Giftware: Successful Selling Strategies

Here’s how five jewelers turned their giftware departments into profit-buildersJewelers who turn their backs on giftware sales may lose out not only a potentially profitable market, but also on opportunities to sell more jewelry.

Here are the stories five jewelers who see giftware as a critical part of their business. And after reading the case histories, look for the new-product section.

THE LLADRO LURE: BAIT TO BRING IN SHOPPERS

When you first walk into Rostand Fine Jewelers in Sunland, Cal., you might think “what’s a nice store like you doing in a place like this?”

Your first view of the interior is a series of wall cases with names such as Rolex, TAG Heuer and Omega. As you peer beyond, you see cases and shelves filled with fine porcelain figurines and quality crystal. But the store is in a small blue-collar community about 25 miles north of downtown Los Angeles. It sits in a strip shopping mall with a 7-Eleven store on one side and a Pizza Hut and Blockbuster video store on the other. How does an American Gem Society store with neighbors like that come to be recognized as one of the nation’s top sellers of fine porcelain and to be singled out in Lladró’s own coffee table book as having “pioneered Lladró’s second market?”

“We have built the store into a destination location,” says Herb Rostand, president of the 35-year-old store. “We’re not a walk-in location; people must drive to us. We had to give them a reason to do so.”

So 15 years ago, Rostand decided to expand his jewelry business and opened a gift section. “It was a time when jewelry was hurting because of the price of metals and stones, and we wanted something complementary,” he says. “I grew up selling toasters, pots and pans and appliances in jewelry stores, and I certainly didn’t want anything like that.”

He contacted Lladró and was told the company was not adding new accounts. But he persisted and soon received a franchise. He devoted one wall to giftware, but quickly realized it wasn’t enough. When a stationery store next door moved out, he broke through the wall and expanded, adding a number of other high-quality lines, including Baccarat, Lalique, Waterford, Armani, Hummel, Swarovski, Walt Disney Collection, Chilmark and Legends, specializing in figurines. “You have to make a statement with merchandise like that,” he says. “Most stores don’t have room.”

Rostand has made room indeed. About 60% of his 5,400-sq.-ft. store is devoted to collectible lines, and he concedes he has run out of room. He carries a full range of merchandise for each line, with prices ranging from less than $100 to $26,000. Giftware and collectibles account for about 60% of total sales. “This has taken on a life of its own,” he says.

About jewelry: Does giftware help to sell jewelry? “I see some people 15 to 20 times a year when they come in for giftware,” says Rostand. “And each time they come in, they must walk through the jewelry side of the store to get to the giftware. The kind of people who come in for giftware are the kind who buy jewelry. They know what we have, and it’s easy for them to come to us because they know where we are.”

Over the years, as a result of calls from collectors and even other dealers, Rostand developed a worldwide reputation as being a source for hard-to-get pieces. Seven years ago, Rostand announced the first all-Lladró auction featuring retired and sold-out items. “That year, we advertised in the newspaper and drew about 1,500 people,” he says. “That was too many, so in the second year, we limited it to invitation-only and made a modest $10 charge to cover the catalog. We now have around 1,000 people attending.”

The auction is conducted every September. Some of the 200-225 pieces offered each year are from the store’s inventory, some are taken on consignment from collectors. “Last year every piece sold,” he says.

Rostand promotes his giftware through newspaper advertising and cable television within a range of about 25 miles. He also has an open house for customers on the Sunday before Thanksgiving that draws many customers for jewelry and giftware.

But apart from the auction, the biggest drawing card is a signing event. “Once or twice a year, an artist from one of the companies comes in and personally signs pieces,” he says. At one recent event, about 2,000 people waited about 21/2 hours in a line that stretched for two blocks for Juan Lladró to sign their figurines.

Early start: Rostand has a long jewelry industry heritage. He’s the fifth generation of his family to be in the business. His father, Maurice, was a traveling representative, first for Columbia Diamond Ring Co. and later for Longines-Wittnauer Watch Co. “At age 13, I worked with my father at the New York show in the Waldorf Astoria, so I got an early start.”

