Too Big to Ignore

Every December, the editors at JCK select an individual whom they feel has had the most impact on the jewelry industry as a whole in the previous year to be the JCK Person of the Year. Past recipients include such luminaries as John Kennedy, whose work on behalf of the Jewelers’ Security Alliance has helped reduce crime against jewelers nationwide; Richard T. Liddicoat, the father of modern gemology; and Pattie Light, whose work on behalf of Jewelers for Children helped raise millions of dollars for children’s charities around the world.

This year, while many individuals made important contributions to the industry in a variety of areas, JCK could pinpoint no one single person whose efforts have had an across-the-board impact. We do, however, feel that one group of consumers represents the single largest opportunity for sales growth in the domestic jewelry industry—and that is why we’ve chosen the female consumer as the collective, conceptual Person of the Year for 2005.

What would you do to attract a customer who owns 6.2 million businesses and who will control two-thirds of the private wealth in America by the end of this decade? A customer whose own wealth and spending power is $6 trillion annually—topping the gross domestic product of many industrialized nations?

What would you do if you knew that this customer had been turned off by the shopping experience in many jewelry stores? Or that many of your peers don’t know how to connect with her? That’s right, her. Consider these figures:

  • 52 percent of the American population is female;

  • Three out of five women are in the workforce, and the U.S. Department of Labor predicts that by the end of the decade, three in five will outearn their partners;

  • The IRS estimates that 43 percent of taxpayers with gross assets of $500,000 or more are women;

  • Women influence 95 percent of consumer purchases and buy 85 percent of consumer goods;

  • Women buy more than $4 billion worth of diamond jewelry every year—26 percent of total diamond-jewelry sales;

  • Women buy more than two-thirds of gold jewelry sold; some studies peg this figure at more than 70 percent;

  • Women have historically been the primary buyers of sterling silver jewelry—more than 90 percent is sold to women;

  • Approximately 45 percent of all Tahitian pearl jewelry is bought by women; however, for the entire cultured-pearl-jewelry category, that figure climbs to between 75 percent and 80 percent;

  • Women buy 43 percent of all platinum jewelry sold, 67 percent of which they purchase for themselves.

Women are not a niche market; they are the long run, says renowned author and marketing guru Tom Peters in Women Roar: The New Economy’s Hidden Imperative. The power that women consumers wield has revolutionized the way cars, financial services, sports, and the military—all traditionally male-dominated—are marketed and sold. Author and marketing expert Bernice Kanner, in her latest work, Pocketbook Power: How to Reach the Hearts and Minds of Today’s Most Coveted Consumers—WOMEN, points out that with women influencing four out of five new vehicle purchases—and directing the financing of more than half of them—it’s not surprising that automakers such as Ford, Saab, and Volvo recruited women to conceptualize and design features that are important to female drivers. And since the typical car-buying experience used to mean the salesperson (usually a man) would direct his questions to the man and/or patronize the woman, women generally viewed the exercise on a par with getting a root canal. Today, however, automotive marketing puts the woman in the driver’s seat, and car salespeople are specifically taught how to connect with a female customer.

Organized sports and the military are also appealing to women, says Kanner. The Super Bowl audience is now 43 percent female, and the military actively recruits young women along with young men.

Yet even in the face of these statistics and market indicators, many companies still consider women a niche market, relegating the marketing and product development needed to attract them to a back—and underfunded—burner. And the jewelry industry is one that lags behind.

“The perception is that above a certain price point, a man has to be part of the purchase,” says Rob May, director of Escada USA, a division of the Pluczenik Group. “But I don’t necessarily believe that.” Retailers, he feels, are just beginning to understand that selling to a woman is different from selling to a man.

“It is no longer true that jewelry purchases must go through a man to get to a woman,” says Ruth Batson, executive director of the American Gem Society. “Women have their own money to spend, and women buy—big time.” Women are the market of the future for the jewelry industry, she says.

Carol Campbell, director of business development for Hollywood-based marketing agency Marketing Matters, is an expert on teaching electronics retailers how to sell to women. In an interview with JCK, she was surprised to learn that the jewelry industry is just waking up to the potential of the female purchaser, given that women are the primary end users of the product. Yet she sees many parallels with electronics retailing.

“I have shopped with women on cruise ships in the Caribbean, and they can’t spend money fast enough on themselves! But the salesperson is clearly trained to sell to her. If she walks through your door, she can probably be closed.”

