Klecka. “If a goldsmith jeweler has his own well-respected image in the community and he displays his own line alongside ours, we all win. It gives designers more market exposure in a quality store and it gives the jeweler’s own work more credibility.”
Stephen Burlingham is the only designer contacted by JCK who says retailer competition could be trouble. He feels retailers should stick to what they do best — selling jewelry — and designers should stick to what they do best — making it.
Knockoffs: Designers do worry about others — whether retailers or manufacturers — making jewelry similar to theirs. Penny Preville, for example, has seen imitations in stores that aren’t her accounts, but doesn’t know whether the retailers made the pieces themselves or bought them from a manufacturer. She says her regular accounts would never carry or create knockoffs of her work, but their lower-priced competitors do, especially in competitive markets such as New York City.
Designers say combating knockoffs is all a matter of how much time and money they’re willing to spend in court. But most take solace in the fact there will always be customers who insist on owning the authentic product. Muses Preville, “What do you do when you see ads that blatantly tout ‘Penny Preville look-alikes’?”
(You can take action, says Paul Kruse of Cushman, Darby and Cushman, an intellectual property law firm in Washington, D.C. Through copyrights, trademarks and patents, the government gives designers the tools to fight imposters, but it’s up to the owner of the original design to defend it. Kruse says a knockoff artist is legally liable even if he or she advertises the product as a knockoff. He also says that if a designer delays taking action, he or she can lose rights by acquiescence.)
Klecka has encountered retail and wholesale copycats. Retailers he turns down as accounts may say they’ll retaliate by making similar pieces themselves. “I tell them it’s a copyright design and that we’ll be watching,” he says. This usually works.
It’s hard to know when individual retailers copy a design, says Conway, unless one of her salespeople spots it in a window. But even if retailers copy the look, she says they don’t duplicate the quality. She worries far more about knockoff manufacturers trying to reproduce her look at mass price points.
Retail perspective: Retailers who do more custom work agree they haven’t reduced the amount of finished jewelry they buy. That’s because custom work has been add-on, rather than replacement business. But while they buy as many units, finished jewelry now accounts for a smaller percentage of total inventory, so manufacturers don’t benefit from jewelers’ growing sales.
“If we didn’t do custom design, we would be buying more finished jewelry than we used to because our business has grown so much,” says Bill Underwood of Underwood’s Jewelers in Fayetteville, Ark. “We haven’t cut back or cut off any suppliers, but the growth has come from our own jewelry.”
What has sometimes changed is the kind of finished jewelry retailers buy or the suppliers from whom they buy it. And all jewelers interviewed say they buy significantly more loose gems and components. Eileen Eichhorn of Decatur, Ind., buys many more semimounts; Bill Farmer of Lexington, Ky., buys more designer pieces and designer semimounts than traditional classics. “We try to think ahead,” Farmer says. “This isn’t New York, but it isn’t a small market either. Sooner or later some category killer will come in, so we’re going for the designer market.”
Eichhorn hasn’t cut back on finished jewelry either, but she tries not to add suppliers unless one has something she absolutely can’t get from her regular sources. She also has reduced the number of shows she attends and, once there, cherry-picks who she visits.
John Allison of Allison’s Custom Jewelry in Sidney, Ohio, now makes about 50% of his stock in-house. But even he has changed only a few suppliers — because of their attitude toward service, not their product.
Keeping control: The desire for something unique and specially made drives custom work. But time is money, and jewelers agree that custom work sometimes doesn’t pay. Complicated or technical settings such as baguette, channel or invisible are best left to manufacturers with precision machinery. And low-end goods aren’t worth the expense.
Farmer would rather let a competitor tie up time and money in solitaires and tennis bracelets. He concentrates on semimounts that can be finished to a customer’s wishes or finished jewelry that competitors don’t offer. He’s even stopped buying gold chain cut and clasped to order; he found a good selection of finished pieces in standard lengths.
Bill Underwood says custom work can be hugely profitable because it allows him to compete in product, service and price at the same time. The jeweler who buys loose goods at the source can control costs better, eliminate the profits of one or two middlemen and keep the retail price competitive while still making full margins.
Custom work now accounts for about 30% of Underwood’s business. He thinks it’s an idea whose time has come: “The Fifties was the decade of the watchmaker. The Sixties was the decade of the gemologist. The Seventies was the decade of the goldsmith. The Eighties was the decade of the entrepreneur. The Nineties is when it all comes together.”
WHEN WHOLESALE & RETAIL BECOME ONE
Branded stores are the hot wave of retailing. From famous fashion designers such as Ralph Lauren and Calvin Klein to jewelry designers such as Lagos, Judith Ripka and Mikimoto (the latter no newcomer to retailing), many manufacturers are increasing their share of consumer dollars by opening stores and pocketing the difference between wholesale and retail prices.
You might think these companies’ retail accounts would be incensed when their vendors become competitors. But a funny thing has happened. Department and specialty stores find their sales of such lines go up — not down — when a company-owned boutique is nearby. The boutique adds cachet and brand recognition — and prices are full retail, so there’s no price cutting or bad feelings.
Jewelers who have opened their own stores — in addition to Lagos, Mikimoto and Ripka — include John Atencio (six stores in Colorado), Ray Tracey (two galleries in Santa Fe, N.M.), Doug Zaruba (two galleries in the Washington, D.C., area), Etienne Perret (one store in Camden, Me.), Joan Michlin (a gallery in the Soho district of New York City) and Diana Vincent (a store in Washington Crossing, Pa.). Going the other way, the venerable Tiffany & Co., which has its own stores, also makes a segment of its line available to jewelers in many areas. (See “When Designers Sell Direct,” JCK, August 1995, for more on this subject.)