After serving in the U.S. Army, Rostand began to sell on the road, also for Longines. In 1960, he opened his own store and is now in his third location. The store has six full-timers (including Rostand and his wife, Barbara) and three part-timers. For promotions, he calls on friends, sales representatives and former employees for assistance.

At age 41, Rostand wanted a new challange. On a bet with a friend, he enrolled in the Beverly School of Law, intending to go for only one semester. Eight semesters later, he graduated, passed the bar exam and opened a law practice to handle what he calls “in the trenches” type of cases – divorces and accidents, and a few involving jewelry. He came to the store evenings and weekends. After about 15 years of “moonlighting” as a lawyer and getting four daughters through school, he gave up law and returned to the store full time.

At 4:31 a.m. Jan. 17, 1994, he wondered whether he still had a store. The epicenter of the Northridge earthquake was about 12 miles from the store. In all, he lost about 600 pieces of inventory, half of them Lladró. “We filled a Dumpster that was 6′ by 4′,” he recalls. “Lladró worked with us and our customers to offer replacement pieces at a discount. The losses we suffered from breakage were offset by the increased business from the replacements. We were lucky.”

THINKING SMALL OFTEN LEADS TO SELLING BIG

by Suzy Spencer, contributing editor

At Joe Koen & Son Jewelers in Austin, Tex., thinking small in giftware often is a prelude to selling big.

When a customer buys a nice piece of diamond jewelry, for example, salespeople make a point of asking if he or she would like a porcelain box to go with it. Or a crystal ring holder to go with that ruby ring. Crystal paperweights are another come-on that can lead to add-ons. The company keeps files on collectibles customers and calls them about new items, such as crystal paperweights with the State of Texas seal (for government workers) or a University of Texas seal (for university supporters).

This sort of business is important to the 111-year-old jewelry firm and goes hand-in-hand with high-end sales.

In particular, Koen targets buyers of collectibles. For a Lladró limited-edition event last fall, for example, postcards were mailed to 10,000 names on Koen’s customer list and 450 names on Lladró’s collector list. In addition, the event was advertised in newspapers and promoted in telephone calls. The result: some customers drove from as far away as Corpus Christi, three hours, to attend.

Lladró is only one of the big names Koen features. “We’ve decided to concentrate on good name-brand items,'” says President Bill Koen, whose great-grandfather was the first in the capital city to carry sterling silver, crystal and fine china. For example, he advertises Waterford crystal in Christmas, Valentine’s Day and Mother’s Day newspaper ads. His employees also push silver picture frames with free engraving.

But many sales come from lower-priced gift items. “A lot of our customers are not spending as much on gifts as they used to,” Koen says, “but they are spending more on themselves.” There’s a brisk turn in $15 to $20 gifts that are bought as much for the prestige of the Joe Koen & Son box as for the present inside.

Also popular are Steinbach Crystal’s German optical glass crystal cubes with three-dimensional etched scenes signed by the artist. “Once a customer buys one,” says Koen, “he always comes back for more.” That’s a $35-$800 purchase.

The tabletop market has changed a lot since the original Koen store opened for business. “We used to have a back room full of china and flatware,” Koen recalls. “Now we let the department stores keep it all in stock.” Dillard’s, one of Texas’ most popular department stores and bridal registries, is a 10-minute drive from Koen’s downtown store (he has two others, in strip shopping centers). And 30 minutes away is the first of several outlet malls, each chock-full of stores selling silver, china and giftware.

Koen’s two largest stores allocate 40%-50% of their selling space to giftware. China, crystal and some flatware samples can be found in the stores; china, crystal and flatware for delivery are special-ordered. Goods that can’t be found at Dillard’s or the outlet malls are stocked. In all, Koen attributes 18%-20% of total sales to bridal and gift registries.

A 125-YEAR TRADITION DEMANDS FULL SERVICE

by William George Shuster, senior editor

At a time when many jewelers have sharply trimmed or eliminated tabletop and giftware departments, J.E. Caldwell – one of Philadelphia’s oldest and best-known jewelers – is actively expanding them.

