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Commentary: The Business

Ellen Fruchtman: News Flash!

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The Business: News Flash!

There’s no longer a reason to be intimidated by online discounters.

BY ELLEN FRUCHTMAN

Published in the July 2012 issue

According to several articles in the trades, Blue Nile will be slashing its pricing following lackluster sales.


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>> NEWS FLASH: Consumers are very responsive to price decreases.

In addition, Blue Nile intends to expand into other types of jewelry due to higher margins and the possibility of repeat business.

>> HERE’S THE REAL NEWS FLASH: Great independents are no longer intimidated by this competitor. Yes, Blue Nile is a formidable force in the jewelry space. No different, however, than all fine jewelry purveyors. The difference is this: Independent jewelers are beginning to fight back. They are sourcing diamonds from competitive vendors. They are running their operations more like a business. They are committing to offering better service and added value. They are continuing their education and training. Do all of those things and chances are great you will net the following headline: “Blue Nile faces another weak quarter. Drops prices on engagement ring product.”

>> THE PROBLEM IS THIS: If you fight in the space of cheapest, there is always someone willing to sell it cheaper. And, if you think you’re going to garner repeat business, think again. That buyer is going to look for the next deal. It’s a bad long-term strategy, Blue Nile. Unless you’re Sam Walton. Now there’s a man who understood the price shopper. And by the way, Blue Nile, I don’t think he’ll take too kindly to someone else invading that space.

>> HERE’S THE GREATEST FALLACY: Blue Nile blames the decrease in income on diamond prices going up by 50 percent. If that’s the case, doesn’t that scenario hold true for the independents? Sales decreased. That has everything to do with traffic. You can’t blame that on margins — since the margins hold true for everyone in the business.

>> THE NEWS THAT’S REALLY FIT THE PRINT: Great independents are making it work. We’re seeing clients posting record sales in engagement and bridal! Great independents have programs in place not only to ensure repeat business with bridal customers, but the crucial fashion category. They send flowers on a first anniversary. They give the groom-to-be a bottle of wine to celebrate popping the question. Hell, they help plan popping the question! They hold posh in-store events for preferred customers. They support important, local charities. They give back to their communities ten-fold.

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And in the end, it will always prove to be the winning strategy.

As it was once famously said by Mark Twain, “The reports of my death are greatly exaggerated.”

Ain’t it the truth?


Ellen Fruchtman is founder and president of Fruchtman Marketing. Contact her at (800) 481-3520 or through fruchtman.com.

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