A new competitor seems to be trying to undercut our prices on everything from diamonds to repairs. How can we avoid getting in a price war?
First, understand that not every price challenge is real. Many of your customers make their purchase decisions because of the quality of your products, services (especially your services), or just the relationship they have with you rather than price. Still, if you’re sure price is the issue, and you are losing customers as a result, you may want to adopt a three-tiered pricing strategy by offering premium and budget options in addition to your regularly priced goods. (You could even name them your Silver, Gold and Platinum options.) The idea is not actually to sell the cheaper or more expensive options, but to underscore the true value you are giving customers with your regular prices through your explanations of what they get with each option. When consumers are faced with such choices, they overwhelmingly choose the middle road. Any time price becomes an issue in jewelry retail, it can be an indicator you need to do a better job in your marketing and customer interactions of emphasizing the value shoppers are getting by dealing with you.
TAXES
We want to hire a new tax pro. What should I look for?
The convoluted nature of the current tax system, especially following the many recent changes to the code, definitely rewards expertise in a narrow field. A tax pro with jewelry should know all the different breaks open to you as well as be able to give you an insight into industry standards. He should also keep you out of trouble. “The IRS knows that family-owned businesses tend to be aggressive with their deductions,” says industry analyst Ken Gassman. “Jewelers need to find an accountant who knows what the typical ranges are for each class of expense. Stay within those ranges, and your chances for audit are less.”
E-MARKETING
Is email better than social media?
Yes. A recent survey by e-commerce software firm Monetate found that email marketing drives more overall sales than social media efforts. Their numbers were revealing:
- 2.49 percent of visitors from search engines buy something
- 4.25 percent of visitors from email buy something
- 0.59 percent of visitors from social media sites buy something
They are big differences, but it doesn’t mean you should close down your Facebook site. It does mean, however, that you should recognize the different benefits the two channels provide. Social media sites, in general, are a far more casual environment that can help build brand awareness, provide bite-size bits of industry information and create communities among your customers. Email has the advantage of directly reaching a single person, and if you work on your analytics, allows you to segment your customer database and offer them different promotions. With social media generating leads but not necessarily more business, it’s thus important to combine both email and social media marketing efforts to get the maximum return for all your hard work.
COLORED DIAMONDS
I hear rumors that some of the fancy-colored diamond melee could be synthetic or treated even if it is stated to be natural. Should I be testing the melee I have coming into the store?
Our industry sources tell us they are indeed seeing a certain amount of salting with treated and synthetic stones in fancy colored diamond parcels, particularly yellow diamonds. And they are not easy to pick out, especially the newer synthetics. “There is no way of telling just by looking, even with an experienced eye,” says Cara Williams of Stone Group Labs. To be tested properly, the melee needs to be unset, so the checking process is actually more expensive than for larger stones. “In balancing the expense of testing against the value of the gem, melee is a tough equation,” says Williams. “Small stones are far easier and cheaper to synthesize, and today’s micropavé styles call for lots of them.” She recommends you ask your supplier how they are handling the influx of synthetics. Be aware too that the good price you are paying may have this new reality built in.