NANCY WRIGHT had taken a big risk when she decided to open Golden Art Diamonds and Gems.
After 20 years of hard work at the bench in a local repair shop, she chose to follow her heart and use an inheritance to open a store that would showcase the jewelry she had been designing and making in her spare time.
ABOUT REAL DEAL
Real Deal is a fictional scenario designed to read like real-life business events. The businesses and people mentioned in this story should not be confused with actual jewelry businesses and people.
ABOUT THE AUTHOR
Kate Peterson is president and CEO of Performance Concepts, a management consultancy for jewelers. Email her at firstname.lastname@example.org.
It took a few years to get off and running, but her instinct paid off nicely. Over the years, Golden Art had become a favorite of the local “rich and famous.” Nancy’s reputation for quality, integrity and exquisite design was solid within celebrity circles, and referrals were the norm.
She found it rather amusing, though, that at least in her view, the level of eccentricity of her well-heeled clients seemed to grow in direct proportion to the size of their bank accounts.
Fortunately, Nancy had unending patience and keen instincts that helped her deal with the craziness calmly and effectively.
“Eccentric.” Yes, that was one word people might use to describe Blake Malone, a 30-something high-tech business owner and one of the wealthiest men in town. Blake was, in the words of Nancy’s assistant, “full blown goofy,” but he had always been polite, respectful and honest with the Golden Art team.
More importantly, despite his occasional odd requests, he did spend money in the store. The difficulty for Nancy was in knowing that he spent a lot more on jewelry for friends, family and his fiancée than the store ever saw. It wasn’t about a lack of loyalty to Golden Art. Rather, it was about a bigger loyalty to local business overall.
His engagement ring was a classic example. Blake spent hours talking to Nancy about the ring, laying out very specific parameters for the 5-carat Asscher-cut diamond and the one-of-a-kind setting he wanted for Hayley. After looking at two diamond options Nancy was able to locate for him, Blake said he would get back to her.
Two weeks later, he came back to the store with a beautiful diamond he’d bought from Phillips and Cole, Nancy’s biggest competitor, and said he was hoping Nancy would help him create the perfect setting to hold the diamond. He ended up spending nearly $18,000 on an exquisite, customdesigned ring that Hayley loved.
As Nancy contemplated the request presented during Blake’s most recent visit, she had to acknowledge that it was far afield from anything she’d been asked to do before, and she had no idea how to handle it.
It was two months before the wedding and Blake wanted a very special gift for his bride. He wanted to present Hayley with a pair of 4-carat total weight diamond stud earrings — Asschercut, of course.
He laid out very specific quality and design parameters. The challenge: Blake wanted Nancy to work with Dan Cole, owner of Phillips and Cole, to source the diamonds and make the earrings, and to, in his words, “split the sale.”
He hadn’t yet spoken to Dan, but said that he would lay the groundwork and was confident that Dan would be amenable to the idea. Nancy agreed to contact Dan the next day to discuss a plan.
After Blake’s visit, Nancy was left to contemplate a strategy. She estimated that, based on Blake’s quality expectations, the total sale would be well in excess of $50,000. She valued Blake as a client, and had a cordial, respectful relationship with Dan Cole but had no idea how to navigate the situation in a way that would satisfy everyone’s needs.
The Big Questions
1. Can two competing businesses work together to create one wedding gift for Blake?
2. Should Nancy tell Blake his plan presents too many logistical challenges to be sensible and force him to choose one or the other store?
3. If the stores work together, how would it work from suppliers to warranty?
Expanded Retailer Responses
Kansas City, MO
Instinct says don’t turn the sale of the mountings away. David Geller would say, charge for the setting of their stones, at the client’s risk, and more than what in-house diamond sale charges would be.
I think she should have asked the customer to finalize the stone sale with the other store and then she will be glad to do the settings for him. I have no problem talking to or collaborating with another store, but this sounds like the start of a bad joke about two jewelers walking into a bar, and I wouldn’t want to be the punchline.
I wouldn’t do it. I mean, how do you know what markups the other store gets? If they work on a 5 percent margin on big sales like this but you work on a 30 percent margin, how do you sell him on something like this? It’s absurd. Get the diamonds in. Say if you don’t like mine, you can go ahead and get them at the other place, and I’ll set them for you.
Santa Fe, NM
How they share the sale is complicated but could be a start of a mutually beneficial arrangement. We work well with other jewelers in town and often recommend other jewelers to customers if they do something we can’t do, and we get recommendations too.
Winnipeg, Manitoba, Canada
Someone is going to be a loser in this scenerio, no doubt. I would bow out as this is not going to end well, as in the first case. She made the ring and used her materials, labor and time to make the smaller part of the sale. Selling a diamond costs nothing but a little time, so the diamond sale is almost pure gravy in profits. We have much experience in making mounts and setting large diamonds for a retailer who sells the diamonds. Guess what? We lose.
Great Neck, NY
Work together as a team, estimate hours, labor and all kinds of expenses to be used, and share the profit 50/50.
Given a cordial relationship exists between the two jewelers, I would approach it with all costs and profits split down the middle. This is a win-win scenario. Forcing the customer to make a choice is risky business and someone ends up being a loser, and possibly both become losers if the customer takes the business elsewhere. As the adage goes: “Half a loaf of bread is better than no bread.” (In this case, even half a loaf is a lot of bread!)
El Dorado Hills, CA
My jaw is dropping, I can’t imagine what I would do.
Absolutely, two competing businesses should work together to create one wedding gift for Blake, per Blake’s wishes. Each of the jewelers should find their best deal, confer, and choose the best one of their two deals for the customer. Jewelers should not disclose the suppliers to one another. Whomever comes up with the highest quality for best margin does the sourcing and is paid by the other jeweler for the balance. Blake pays each of the two stores half plus tax since Blake wants to “spread the love”. No warranty is provided. The stores split the cost of an external, mutually agreeable appraiser to write the insurance appraisal for the finished jewelry and Blake agrees to carry his own insurance on the earrings upon delivery through a company that will insure the earrings for full value, not just replacement value. Both stores will honor trade-in for higher value diamond earrings in the future, and will even offer to split the sale on future upgrades.
Kansas City, MO
Let Cole source the diamonds and then create the settings in house. Cole supplies and guarantees the stones, she covers the mounting. Just as if the customer brought their own stone.
Baton Rouge, LA
I would work with Dan Cole and create the piece of jewelry for Blake. Of course, if Dan Cole is open to the idea, too. Every custom design piece of jewelry presents its own logistical challenges. These are different, but Blake has always been a different breed of customer. As far as working together and warranty, I would want each team to warranty and be compensated for their part of the job. In other words, if Dan Cole supplies the diamonds for the job, he should be compensated and warranty that part of the sale. Dan and Nancy should be responsible for their part. One thing the jewelry business as taught me is the best laid plans can have their pitfalls. There are NO guarantees!
I understand that a sale is a sale but this is ridiculous. Blake may be a decent customer but his request is not. There is definitely too many dynamics to this situation and it simply doesn’t make sense for two competitors to split the sale. I would respectfully tell him that the logistics are too much and he needs to trust one or the other to complete this gift for him. And honestly….I’d feel a little insulted as well that he didn’t trust me enough to solely complete this project for him. Sometimes people don’t have any respect or sense and you just have to say NO.