The JCK 2008 It List

Fashion Crossover

We’ve been talking and talking (and talking) about the merging of fine jewelry into the fashion world, and recent developments show that movement is continuing to grow. Watch for new competition from a breed of boutique retailers who mix fine-jewelry selections with other high-end fashion accessories, and even more big fashion brands launching their own fine-jewelry lines.

How jewelers can address this issue: Female self-purchasers are driving both trends, and one of the best ways for traditional jewelers to compete is to offer a selection of fashion-conscious jewels, especially in lower-price semiprecious stones that represent the colors of the season.

China Syndrome

Among products recalled by the Consumer Product Safety Commission last year, some 60 percent were for items made in China. Meanwhile, nearly a half-dozen consumer studies, including one from Deloitte & Touche USA, reveal that Chinese-made imports are receiving more scrutiny from U.S. shoppers. An increasing number of Americans take country of origin into account, will pay more for American-made goods, are uneasy about buying products from China, and want luxury items to be made in countries with reputations for quality.

How jewelers can address this issue: Ask your vendors where merchandise is made, and reveal the information to customers by placing small “Made in …” signs next to each collection in your cases.

Celebrity Endorsements

Expect the celebrity-brand-of-the-week trend to continue. Everyone from musicians (Kanye West) to reality television stars (Brody Jenner) to real estate heiresses (Ivanka Trump) has launched fine-jewelry lines. The trend underlines both the unwavering strength of celebrity in marketing and the firm place fine jewelry has taken in the realm of fashion accessories.

How jewelers can address this issue: Stay abreast of new celebrity lines and consider adding a few to your merchandise mix. Along with overall design and pricing of the lines, take into consideration the appeal of the celebrity (age, gender, favorite causes) to your local customers. If you add one of these lines, take full advantage of the promotional opportunities that arise from having a celebrity name associated with your store.

Jewelry with a Conscience

The real credit may go to Al Gore, but the blossoming of environmentally (and socially) conscious jewelry is more directly attributable to media powerhouses that made this the It cause of 2007. Both Vogue and Vanity Fair (and JCK Luxury) had green issues or features that made reducing our carbon footprint suddenly chic. With the impact of global warming finally dawning on mainstream America, and the coming-of-age of generations that are much more conscious than their elders of environmental and social issues, jewelry—like all fashion—will continue to grow greener.

How jewelers can address this issue: Understand environmental and social issues well enough to answer consumer questions. Ask for Kimberley documentation with diamond purchases and make sure suppliers know it matters to you. Switch to environmentally sound packaging and marketing materials and promote their use, e.g., “All our boxes, bags, and catalogs are made from recycled paper” or “We plant a tree for each catalog we produce.”

Mighty Mechanicals

Watches with mechanical mechanisms—primarily self-winding—will boom in the mid- and upscale price segments and come on strong in the popular-price category. (Armitron, Fossil, and Timex, for example, now all offer mechanical watches.) More brands will unveil their own movements and add complications, and upscale brands will create more models with complications made specifically for women.

How jewelers can address this issue: Be prepared to discuss technical aspects of watches with women as well as men. Take advantage of watch brands’ sales training programs and literature.

Combating Crime

Local crime prevention networks will proliferate, spurred by a joint project of Jewelers’ Security Alliance, Jewelers of America, and Jewelers Mutual Insurance Co. The project, which has its own administrator and regional organizers, anticipates at least 60 new local networks this year, with a goal of 200 by 2010.

How jewelers can address this issue: Join a network or start your own. Call JSA at (800) 537-0067 or visit www.jewelerssecurity.org to get a how-to training booklet and related materials.

Palladium Plows Ahead

Expect significant acceleration of public awareness of palladium jewelry. Palladium Alliance International will launch its first consumer advertising and branding campaign and publish its second annual Palladium Design Book, a marketing tool sent to top-tier retailers and distributed at major trade shows and press events. PAI will present “the first annual Palladium Social Event,” showcasing new jewelry for the consumer and trade press and “fashion and jewelry influencers.” There’s also a new Web site at www.luxurypalladium.com for the general public.

How jewelers can address this issue: PAI is offering jewelry retailers free advertising templates at www.luxurypalladium.com for use in their own ad campaigns. It also will launch an online sales training program for manufacturers and designers (and customized for retailers’ salespeople) and introduce new point-of-sale materials for retailers including counter cards and booklets for consumers.

High-End Watches

Following the lead of companies such as Backes & Strauss, which is producing exquisite diamond watches in a joint project with luxury watchmaker Franck Muller, and Concord, which recently vaulted into the top-luxury watch niche, more luxury watchmakers will target the highest of the high-end markets.

How jewelers can address this issue: Not everyone can carry million-dollar timepieces, but jewelers can test the waters of their local market by hosting a special watch show with some higher-end models and vendors than they typically carry. If response is good, consider expanding your regular offerings upward.

