The Independents’ One Great Advantage

The Independents’ One Great Advantage

As we enter the last year of the century, it’s appropriate to think about long-term objectives – not the usual short-term ones we forget within a matter of weeks or months. Here are some factors to keep in mind for the new millennium.

In an industry where technological change has been relatively minor, the Internet will be a tremendous force for change. The consumer’s ability to gather information on every subject will have a decided effect on both the retail and manufacturing segments of our industry. Look at what’s happening in the diamond trade. Every day there are stories of consumers entering jewelry stores demanding prices that allow little or no profit because of the ready availability of wholesale pricing data.

How will jewelers meet the challenge of the Internet? Diamond jewelry currently represents a considerable portion of the average store’s business. Will jewelers no longer stock diamonds if margins continue to deteriorate, as many claim they have? Or will they adopt more capable sales efforts to differentiate their store and their “product” from the competition, including the growing number of direct diamond merchants?

Retail jewelers have been under assault for many years, and yet as a group they’ve been able to adapt reasonably well to the changed retail environment. First, it was the catalog showrooms that threatened the industry’s equilibrium. After that, department stores attacked some of the retail jeweler’s core business segments: sterling silver, china, crystal, and gifts. Next came rampant discounting followed by the growth of the major chain jewelers. At each juncture, the death of the independent was predicted. But the independents focused on what they did well, adapted – and survived.

The reason they survive is that they’re better in tune with what consumers want than their corporate competitors, who follow numbers and formulas. If you’re behind the counter talking with customers, you can perceive and interpret changes much more quickly than if you tried to identify changing trends in a mountain of data from computer reports or from a comparison of current performance with someone’s model of the industry’s past behavior.

In the corporate world, there are two jokes that exemplify this type of modeling, which values following, not leading. The first involves someone far away from the living, breathing consumer, who says: “I’m from management and I’m here to help you.” The second is: “Accounting is a necessary profession that is akin to looking out the rear window of a moving automobile and simultaneously telling the driver where and how to negotiate the changing landscape of the road ahead.”

Undoubtedly, technology will affect how business is done. The person closest to the action is the best interpreter of what’s happening. The Internet will help consumers know more. But the retail jeweler remains the expert adviser in an industry in which consumers are (or should be) willing to pay for expert knowledge. Very few consumers will achieve the level of knowledge and experience in diamonds and gemstones needed to determine why one product is more valuable than another.

Retail jewelers’ strategic thinking for 1999 and beyond should focus on one key issue: Invest in quality training for anyone behind the counter who deals with the consumer! Product knowledge plus people knowledge is the only model that has worked and will continue to work as we adapt to the ever-changing landscape.

The Independents’ One Great Advantage

As we enter the last year of the century, it’s appropriate to think about long-term objectives – not the usual short-term ones we forget within a matter of weeks or months. Here are some factors to keep in mind for the new millennium.

In an industry in which technological change has been relatively minor, the Internet will be a tremendous force for change. The consumer’s ability to gather information on every subject will have a decided effect on our industry. Look at what’s happening in the diamond trade. Every day there are stories of consumers entering jewelry stores demanding prices that allow little or no profit because of the ready availability of wholesale pricing data.

How will jewelers meet the challenge of the Internet? Diamond jewelry currently represents a con- siderable portion of the average store’s business. Will jewelers no longer stock diamonds if margins continue to deteriorate, as many claim they have? Or will they adopt more capable sales efforts to differentiate their store and their “product” from the competition, including the growing number of direct diamond merchants?

Retail jewelers have been under assault for many years, and yet as a group they’ve been able to adapt reasonably well to the changed retail environment. First, it was the catalog showrooms that threatened the industry’s equilibrium. After that, department stores attacked some of the retail jeweler’s core business segments: sterling silver, china, crystal, and gifts. Next came rampant discounting followed by the growth of the major chain jewelers. At each juncture, the death of the independent was predicted. But the independents focused on what they did well, adapted – and survived.

They survive because they’re better in tune with what consumers want than their corporate competitors, who follow numbers and formulas. If you’re behind the counter talking with customers, you can perceive and interpret changes much more quickly than if you tried to identify trends in a mountain of data from computer reports or from comparing current performance with someone’s model of the industry’s past behavior.

In the corporate world, there are two jokes that exemplify this type of modeling, which values following, not leading. The first involves someone far away from the living, breathing consumer, who says: “I’m from management and I’m here to help you.” The second is: “Accounting is a necessary profession that is akin to looking out the rear window of a moving automobile and simultaneously telling the driver where and how to negotiate the changing landscape of the road ahead.”

Undoubtedly, technology will affect how business is done. The person closest to the action is the best interpreter of what’s happening. The Internet will help consumers know more. But the retail jeweler remains the expert adviser in an industry in which consumers are (or should be) willing to pay for expert knowledge. Very few consumers will achieve the level of knowledge and experience in diamonds and gemstones needed to determine why one product is more valuable than another.

Retail jewelers’ strategic thinking for 1999 and beyond should focus on training for anyone who deals with the consumer. Product knowledge plus people knowledge is the only model that has worked and will continue to work in today’s ever-changing landscape.