That is, if the jeweler and the sales associates know how to sell to her. A woman wants an experience, a relationship, and a sense of what’s in it for her. In electronics, for example, Campbell says women will strip even the fanciest gizmo down to its most basic premise: What will it do for me? With jewelry, the question is: How will it make her feel?

“Jewelry is a gift of love. It can mean ‘I love you,’ and it can mean ‘I love me,’” Bernice Kanner told JCK. “A woman can buy jewelry for a multitude of reasons … I just got a job, a raise, the news that my breast cancer is in remission, or just because it makes me feel good. Because I’ve arrived. Because I deserve it.”

This industry is steeped in tradition, and tradition says that men buy jewelry for their wives or that women buy it with the permission of their husbands, says Batson. But Kanner thinks this has more to do with generational attitudes than the product.

“Older men are dealing with the stereotype that it’s the man’s job to gift the woman. They can’t adapt to the idea of a woman’s self-love because they don’t believe in it.”

The younger generation (men and women) has a different mindset, Kanner says, and they think self-love is worthy. But women have a more fragile sense of self than men, and the jewelry-store environment intimidates them. “You feel like a thief even before you walk in. I don’t know how you’d solve it, because jewelry is small precious goods that are highly portable, but a lock and key has a sense of keeping one out.”

Women are more likely to feel comfortable shopping for fine jewelry in a department store rather than a jewelry store, Kanner says.

Merely painting a product—or an experience—pink won’t make it appeal to women, say Lisa Johnson and Andrea Learned, marketing experts and the authors of Don’t Think Pink: What Really Makes Women Buy—and How to Increase Your Share of This Crucial Market. A product or a marketing campaign needs to resonate with women, which only happens when it truly addresses their lifestyles and needs.

“As a woman who shops for her own jewelry, I expect an experience, not just a transaction,” says Ruth Batson. “I’d like to see jewelry merchandised by style and use. Show me what’s appropriate for the office, the weekend, a romantic dinner, or an important event. Also, it would be nice to have seating at the counter other than in the wedding-band section.”

As Batson suggests, understanding how a customer wears her jewelry and knowing what she wants to learn from the experience—such as what’s appropriate for what occasion—is the difference between connecting with the customer and merely pitching product or services at her. Instead of simply running a promotion announcing you’ve just returned from the biggest jewelry show of the year, consider calling in a focus group of female customers before you leave for the show and asking them what kind of products they’d like you to look for at the show. What pieces and price points would best suit their wardrobe needs?

A SHOE-IN

Jewelers have been heard to comment that salespeople in department stores may sell shoes one week and jewelry the next, implying that their professionalism and product knowledge aren’t up to par. Although jewelry product knowledge is important—and salespeople should be current—technical aspects are far down the list of why women buy.

Doug Hucker, executive director of the American Gem Trade Association, told an audience at The JCK Show ~ Las Vegas that women come to a jewelry store to buy a piece of fashion, not get a science lesson, and jewelers should not get hung up on gemological explanations. If the jeweler doesn’t understand fashion or isn’t comfortable selling jewelry as a fashion item, he or she should hire someone who is, Hucker said.

Rob May debunks the shoe-salesman myth and says jewelers should hire sales associates (particularly women) who sell fashion, who sell handbags—and who sell shoes. Batson says emulating the designer-shoe industry could help jewelers boost their appeal among female self-purchasers.

“I have many pairs of expensive black shoes, and I feel good about every single one of them and can’t wait for my next pair!” Batson says. And more than a decade ago, when the domestic jewelry market in Hong Kong was still primarily composed of traditional 24k chuk kam gold jewelry, one progressive company began opening shops featuring 24k jewelry with current, rather than traditional, designs, targeted to young women buying jewelry as a fashion statement. The company behind it was a shoe retailer, who told JCK then that women buy jewelry for the same reason they buy shoes—as a feel-good fashion item.

Only recently has the need for change been driven home. Sales of fine jewelry have risen slowly and steadily year-over-year and, in an industry where tradition rules, slow-and-steady seems normal. But in a world where fast-and-agile is the new paradigm, slow-and-steady won’t guarantee market share.

Consider the raison d’être behind the Diamond Trading Company’s Supplier of Choice initiative: Fine-jewelry sales growth lagged far behind that of other luxury-goods categories. If this inspired De Beers to turn the diamond pipeline on its head—with all the attendant confusion—it’s reason enough to look critically at where jewelry stands in relation to other consumer goods.

Why is it important to make sure women want to shop in your store? Because you can make a lot of money, says Campbell. And because if you don’t, you’re going to be out of business, says Kanner. It’s that simple.

