How To Profit From Packaging

In their fight for profits and market share, more jewelers are wielding an underused promotional tool: packaging.

Aiding them are packaging industry changes that have held down prices and resulted in more options than ever. But some of the changes have had a negative effect on quality and delivery times, say some jewelers and suppliers.

Here’s an overview of what’s happening in packaging, how it affects jewelers and what to watch in the year ahead. As a bonus, this report also spotlights some packaging products and accessories.

Spending: Jewelry packaging is big business, conservatively estimated at more than $100 million annually in the U.S. Half of that amount is spent on metal- and plastic-shell boxes and high-end products; the other half goes for bags, paper boxes, accessories and other forms of packaging. Jewelry chain stores and independents account for about two-thirds of total expenditures, with mass merchandisers and other jewelry retailers buying the rest.

There is no rule-of-thumb on how much a jeweler should spend on packaging, although a recent JCK poll of scores of jewelers found that most spend 1% or less of their annual budget. But they get more mileage out of that expenditure than they once did, thanks in part to foreign competition. By some estimates, the share of foreign-made metal-shell or plastic-mold boxes in the U.S. has grown from nearly nothing to about half of the total market in the past five years. Asian companies in particular claim to make the same products faster and in larger quantities than other packaging manufacturers — for half the price. Indeed, growing Asian competition is the biggest single change in the U.S. packaging industry in recent years, says Barry Rutherford, executive vice president of Chippenhook, Lewisville, Tex., a leading U.S. packaging supplier.

Seven out of 10 jewelers polled by JCK say they buy up to 25% of their packaging directly from foreign vendors. And some suppliers say the Asian invasion will expand in the next few years — affecting both value-oriented and high-end packaging.

Advantages/disadvantages: Competition from foreign packaging companies has benefited jewelry retailers. “Prices have remained pretty stable over the past four to five years because there’s so much more competition,” says Linnea Johnson, marketing director of Jewel Case Corp., Providence, R.I. In fact, most U.S. packaging suppliers say prices will be stable for at least 12-18 months. (The average jewelry box costs 50¢#-94# to $1.50.)

Competition also has spurred innovation, especially in the design and use of plastic injection molds to create new shapes and sizes.

But there’s a downside, too. A number of jewelers and U.S. suppliers say competition also has affected the quality, consistency and delivery of some packaging. “Competitors — Oriental and domestic — have tried to reduce their costs in the chase for the almighty dollar,” says Robert Pauly, president of the Signature Packaging Group, a Chicago, Ill., company that specializes in custom-made packaging. “As a result, they have compromised their product and quality.” Adds another supplier, “A lot of packaging now sold in this country is poor quality, and the price reflects that.” Worst-case examples include 49¢#-94# boxes with hinges that come apart in the hand.

Long delivery times also draw steam from jewelry retailers and U.S. suppliers who buy from overseas manufacturers. “You have to constantly stay on top [of the foreign firm],” says one U.S. supplier. “And when you deal with countries outside the U.S., you’re talking about a couple months’ delivery lead-time.”

In the past year, say retailers and suppliers, U.S. customers have become more demanding. “More retailers are looking for consistency in quality and delivery,” says Rutherford. And many who bought overseas now realize domestic suppliers can be more accessible and more accommodating, says Jewel Case’s Johnson. In fact, some companies that produce higher-end packaging say they’re having their best business in years.

Image-builders: The way stores use packaging also is changing. For years, many jewelers saw boxes, bags, pouches and tissues as commodities to hold a ring or hand to a customer as a carry-all. Now, many consider packaging a way to set themselves apart from competitors.

“There are two type of jewelers: those who say packaging makes no difference and those who say it makes all the difference,” says Leslie Tcheyan, owner of Tryon Mercantile, New York, N.Y. “Today, more and more of them realize that anything promotional, like packaging, can be used to catch the consumer’s eye.”

Too many jewelers still wrongly consider packaging as an overhead expense when it should be a vital part of the advertising or promotional budget, says Pauly. “If a jeweler puts a $5,000 ring into a crummy box that makes it look like a $500 ring, what statement does that make to the customer?” he asks. “On the other hand, putting a $500 ring into a fine box can make it look like a $5,000 ring.

“A jeweler’s packaging is part of his image; whatever [packaging] he uses for his jewelry makes a statement.”

The JCK poll found the majority of jewelers (two out of three) agree that packaging makes an important statement. Here are some ways jewelers use packaging to their advantage:

  • Choosing colors that coordinate with the store and placing their logo on boxes and bags.

