WGC STRESSES TO HIGH-VOLUME MARKET

The World Gold Council’s efforts with the high-volume market are driven by its increased recognition that this retail sector accounted for more than three-quarters of all U.S. gold jewelry dollar sales and nearly 90% of all unit sales last year, according to the council’s 1996 Annual Report.

“In the non-traditional sector, major retailers have become leaders in the gold jewelry market by giving gold primary value and mass-market appeal,” says Michael C. Barlerin, the council’s chief executive officer of the Americas. “But we felt they had done all they could as far as volume. They offered gold jewelry more as a commodity and were even selling it by karat weight.

“We sensed that for them to continue their growth momentum and to enable smarter players to differen-tiate themselves, there needed to be a move toward quality. Late last year, we began to direct almost all our efforts, and the overwhelming majority of our budget, to developing a ‘Supersellers Total Quality Strategy’ with major retailers.”

Strategy

According to Barlerin, this strategy – about 80% in place – focuses on:

• Higher karatage, gram weight and price points. “You needn’t always sell special, better-quality merchandise at a discount,” he says.

• Wider gold jewelry assortments. “Give customers lots of merchandise options and make sure you’re always well-stocked,” Barlerin says.

• More branded lines and unique collections. Recent programs WGC helped to shape include QVC’s well-received Arte d’Oro 18k gold collection, Service Merchandise’s Tuscany Gold collection and European jewelry bearing the Emagold quality mark. “We’re telling retailers not to just carry the basics that have driven the business the past five years, but to take some chances,” Barlerin says.

• Strong partnerships with a select group of the industry’s largest players. This year WGC is working closely with J.C. Penney, QVC, Sears, Service, Sterling, Zale and about six others rather than dilute its efforts and resources among a larger number of volume retailers. “We’re looking for our partners to do volume themselves, but we also want them to send a signal to the rest of the industry that the volume [for higher-quality gold merchandise] is out there,” Barlerin says. “We can really impact the marketplace by working with such huge, influential players.”

• Coordinated point-of-sale presentations and advertising materials reflect a more upscale gold direction. “For aesthetics, the advertising vehicle [especially catalogs, newspaper circulars, direct mail pieces and other printed materials] should mirror the point-of-sale presentation,” he says.

• A sales training program integrated with the other initiatives, rather than the one-dimensional, stand-alone programs of the past. “We’re looking at long-term strategic partnerships, not just a one-season deal,” Barlerin says. “We’re developing comprehensive, non-proprietary programs – tailored to the strengths and weaknesses of each key partner – that we can pilot off of and package for other retailers once we’re beyond the exclusivity period.” Barlerin says this exclusivity probably won’t end until next year.

Ongoing process

WGC’s shift from the independent jewelry sector has been an ongoing process, propelled by its success with that segment and the growing importance of the volume market.

“Four years ago, we moved from consumer-focused advertising to business-to-business partnerships with companies,” he recalls. “We focused primarily on getting guild stores, independents and some jewelry chains – all of whom were very diamond-intensive – to understand the opportunities of gold and commit more open-to-buy.

At the same time, WGC conducted specialized programs with six to 10 players in the mass market, says Barlerin. “We talked profitability and partnering with them, did three years of gold symposiums, worked with their training programs and tried to sell to their chief financial officers and general merchandise managers the idea that our ‘Build Your Business Out of Gold’ program was geared to the customer they were already attracting,” he says. “At that point, we weren’t using our co-op dollars for the mass sector.

“Over the past few years, though, we’ve seen a maturation of the guild stores, so we modified our co-op percentages and asked the independents to step up to the plate [and become more self-sufficient in developing and financing their gold jewelry programs].”

Videos, Gold Focus & the Web

Not all of WGC’s marketing efforts this year are geared to the high-volume market. WGC is maintaining or developing several generic programs. But existing programs are being broadened to include the majors, and newer programs can still be customized for individual volume players. For example:

• WGC has produced a 12-minute video, “The Rewards of Gold: How to Sell Gold Jewelry,” that offers store associates a basic primer on the metal. It gives a historical perspective on gold and explains its significance in our culture. The tape also defines important selling characteristics such as gram weight, karatage and color, lists common finishes and chain styles and covers care of gold jewelry. It also teaches sales associates how to explain price differences between pieces based on weight, purity, craftsmanship and the quality of the findings.

“The tape is basic and fun to watch,” says Debra C. McDonough, WGC communications director. “We are incorporating it into our training programs for our high-volume partners.” Other retailers can buy the video for $24.95.

• WGC also is producing about six issues of Gold Focus, a market report of trends, sales tips and other information that retailers of any classification can use. The first three issues highlighted gold necklaces, gold earrings and the most frequently asked questions salespeople are likely to hear from customers.

WGC did an introductory mailing of the report early this year to 22,000 retailers across all trade channels, seeking feedback on the format and requesting future topics. Since February, the association has used the industry’s major trade publications as its delivery vehicle for Gold Focus, packaging each report within the magazines as a tear-out insert. McDonough says retailers can customize these reports and use them in training booklets, direct-mail pieces or even counter materials. Several of the majors, including Service Merchandise and J.C. Penney, have already done so. “We’re also talking to key manufacturers to see how we can incorporate the market report into their programs to get it into as many retail doors as possible,” she says.

Other WGC product trend and sourcing guides will be broader than before, with representation from the low end as well as the middle and high ends, she adds.

• A WGC Web site is also in the works. However, WGC believes it can make a bigger impact in cyberspace by developing “modules” of basic gold jewelry product knowledge that can be incorporated as a “window” into high-volume retail sites, where consumers can buy jewelry on-line.

• Even WGC’s trade show booths this year have reflected its broadened scope. In the past, the booths primarily highlighted higher-end, designer pieces. Now they showcase mass-market offerings as well.