They are “a very important part of the image of Caldwell,” says President John Hunter. “It is part of our 125-year tradition” of being a full-service business for our customers. In fact, giftware represents about 35% of total sales.

Many of the tabletop and giftware sales are related to the bridal market, a corporate gift division and a contract division that does specialized work such as medals for the Daughters of the American Revolution.

Tabletop demand varies in the areas that Caldwell’s seven stores serve, and the inventory reflects that fact. One suburban mall store carries little tabletop inventory, for example, while three stores in upscale suburbs have large departments.

Hunter concedes the tabletop business has had its ups and downs in recent years. The casual lifestyle of the 1970s and early 1980s depressed china and flatware sales, he says. But the 1990s have been accompanied by a return to more traditional ways of living. “We’re seeing a big surge in appreciation of finer china,” says Hunter. “Since so many other retailers have dropped it, its a draw for us. The same with sterling flatware. Very few department stores carry it, so its a growing business for us.”

Caldwell carries a variety of tabletop merchandise, ranging from $20 retail hostess gift to a $35,000 Steuben crystal bowl. But most pieces are upper-end, unique designs not found in department stores, including finer lines of china and sterling flatware, a large assortment of estate silver hollowware and sterling hollowware, and an array of crystal from such names as Waterford and Baccarat.

“Unique” and “exclusive” are guiding lights in Caldwell’s tabletops and giftware marketing strategy. “Anything we can’t be competitive with, we draw away from,” says Hunter. “We like to be first [in the region] with a place setting or flatware. We also seek designs created exclusively for us with our names on them.

Promotions: Occasionally, Caldwell runs an ad for a special “different” piece of crystal, but that’s not really the Caldwell style. “In general, we get people into the store by inviting them for a non-shopping experience so they can experience the beauty and warmth of the store,” he says.

One such event in November starred upscale tableware and giftware supplier Mottahedeh & Co. Caldwell set up 10 tables and invited a half dozen Philadelphia interior designers to create settings with pieces they selected from the Mottahedeh showroom. President Mildred Mottahedeh attended an invitation-only afternoon tea and an evening cocktail party with 100 guests, signing any pieces sold that day.

The event attracted a good turnout, says Caldwell Manager Charlotte Merit. “Many customers became interested in Mottahedeh and came back,” she says. In addition, the specially designed tables and settings remained up for 10 days, generating customer interest. In fact, Caldwell kept the two most popular tables up through the Christmas season.

Also in November, Caldwell held a cocktail party featuring Steuben designer Dave Dowler, who signed pieces of his work in the store when they were sold. Though smaller than the Mottahedeh event, “we definitely had sales,” says Merit. Another top event in 1994 featured Fabergé eggs and designer Theodore Fabergé.

Such events take work, of course. “It took a year to pull together the Fabergé event,” says Hunter. But based on the customer interest and business generated, “it was worth it.”

A CUP & SAUCER REQUEST LAUNCHED THIS VENTURE

by Jack Heeger, contributing editor

You’ve got to believe in giftware if you devote about two-thirds of a 8,000-sq.-ft. store to it and it brings in about 50% of your annual business. And there’s no doubt that Ruth Neufeld is a believer.

It all started when a customer came in and asked about cups and saucers just after Neufeld and her husband Jacob had opened their store in Glendora, Cal., 42 years ago. The Neufelds said they’d stock what the customerwanted – and went on from the original china patterns to stock some of the finest names in the giftware business.

Their store, Neufeld Glendora Promenade, is located in an upper-middle-class conservative community of 50,000 in the San Gabriel Valley about 20 miles east of Los Angeles. It’s believed to be one of the two largest Lladró dealers in Southern California (the other is Rostand Fine Jewelers, also profiled in this report).

The store carries a full line of jewelry and a wide collection of figurines and crystal – including Hummel, Armani, Boehm, Lalique, Baccarat, Waterford, Swarovski, Chilmark and Legends as well as Lladró. The sterling silver section features such names as Reed & Barton, Gorham and Oneida.