  • Using packaging as more than a container. Examples including placing slow-moving merchandise in stylish, eye-catching boxes and using boxes to draw attention to specific products (such as placing red jewelry boxes in a corner of a display window decorated in white).

  • Buying better quality packaging for upscale jewelry and less expensive packaging for lower priced merchandise.

  • Choosing “soft” packaging — pouches, folders, bags — for a different look or for hard-to-package items such as big omega chains or certain pieces of giftware.

More options: When choosing packaging, you have more options than ever. Here’s a look at the latest shapes, sizes, materials and colors.

  • Shape & design: Traditional square and domed boxes still dominate, but there are some innovations. In less expensive packaging, for example, Noble Gift Packaging, Montreal, Ontario, offers the “walnut shell” ring box, while Alfa Box, Alhambra, Cal., offers boxes shaped like cowboy hats and graduation caps. Plastic injection technology allows curves and rounded edges in all types of designs, including Chippenhook’s new Arc line of boxes with arched domes.

  • Size & use: What’s inside affects what’s outside, say packaging designers. “As earrings and bracelets get larger, box sizes are increasing,” says Jewel Case’s Johnson. “And there is more use of soft, flexible packaging for hard-to-package items.” There also are more boxes designed so they can be used for different items (rings or earrings, for example) and more boxes where consumers can carry their jewelry while traveling.

  • Materials: There is greater use of authentic and natural materials — such as velvet, suede, leather and wood — and more texture — such as textured paper and designs cut into velvet. Jewelers also have some unusual materials to choose from for custom boxes, including ostrich. In addition, synthetic materials are gaining an audience in high-end packaging.

  • Colors: White and neutral shades remain popular, in part because of the widespread use of white-tone jewelry displays (packaging colors generally follow display colors, says Pauly). And while many jewelers still opt for conservative grays, dark blues and blacks, more are choosing them lined in white or cream. A trend in the making: earth tones popular in the 1980s are reemerging.

PACKAGING DO’S & DON’TS

Product quality and delivery time are jewelers’ two biggest complaints about packaging. Some suppliers and manufacturers acknowledge there’s cause for these complaints.

So what’s a jeweler to do? Here are some suggestions from leading packaging manufacturers and suppliers:

DO’S

  • Do choose a supplier that is knowledgeable about jewelry, produces a quality product and has a history of providing adequate advice and support.

  • Do research the supplier’s track record. Ask other jewelers about their packaging suppliers and visit packaging exhibitors at trade shows. How long have they been in business? Do they have sales representatives who visit jewelry stores? What is their average delivery time? Do they offer samples that you can examine?

  • Do check for U.S. offices or sales representatives of foreign companies.

  • Do include packaging when you draw up your annual promotional budget. What do you need, how much do you need and when will you need to order it?

  • Do be realistic about lead times, especially for customized packaging. It can take up to several weeks, depending on the size and complexity of the order and whether you use a domestic or foreign supplier.

  • Do keep track of your packaging levels so you don’t run out.

DON’TS

  • Don’t let price alone guide your choice of a supplier. Ring boxes that cost only a few cents may seem like a great deal, but you may have to contend with slow delivery or shoddy quality.

  • Don’t expect more than you’re paying for. “Some jewelers pay 50¢#-94# a box and then expect the quality and service that come with one costing $10 or $20,” says one supplier.

  • Don’t wait until the last minute to order. September through November is the heaviest season for packaging suppliers. The later you order during busy seasons, the longer you’ll wait and the fewer options you’ll have.

  • Don’t panic if you do run short. Many suppliers keep sizable stocks of generic packaging on hand specifically for unexpected or quick turnaround orders. These usually can be sent within a few days of receiving an order.

HOW IMPORTANT IS PACKAGING TO YOUR STORE’S IMAGE?

Source: JCKRetail Jewelers Panel
 
  % of respondents
Very important 67%
Somewhat important 25%
Of minor importance 5%
No importance 1%
No answer 2%

WHAT PACKAGING DO YOU USE?

Note:Total adds to more than 100% because of multiple answers.
Source: JCK Retail Jewelers Panel
 
  % of respondents
Boxes 100%
Bags 99%
Bows 80%
Stickers 69%
Ribbons 71%
Pouches 63%
Other 3%

WHAT’S THE BIGGEST COMPLAINT ABOUT THE PACKAGING YOU USE?

Source: JCK Retail Jewelers Panel
 
  % of respondents
Order processing & delivery time 31%
Quality 25%
No Complaints 20%
Costs 14%
Appearance 6%
Service 4%