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If You Can’t Beat Them, Try Again With Their Weapons

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If You Can’t Beat Them, Try Again With Their Weapons

Many diamond jewelry retailers suffered from low traffic, stunted sales and reduced turnover this summer. With all that time on their hands, hopefully they took the opportunity to think in earnest about the upcoming holiday season and how to prepare for it. Since all these retailers are hoping for the same thing – good consumer demand – there is a good chance they also shared a common concern (especially independent jewelers): how much harm online retailers will inflict on them as they keep eating away at their business.

Tradeshows are a great opportunity to meet and talk with members of the industry and to hear many views about issues close to the trade’s heart. This week at International Jewellery London (IJL), a fair geared primarily to British independent retailers and designers, I had a chance to sit down with a jeweler who does things differently from many others.

&#8220 E-tailing is only
going to grow and
retailers to survive
will need to find
ways to adapt. &#8221

First, he has a line of his own diamond jewelry designs that really stands out, the embodiment of “differentiation.” Then, he takes the sting out of the online competition by pricing the diamonds set in his jewelry at Blue Nile prices.

He figured out that Blue Niles’ markup is about 15 percent so he lowered his 29 percent markup to 15 percent and saw his sales double. This means that although his earnings from diamonds were eventually the same, his sales of mountings – his main product and point of differentiation – doubled and he earned much more.

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Inadvertently, this innovative jeweler discovered the first rule of diamond trading – it’s a game of volume.

Blue Nile figured out this rule a long time ago. Loose diamond wholesalers’ margins are typically 3-7 percent. To make a decent living, wholesalers must sell very large quantities of diamonds. To compete with physical stores, Blue Nile focused the game on price and succeeded because of the large volume of goods it sells.

This jeweler’s success story got me thinking about all those issues that frustrate store retailers about the online business and their secret hope that e-tailers will simply disappear. That is not going to happen. E-tailing is only going to grow and retailers to survive will need to find ways to adapt. To do so, retailers need to study what gives Blue Nile and other e-tailers an advantage and either adopt these advantages or figure out how to counter them. Service, differentiation, price, volume and marketing are just some of the points to consider.

Change is constant. Onliners will change and retailers will need to change too. Constantly. Those that do will be on their way to profitable holiday seasons.

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Wilkerson Testimonials

If It’s Time to Consolidate, It’s Time to Call Wilkerson

When Tom Moses decided to close one of the two Moses Jewelers stores in western Pennsylvania, it was time to call in the experts. After reviewing two candidates, Moses, a co-owner of the 72 year-old business, decided to go with Wilkerson. The sale went better than expected. Concerned about running it during the pandemic, Moses says it might have helped the sale. “People wanted to get out, so there was pent-up demand,” he says. “Folks were not traveling so there was disposable income, and we don’t recall a single client commenting to us, feeling uncomfortable. It was busy in here!” And perhaps most importantly, Wilkerson was easy to deal with, he says, and Susan, their personal Wilkerson consultant, was knowledgeable, organized and “really good.” Now, the company can focus on their remaining location — without the hassle of carrying over merchandise that either wouldn’t fit or hadn’t sold. “The decision to hire Wilkerson was a good one,” says Moses.

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If You Can’t Beat Them, Try Again With Their Weapons

mm

Published

on

If You Can’t Beat Them, Try Again With Their Weapons

Many diamond jewelry retailers suffered from low traffic, stunted sales and reduced turnover this summer. With all that time on their hands, hopefully they took the opportunity to think in earnest about the upcoming holiday season and how to prepare for it. Since all these retailers are hoping for the same thing – good consumer demand – there is a good chance they also shared a common concern (especially independent jewelers): how much harm online retailers will inflict on them as they keep eating away at their business.

Tradeshows are a great opportunity to meet and talk with members of the industry and to hear many views about issues close to the trade’s heart. This week at International Jewellery London (IJL), a fair geared primarily to British independent retailers and designers, I had a chance to sit down with a jeweler who does things differently from many others.

&#8220 E-tailing is only
going to grow and
retailers to survive
will need to find
ways to adapt. &#8221

First, he has a line of his own diamond jewelry designs that really stands out, the embodiment of “differentiation.” Then, he takes the sting out of the online competition by pricing the diamonds set in his jewelry at Blue Nile prices.

Advertisement

He figured out that Blue Niles’ markup is about 15 percent so he lowered his 29 percent markup to 15 percent and saw his sales double. This means that although his earnings from diamonds were eventually the same, his sales of mountings – his main product and point of differentiation – doubled and he earned much more.

Inadvertently, this innovative jeweler discovered the first rule of diamond trading – it’s a game of volume.

Blue Nile figured out this rule a long time ago. Loose diamond wholesalers’ margins are typically 3-7 percent. To make a decent living, wholesalers must sell very large quantities of diamonds. To compete with physical stores, Blue Nile focused the game on price and succeeded because of the large volume of goods it sells.

This jeweler’s success story got me thinking about all those issues that frustrate store retailers about the online business and their secret hope that e-tailers will simply disappear. That is not going to happen. E-tailing is only going to grow and retailers to survive will need to find ways to adapt. To do so, retailers need to study what gives Blue Nile and other e-tailers an advantage and either adopt these advantages or figure out how to counter them. Service, differentiation, price, volume and marketing are just some of the points to consider.

Change is constant. Onliners will change and retailers will need to change too. Constantly. Those that do will be on their way to profitable holiday seasons.

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var disqus_shortname = ‘instoremag’; // required: replace example with your forum shortname

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var dsq = document.createElement(‘script’); dsq.type = ‘text/javascript’; dsq.async = true;
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Please enable JavaScript to view the comments powered by Disqus.
blog comments powered by Disqus

Advertisement

SPONSORED VIDEO

Wilkerson Testimonials

If It’s Time to Consolidate, It’s Time to Call Wilkerson

When Tom Moses decided to close one of the two Moses Jewelers stores in western Pennsylvania, it was time to call in the experts. After reviewing two candidates, Moses, a co-owner of the 72 year-old business, decided to go with Wilkerson. The sale went better than expected. Concerned about running it during the pandemic, Moses says it might have helped the sale. “People wanted to get out, so there was pent-up demand,” he says. “Folks were not traveling so there was disposable income, and we don’t recall a single client commenting to us, feeling uncomfortable. It was busy in here!” And perhaps most importantly, Wilkerson was easy to deal with, he says, and Susan, their personal Wilkerson consultant, was knowledgeable, organized and “really good.” Now, the company can focus on their remaining location — without the hassle of carrying over merchandise that either wouldn’t fit or hadn’t sold. “The decision to hire Wilkerson was a good one,” says Moses.

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Most Popular