Gems ‘Made in America’

With more emphasis on where gems have been cut and polished, more American lapidary artists will create or recut fine-quality gems.

How jewelers can address this issue: Seek out local lapidary artists and award winners from American Gem Trade Association Cutting Edge competitions, or contact national groups such as Gem Artists of North America (www.gemartists.org) or North American Gem Carvers (www.northamericangemcarvers.com).

Eastern Europe Rising

Along with China, India, and the Middle East, consumers in the former Soviet empire are spending big on luxury goods. The impact on American jewelers will be felt through rising prices for big diamonds and gems, as demand for top stones grows but supply lags. Additionally, global jewelry manufacturers report that retailers in those countries frequently pay up front, so if the choice is between a European wielding cash and an American asking for terms and returns, guess who wins?

How jewelers can address this issue: Manage your cash flow carefully, pay bills on time, and use memo and extended payment terms sparingly. And have a stash of cash in case that special stone comes up unexpectedly.

High Def and Handbags

“2008 is expected to be a banner year for high-definition television sales,” says Steve Smith, editor-in-chief of TWICE, the consumer electronics industry’s weekly newsmagazine. By February 2009 analog TVs will be obsolete, he says, so consumers who don’t subscribe to cable or satellite services will have to purchase either a new set or an analog-to-digital converter box. Meanwhile, sales of status handbags continue to skyrocket—and while there comes a point where a household has as many TV sets as it needs, there’s no saturation point for handbags—women buy new ones every season to stay on trend.

How jewelers can address this issue: To take advantage of the television boom, develop an innovative partnership promotion with a local electronics store. To capitalize on the handbag phenomenon, make sure your marketing underscores the importance of jewelry as a fashion statement and targets fashion-conscious women. Inside the store, install a full-length mirror and spread out an assortment of current fashion magazines for browsing. Other touches that appeal to female shoppers are a concierge service to hold bags and coats; a cup of coffee, tea, or juice; and a play area for children.

Gem Enhancements on Trial

As the gem trade continues to engage in heated arguments over nomenclature for highly altered gem materials—including superheated Mong Hsu corundum, irradiated blue topaz, beryllium-treated Tanzanian corundum, glass-filled Madagascan corundum, and superheated Indian industrial diamond—consumers will begin to ask for straightforward information. Terms like enhanced, heated, irradiated, and treated don’t adequately disclose the details of treatments, and they won’t be enough to satisfy customers.

How jewelers can address this issue: Understand why prices of treated gems are so different from those of natural gems, and explain the difference to customers. Be able to describe how high-temperature furnaces are used to improve the color of Mong Hsu ruby, how special coloring agents improve colorless or off-color Tanzanian sapphire, and how filling fissures with a special glass to mask bright reflections improves the clarity of highly fractured Madagascar ruby.

Gems Go Natural

More consumers will insist on natural, untreated gems—no color enhancement, no coating, no stabilizing—and such gems will be even more heavily promoted.

How jewelers can address this issue: Use suppliers that guarantee all-natural gemstones, and also look for gems that usually are not enhanced such as amazonite, chrysoberyl (including cat’s-eye and alexandrite), diopside (including chrome green), garnet, iolite, moonstone, peridot, rutilated and rock crystal quartz, sphene, and spinel.

The De Beers Lawsuit

Retailers stand to gain money from the De Beers antitrust settlement, but be aware of the consumer aspect. Any customer who purchased diamonds over the last 12 years also is eligible for a settlement check, and some fear this will mean customers will ask their jewelers for old records and sales receipts.

How jewelers can address this issue: Jewelers of America is preparing a list of talking points for members. Meanwhile, maintain good records and address customer concerns. Helping them with their claims is good customer service and effective public relations.

Consumer Power

People don’t want to be targets of marketing anymore, and now, with the Internet, they can bypass marketing messages by creating social networks of passionate customers and professionals who are willing to share information and opinions about products. New software makes this online activity more vibrant, efficient, and fun. Kelly Mooney, president and chief experience officer for Resource Interactive, calls it the “rise of the individual,” where consumers are in charge of the marketplace.

How jewelers can address this issue: Join the online conversation. Make all of your product information available and create Web environments that facilitate sharing.

Silpada

This importer of cute, cheap, Chinese-made sterling silver jewelry sells its products through home parties—it’s the Tupperware concept applied to fashion jewelry. Silpada representatives persuade a hostess to open her home to guests (as many as 60), and the hostess provides light refreshments and receives jewelry for her efforts—the higher the sales, the pricier the present. After 10 years of business, Silpada has more than 17,000 independent direct sales representatives and annual retail sales of $190 million.

How jewelers can address this issue: Ask a good customer to host a home show for your store where you’re the sales representative. Start with dated inventory or low-cost items, or choose a theme (like pet-motif jewelry). Offer a jewelry incentive based on sales.