I can’t believe mall jewelers don’t understand the need to change things up, but I can believe most are afraid to step back from proven sellers and take more chances. It’s a valid fear, especially in a public company under pressure to meet analysts’ and shareholders’ expectations. And in an environment where materials costs are spiraling while their customers’ wallets are under attack, the instinct to stick with established winners seems the prudent choice.
But without some newness, even winners grow boring. Beryl Raff, executive vice president and general merchandise manager of jewelry for J.C. Penney, alluded to this in her presentation at the Plumb Club conference last spring when she wondered what happened to quality and innovation. At the Rapaport International Diamond Conference last month, Neal Goldberg, the new CEO of Zale Corp., spelled it out unequivocally: The mall sector of the industry is drowning in a sea of sameness. The stores look alike, the product never changes, and the marketing may as well be for machine parts.
“The first industry event I attended was the 24 Karat Club [banquet in January 2008],” said Goldberg, who joined Zale in late 2007. “I kept hearing over and over that the iPod was the reason why business was so bad. Nobody said, ‘We didn’t do a good job.’”
Analysts have been saying this for years, but finally the message is coming from the trenches as well as the pulpit. Goldberg is not the first outsider to try to engineer a turnaround at a chain jewelry store, but I’ll bet he’s the first to take his executive team on a field trip to some malls and make them look in every store, not just jewelry stores. Non-jewelry stores, he emphasized, are awash in energizing color, and they introduce new merchandise seasonally throughout the year. Jewelry stores are relatively colorless and introduce new merchandise once or twice a year. He also showed the Rapaport audience four mall stores’ ads—including one of Zales’—all touting a virtually identical Journey squiggle pendant for roughly the same price. With the names covered, it was impossible to tell whose was whose.
Claudia Rose, director at the Diamond Promotion Service, says customers need newness to keep them interested. What customers want, she says, is “vanilla with sprinkles.” A little different, a little exciting, but not out in left field.
Apparel classics—white shirt, black dress, pair of jeans—still get tweaked every season. It might be longer or shorter, narrower or fuller, have a dramatic collar or sleeve or a different wash for the denim. It’s still fundamentally a white shirt, black dress, or pair of jeans, but it looks au courant. That’s the kind of thinking that fine jewelry—at all levels—needs. Take basic diamond stud earrings. Instead of showing the same plain four-prong settings every year, add a bezel. Widen the bezel. Narrow the bezel. Pavé the bezel. Design the bezel as a removable jacket. Add a drop to the jacket. Add a hint of rose gold trim to a white gold bezel. Skip the bezel but cluster five small round stones like a little flower for a customer who can’t afford a large single stone. And so on.
Even something as simple as selling a diamond or colored gemstone pendant with a selection of colorful silk cords in lieu of a chain (or as an add-on to the chain) brings an easy seasonality to a piece. And there are countless ways to incorporate the Journey concept—still a powerful emotional selling point—without squiggles.
Mark Moeller, CEO of Minneapolis-based R.F. Moeller, also spoke at the conference. In a year that’s as bad as anyone can remember in 25 years, his business has been spectacular, “a year that anyone dreams about.” He attributes it to having a unique selling proposition and point of differentiation and educating clients to understand value in a way that’s separate from price. Jewelers who don’t are finished, especially in bread-and-butter diamonds. To prove his point, Moeller shared diamond sales figures for his store: 82 percent are branded premium stones, generating a 42.7 percent gross profit margin. Only 18 percent of his diamond sales are generic stones, generating a 27.4 percent margin. He offers a permanent trade-in policy: full cash credit for the diamond purchase price, applicable toward the purchase of anything else in the store. The trust it generates far offsets any monetary loss, he explained.
“The definition of insanity is to do the same thing over and over and expect different results,” he said. “Differentiate what you’re selling from the competition in such a way that buying it from anyone else strikes the prospect as just plain dumb.”