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Refuse to Play the Price Game

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This isn’t another one of those sales advice columns urging jewelry retailers to build value in your diamond product while remaining firm on price.  While that’s great advice, it’s a difficult game to play and ultimately, potentially, a losing proposition in business.  Independent retailers do not have the buying power that Blue Nile or large corporations have.  So if you’re selling commodities against them – and that includes diamonds; we’ve done it to ourselves by claiming they can be completely nailed down through technical measurements – you’re fighting an uphill battle.

Instead, why not build a business where your product cannot be price-shopped?  All of a sudden, the sales process really does become about building value.  You don’t have to worry about being undersold, you just have to worry about helping the client understand the value in your product.

This is on my mind today because I’ll be doing an interview next week with FourGrainer.com’s “In the Jewelry Trade” podcast, and one of the questions they’re going to ask me is, “What advice would you give a new retailer entering the jewelry business?”  It occurred to me that I would tell that hopeful businessperson to think like a merchant and sell product that can earn a strong margin while also selling through at a reasonable rate.

Yes, we all know diamonds are the lifeblood of the jewelry business.  Or at least, we’ve been told that, and it’s true, in part – most jewelry purchases continue to be overwhelmingly diamond-based.

But that doesn’t mean your business has to be diamond-based to be successful.

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What about a business that revolves around custom design?  That model has been so successful for Green Lake Jewelry Works that they’re looking to expand aggressively, even though the jewelry market overall is stagnant.  Custom work taps the zeitgeist of individual, personalized jewelry.  It gives the buyer a story.  It’s more than a product – it’s an experience.  I bet it’s a little like getting a tattoo… you get into the art, the concept, and you work with an artist, and you put in the time (and the pain) and the money, and presto!  You have something that’s all your own that you can wear forever.  I bet that, like tattoos, once you’ve gone through the custom design jewelry process once, you want to do it again.

What about a store based around designer jewelry?  I’m not talking necessarily about the big-name designers – unless they hold firm on price and are not selling directly online – I’m talking about small, independent creators who do fabulous work and have a strong vision for their collections.  We have so many talented designers in our industry (and in some ways, they’re as much the “lifeblood” of the jewelry industry as diamonds are).  They need retailers to believe in their product and be excited to show and sell it to customers.  Again, this is the type of product that’s selling today: Unique designs that the client won’t see all her girlfriends wearing (and if she does see someone wearing it, she immediately feels a connection).  Walk the aisles at Couture, especially NextWave and the Design Atelier, as well as the Design Center at JCK – you’ll find so many great designs that can provide you with a much better margin than a straight-up diamond sale will.  As for turn ratio, it all comes down to focus (in your store), passion, and training.

What about a store that delivers a huge selection of semi-mounts?  There’s plenty of those out there doing very well.  Unfortunately, some choose to focus their marketing message on their diamond pricing, which I believe is the wrong way to spend your advertising dollar.  Instead, let the diamond be the add-on – the gemstone you sell to go into that perfect engagement ring and make it sparkle.  Don’t make the diamond the thing – make the ring the thing.  You’re far less likely to lose dollars fighting over price on a semi-mount that your customer probably can’t see down the street, whereas they can certainly find diamonds everywhere they go (including online).  Tout your ring selection, sell that unique mounting that perfectly fits the bride’s personality, and then, oh yeah, you probably want a diamond (or colored gemstone!) to go in there.

I don’t claim to be an expert, but I’ve been around this business long enough to know that if I did open up my own store, I wouldn’t trap myself in a commodity war that I could never win.  I would choose a model that I could be passionate about, that was also built on a product that couldn’t be price-shopped.

But then again, I’ve never liked to haggle!


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