There are real indications today that the whole jewelry industry is moving towards a tectonic shift. The independent store, often dismissed as a dying breed, is showing new signs of vitality. And mass merchants, who have been gobbling up jewelry sales and share of market since the start of the 1990s, are in deep trouble.
Right off, let’s say that not all independents are thriving nor are all mass merchants failing. But there’s no doubt that independents are acting with new authority and expertise – marketing strengths that give them much-improved retailing clout. Disarray among the mass merchants is plain to see as mergers, acquisitions and bankruptcies slice their ranks.
The independent resurgence is widespread, going far beyond the 50 to 100 outstanding merchants who are leaders no matter what the competition. Today there are jewelers in cities all across the country who are honing their buying and pricing skills, targeting likely customers with a new precision, giving more thought to profits than to sales volume and finally ridding themselves of the discounting virus.
There’s strong supporting evidence for these trends. A recent poll of the JCK Retail Panel, a group of some 500 independent and small-chain jewelers, reveals a vitality and business confidence I haven’t seen from the panel in years. One of the most striking findings is the almost total absence of complaints about competition, fair or unfair. Today’s panelists seem far more interested in getting things done than worrying about what the other guy is up to.
Meanwhile, many majors are up to their necks in trouble. Service Merchandise is going through a huge shakeup. Montgomery Ward, Bradlees, Caldor and Luria all have Chapter XI filings. Reliable Stores recently closed its jewelry division. Best Products, Brendle’s and Rich’s department stores have folded.
Even the best of the majors, with Wal-Mart and its estimated $1.5 billion in annual jewelry sales the clear leader, face severe problems. Among the most troublesome:
Finding a workable balance between consumers’ desire for quality and their equally strong desire for rock-bottom prices;
Coming to terms with the flood of returned merchandise that threatens to choke the market. Ironically, the majors themselves are to blame for the returns problem. Their lack of discipline in ordering, fueled by the arrogance which allows them to send back anything they can’t sell, means their suppliers are dumping returns onto the market at distress prices. While suppliers must take the biggest hit, major retailers can only hurt themselves by putting even greater price pressures into the market.
Their situation opens the doors for independents to take the high road to better business. Our panelists are pointing the way and their number one strategy is concentration on profit. They’ll pursue this goal with a mix of basic and innovative tactics.
The prime focus will be on inventory. Jeweler after jeweler told us that this is a year when they’ll seek to identify best sellers and keep them in stock, while at the same time spotting and discarding slow sellers and real dogs.
Many also will make a determined effort to create best sellers. In some instances this means using unusual or unexpected components in fairly standard items. Thus, quite a few panelists say they’ll feature some of the new, exciting but not very well known diamond cuts. In other instances, many panelists say they’ll pay more attention than ever to making their own jewelry. Custom design, if properly priced, can be highly profitable. It also, of course, eliminates consumer comparison shopping.
Another basic will be a two-pronged approach to the sales staff. One is simply to discourage discounting as a way to make the sale. The harder way is to train so well that staff members have enough confidence – in themselves and the product – to sell value, not price. Independents’ new aggressiveness shows in their marketing plans. They’re more determined to spend promotional dollars for maximum effect, pinpointing and seeking out the most desirable customers. They will use advertising and direct mail much more selectively. And they’ll work harder to pamper their best customers.
Will the efforts pay off? Panelists, at least, believe they will. Many are looking for a very good 1998. They’re prepared to go out and earn it.