A DIFFERENT APPROACH

Kurz, a jeweler in Switzerland, recently revamped its image and product mix to target female shoppers. The 10-store chain, part of the Bucherer group, is based in Zürich with stores across Switzerland.

Susan Sagherian, a veteran industry trend watcher and a graduate gemologist, is the head of Kurz’s jewelry department. “I get the feeling from U.S. customers that they still believe jewelry is something you receive from your husband or partner,” she says. “And I get the feeling that retailers think the same. Shifting your focus as a retailer from a gift-purchasing man to a self-purchasing woman, however, is a huge step. You have to change your view completely. And not only your view but also your collection, your way of training the sales staff, your marketing, etc.”

Kurz, which Sagherian says had a “middle-of-the-road, generalist image,” began focusing on fashion about three years ago. “In our research, we found that the potential of this market niche was sufficiently big enough for us and not currently occupied,” she says.

The strategy paid off, and quickly, says Sagherian. “After two years of hard work we can say that all the parts of our collection that we had the chance to reorganize are working very well. We have completely changed the look of the collection in the windows. We have refurbished two shops in this time and both are working very well, are highly accepted with our existing customers, and pulling in new ones.

“We put a lot of emphasis on thinking about women with everything we do. We train our staff not only in product knowledge but also in style, and we arrange products in such a way to meet a particular woman’s taste with clearly visible style segments in each vitrine. One is a more classical showcase, one is more romantic, one more modern, one more youthful, etc.”

Sagherian says a woman can find her personal style and then find different kinds of products in all price levels to suit it. The retailer’s marketing and promotional materials and events also appeal to women. Its new marketing campaign shows pictures of different types of women wearing Kurz jewelry and enjoying themselves. The headline says, “I am beautiful.”

Kurz still retains a broad clientele and carries a wide selection of product, Sagherian says, ranging from newborn-baby gifts to affordable fashion product for impulse buying to exclusive one-off pieces for well-heeled customers. The firm also finds that some stores cater to tourists while others have a local clientele. But across the board, clients are more likely to be female than male and, says Sagherian, “mostly buying themselves, either as a gift or as self indulgence.”

WHAT SHALL I WEAR?

Knowing how to sell to a female customer is only half the battle. The other half is having product she wants to buy.

Ben Janowski, an industry analyst and president of Janos Consultants, cites apparel to explain what’s holding back growth in the female self-purchase jewelry market. “Men’s apparel tends to stay the same, but women’s is more fashion-oriented and changes all the time. Yet when they go to a jewelry store, they see the same [kind of] thing the store had a year ago. They’re not excited by it; they’re bored by it.”

Karen Janowski, Ben’s wife and partner, adds, “[Women] will buy the ‘It Bag’ of the year without even thinking. Or, maybe they’ll think about it, but they’ll still buy it. But they won’t buy the jewelry even if it’s the same price as the handbag.”

Barbara Bonn, creative partner at New York ad agency Jim Feldman Creative Direction, says, “The idea of fine jewelry that changes seasonally like fashion hasn’t taken hold [in the industry]. I think the word ‘fashion’ is scary to fine-jewelry people. It has implications of impermanence, of being here today and gone tomorrow.”

Jim Feldman, owner of Jim Feldman Creative Direction, says traditional diamond marketing constrains marketing to women. It’s not only predominantly occasion-driven but also undercuts the notion that diamond jewelry can be a fashion item. “I think ‘A Diamond Is Forever’ sometimes works against the industry,” Feldman says. “A diamond may be forever, but a setting isn’t.”

“Women look for design, for differentiation. They have their own individual style, and they change who they are from year to year and from decade to decade,” explains Rob May. “Jewelers need to hire salespeople who understand this, who get it. It’s OK for her to have three different rings that she’d wear on the same finger on three different days.”

Unfortunately, says Janowski, a good part of the industry can’t afford to react that quickly to design trends. “David Yurman knows he can’t show this year the same thing he sold last year, but the average company can’t afford [the kind of product development Yurman does] every year.

“And if it doesn’t sell through, and the retailer sends it back, it’s death [for the vendor]. With a diamond solitaire, it doesn’t matter [if the retailer sends it back]. How do we break the chain?”

This emphasis on fashionable product doesn’t mean that classics are dead. Quite the contrary, says Sagherian. “We sell a lot of pieces that are far from classic. But there is also a daily business of simple diamond and pearl studs and rings. I would say that the two styles are equally important for us.”