Although the whole giftware business grew out of an order for china, Neufeld finally dropped china last fall because of intense competition from outlet centers that have proliferated in the area in the past few years. “I thought about it for about five years,” she says. “I couldn’t compete. They sold it for less than I could buy it for.”

The space vacated by china was dedicated to the Lladró collection which now occupies 47 feet of wall space, not to mention some large pieces placed on tables.

One item in the store, a 5′ diamond table by Lalique, is priced at $79,000, but Neufeld has all price ranges. “I try to have a number of items under $20 so everyone who walks in feels they can afford something at Neufeld,” she says. That concept extends across all lines in the store.

Giftware sales: “We don’t discount or negotiate prices,” Neufeld says. “But I always scout the competition and make certain we are competitive.”

Most customers are drawn by word-of-mouth or special promotions. Neufeld does very little advertising. “But one time,” she recalls,” Lalique featured a particular piece in an ad in Architectural Digest and mentioned us, along with two other stores. We sold one to a customer from Long Island,” she says proudly.

Most sales are to regular customers, whose names are on an extensive mailing list that covers communities as far away as Santa Monica 40 miles away. “We have an open house every November,” says Neufeld. “It’s not a sale. We serve refreshments, we have music [a piano in the middle of the giftware department is topped with picture frames] and people have a good time. And we do sell some merchandise.” The open house is by invitation only – no advertising or signs.

Neufeld operates the store with four full-time and two part-time workers; her husband, a former watchmaker, is retired. Ruth Neufeld loves to talk about the inventory and takes a personal interest in just about every piece. “I love this business,” she says. “I love being a part of people’s lives.”

THE BUNNIES HOP OFF THESHELF IN THIS STORE

by Suzy Spencer, contributing editor

As a giftware marketer, Majors Jewelers in Austin, Tex., seems to do everything wrong – which seems to be the reason for its success!

Owner Mark B. Majors, a fourth-generation jeweler, opened his store in 1987, dead in the middle of the economic bust in Texas. He allotted only 260 sq. ft. of his 1,300-sq.-ft selling space to gifts. And it’s not even a separate department – just a few glass shelves and windows on the back wall. In fact, you barely notice the giftware. At first, you see the David Yurman jewelry and the Rolex watches. “The jewelry sells the giftware, not the giftware the jewelry,” he says.

When you do notice the giftware, the selection appears limited – only three brands: Herend, Lalique and Baccarat. But look again and you see $75,000 worth of inventory in those three brands.

And you see sales potential.

Herend, added just in October, “sells like crazy” – typically $150 a pop, says Majors. A typical Baccarat sale is $200; a typical Lalique sale, $600-$800. Herend is Majors’ biggest giftware seller, particularly the blue bunnies. Considering dollars per sale, Lalique is the winner. But in total dollars, Baccarat rings up the most.

Majors, a graduate of the University of Texas advertising school, promotes only the Herend brand. From October through December 1994, for example, he ran a one-column by 5″ $100 Herend ad once a week in the American Statesman newspaper.

Against the norm: Is going against the norm another key to success?

Majors is located in a not-far-from-downtown residential neighborhood that’s often described as old Austin wealth. But most of his customers are 25-45-year-olds who live in areas more associated with new wealth. He describes them as “eclectic” – attorneys (the Austin telephone directory lists about 75 pages of attorneys), musicians (Austin is nicknamed the live music capital of the world) and “trust-fund babies.” Doctors are not among his customers. Neither are older people.

But changes may be brewing. Despite his success, Majors is thinking about changing his way of doing business. He’s thinking about playing by the rules. He’s talking about tracking his sales better, stocking only items that turn every four to six months, doing a better job at promotion.

Indeed, he’s considering opening a department called Majors Gifts, complete with bridal registry and an assortment of expensive china. “I think there’s a definite market for it,” says the recently married jeweler.

But even as he talks about doing things “the right way,” he also voices some reservations. Opening a bridal and gift department “is just too much work,” he says. So at least for now, it seems as if he’ll stick with his three top-selling gift lines. Those Herend bunnies hop out the door faster than the dust bunnies hop in. He’ll just keep a watchful eye for someone to hire for Majors Gifts. Only then will he start to play by the rules.