Kanner’s book points out that seven out of 10 Americans choose jeans as their first choice for casual wear, and that the little black dress, a classic introduced in 1926 by Coco Chanel, is in as many women’s closets as jeans are. A spokesperson for Neiman Marcus says that in times of uncertainty, women usually revert to the classic uniform of jeans, white shirt, and sneakers. (Even in times of relative certainty, it’s a favorite.) The individualization, says Rob May, comes from how women put items together. Selling a matched set to a man for a gift is a no-brainer, but a woman will mix things up—some classic, some fashion-forward—according to her own style.

“Women dress for other women, much more so than for men,” says Kanner.

THE RIGHT PRICE

Industry sales trainers almost universally teach associates to push price objections aside right away to focus on benefits and value.

Sorry, says Kanner, but for a female shopper, it is about price. Prices should be visible. If a woman has $500 or $5,000 to spend, she wants to know what she can get for it. Kanner also suggests grouping jewelry according to price points so a shopper knows what her choices are.

“Most people buy something with a budget in mind,” she says. “It’s the guiding principle. You don’t go looking at houses saying ‘I want a Colonial with a red front door.’ You go looking to see what you can find for $750,000.”

You can deflect a price objection if that comes up first, says Carol Campbell, but you have to focus on what she wants, not on what you want to sell. And put the watch on her wrist or the remote control in her hand so she sees herself as the owner, Campbell stresses. Empower her to close herself!

“There’s a price tag on a Maserati, and a price tag on an Oscar de la Renta gown,” says Alyce Alston, chief executive officer of De Beers North America. “It can be done tastefully.” Visible pricing is a key element to the new De Beers stores’ merchandising, she said.

Karen Janowski adds, “In the industry we think of jewelry as heirlooms, not disposable.”

No, fine jewelry is not priced to be disposable. Yet there’s a niche—still unfilled—between heirloom and disposable, a sweet spot that Ben Janowski insists can be answered. “Watches have done it, but the jewelry industry hasn’t,” he says.

Ruth Batson adds, “For someone like myself, who can’t afford the museum-quality pieces but doesn’t want the $299 tennis bracelet, there seems to be a lack of middle range–priced jewelry.”

Industry analysts and many articles have cited the increasing polarization of the jewelry industry—indeed, of the retail marketplace in general. Sales, they say, are clustered at the high and low ends of the market, suggesting that the middle market no longer exists.

Is this true? In the jewelry industry, there’s a lack of design-driven product at a middle-level price point, but the question arises: Is the customer disappearing because of lack of product, or is product disappearing because of lack of demand?

In the retail market as a whole, the psychographics of shopping have polarized between mass and class, but the demographics have not. Good design, for the first time in history, is available to the masses as well as the classes. At the same time, the proliferation of fashion, shopping, and lifestyle magazines like InStyle and Lucky, along with shelter magazines like Martha Stewart Living and Real Simple, and TV programs and channels devoted to home and hearth are teaching consumers how to identify—and identify with—good design and quality. Witness the proliferation of affordable-design stores like Crate & Barrel and Pottery Barn for furniture, Chico’s and Banana Republic for fashion, Coach for leather, and Bose for audio. And Lexus, BMW, Mercedes-Benz, and Volvo all have entry-level models.

The price points for these goods are bang in the middle. But because they’re design-driven, they present an upscale image and give the impression that they’re luxury price. But a $1,000 couch costs $1,000, whether you buy it at Sears or Crate & Barrel.

What, then, is that self-purchase “sweet spot” price point for fine jewelry? “I think it’s going to be different for an independent versus a chain store,” says Rob May.

“At Kurz we put a lot of emphasis [on product] between $300 to $1,300,” says Sagherian. “It is a price level where women really buy spontaneously, when doing their seasonal shopping anyway. The more wearable and versatile the piece is, the sooner it’s sold. With our even-less-expensive range (like silver, semiprecious, and freshwater pearls), we make sure there is always something new in our store.”

WHAT’S THE NEXT STEP?

The industry needs to do more consumer research, May says. “Changes shouldn’t be made based on what we think it should be, but on what the customers think it should be.” He predicts that such change will probably be sparked by a large retailer—and it will be seismic. Traditional jewelers aren’t going away, says May, but they will need to be different.

“The industry has changed so much already. It’s tremendously different than it was when I started 20 years ago. It used to be that what you know got you through. Now it’s how you connect that gets you through. Are you adaptable enough to move?”