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Real Deal

This “Real Deal” Jeweler’s Nightmare Scenario with Lab-Grown Diamonds and How Retailers Suggest He Handle It

Should this retailer agree to his client’s demands?

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A lot had changed in the four years since Keith Thomas took over the day-to-day operation of The Gem Vault from his mom. Volume and profits were on a steady incline. The Vault ’s bridal business had nearly doubled over four years as Keith’s new ideas began to take hold. 

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 kate@performanceconcepts.net

Keith felt especially grateful for his dad’s early jump onto the “we buy diamonds and gold” train. Nearly 20 years’ worth of his dad’s sharp eye and good deals left the store with a great selection of diamond qualities and sizes, and often made them price-competitive with internet sellers. 

When a diamond jewelry rep who had been visiting the store since Keith was in high school stopped by about 18 months ago, Keith made time to listen as he made his best pitch for his new lab-grown diamond line. Keith had done some homework on the “lab-grown phenomenon” and believed that it was here to stay. He also knew that his mom and dad were both firmly opposed to carrying synthetics in the store. But the rep was able to counter every argument. He talked about the need to service today’s eco-minded and socially responsible consumer and pointed out that all of the stones were clearly inscribed, making inventory mistakes unlikely. He offered to leave Keith with a 25 stone memo complete with a cool in-store display and iPad to tell the story. Keith agreed — and after six months, lab-grown diamonds represented nearly 35 percent of loose diamond sales at The Gem Vault.

Keith was on the floor one day several months ago when Ian Sandren came in looking for an engagement ring. Ian had just moved to town for a job as the new art director at a local marketing firm and had been sent in by a colleague who was a long-time customer of the store. He said that he had seen information on lab-grown stones on the store’s website, but that he was only interested in seeing natural diamonds. He said that while he didn’t have a problem with the concept in general, he didn’t feel at all comfortable with the idea of a synthetic in his fiancée’s engagement ring. Keith assured him that all of the lab-grown stones in the store were clearly marked. He pointed out that reports from independent grading services were available if Ian chose, and that his engagement ring would be accompanied by a detailed appraisal that included a statement of natural origin. 

After spending several hours with Keith over the course of three visits, Ian chose a 0.98-carat round diamond (G, VS2, ideal cut) from the store’s stock and a beautifully designed platinum and diamond mounting with a total price of $9,200. The center diamond did not have a grading report, but Ian was comfortable with the grade assigned by the store’s appraiser. The finished ring was delivered two weeks later, and Ian loved it. 

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That was the last Keith heard from Ian until last week, when he signed for a registered envelope addressed to him personally. In it was a letter, along with a copy of a GIA report. In his letter, Ian said that his fiancee’s father — an insurance broker — highly recommended that his daughter get a GIA report on the diamond and took her to a local jeweler friend who agreed to help. The diamond was taken out of the mounting and sent to GIA New York. When the diamond and report came back, GIA had identified the stone as laboratory grown. Grades for color, clarity and cut (near colorless, very slightly included, XXX) did match those assigned by the Gem Vault appraiser.  After receiving the report and before resetting the stone, the jeweler took the mounting to a nearby manufacturer who, with proper screening equipment, was also able to identify four of the 20 melee in the setting as synthetic. 

Ian made it clear that he believed Keith and the Gem Vault had been either terribly careless or deliberately fraudulent. He said he had to assume that he was not the only customer who had been sold a synthetic under the guise of a natural diamond. He demanded that Keith supply documented natural diamonds of the quality for which he’d paid to replace the synthetic stones, and that the Gem Vault refund the price paid for the ring to compensate for his and his fiancée’s stress and expense.

Keith was mortified. The only possible explanation he could come up with was that the synthetic center had been purchased by the store in an over-the-counter transaction and that the supplier of the mounting was far less cautious than they claimed. He was committed to making it right with Ian — but it was clear that he was staring down a potential public relations nightmare. He had no way of knowing how many other synthetic melee or larger non-disclosed loose diamonds had been bought and/or sold by the store, but he didn’t think he could live with the idea of not finding out.

The Big Questions

  • Should Keith agree to Ian’s demands? If he does, is it appropriate to ask for a confidentiality agreement?
  • Is there a way to ensure that he identifies any other synthetics that he might have unknowingly sold without incurring overwhelming expense and/or creating a public relations nightmare?
  • Should he stop selling synthetics and adhere to his parents’ recommended “natural only” strategy?

Expanded Real Deal Responses

Ira K.  Tallahassee, FL

Keith is probably not the first and certainly not the last that this will happen to, but if he doesn’t mind a $5,000-$7,000 loss, he can pay Ian off. Offer Ian either a refund or a new ring with natural GIA-papered diamond, a discount on his wedding rings and a sincere apology.

As a thought: how do we know that someone couldn’t or wouldn’t switch a natural for a synthetic and then work this as a scam?

Bruce A. Sherwood Park, Alberta

Keith should obviously supply his customer with the same or better quality diamonds as those for which he was charged. That makes the purchase complete and it should not be accompanied with a refund of the original sale. Do not ask for a confidentiality agreement because any fallout from this client will be best handled confidently and professionally if and when it surfaces. He must recheck all of his diamond inventory, whether it is expensive or not! As for carrying synthetic alongside natural, he will face the same dilemma we all do when we weigh the decision regarding synthetic. This problem was not caused by him carrying synthetic, so it should not enter into how he proceeds in future.

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Marcus M. Midland, TX

In my opinion, buying diamonds off the street has always had its risk and been a tricky game. Now, with lab-grown diamonds in the mix, forget about it. I never buy off the street and refuse to buy into the lab-grown diamond business. Am I missing out on some sales? Maybe, but I’m also safeguarding myself from potential disasters like this. Keith absolutely has to make this right for Ian and he needs to make it very clear that it was a careless mistake on his end but that he would appreciate keeping it confidential. And I don’t know what he can do about ensuring he didn’t do this to other customers, but he better get on top of it quick. He should also really think about going back to his original family business plan and stick to selling naturally grown diamonds. Good luck Keith.

Rex S. Houston, TX

In today’s environment, it is almost negligent to sell a center diamond over a half-carat without a recognized and respected independent lab report. They represent a minute cost compared to the item. We have almost exclusively used GIA after we have all the diamonds we buy from the public recut to ideal proportions. Through this process, we have two outside layers to examine and verify our diamonds as not being treated or lab-grown. At JCK last year, I put a deposit down on the GIA id100 and received it yesterday. Last week, our entire staff was trained on the device at the IJO show. It is the only device to quickly test for lab-grown HPHT and CVD; all of the other machines only test for HPHT. Get the machine test for everything, always!

Daniel S. Cambridge, MA

Not only should he immediately do what the customer asked, but he should go over and above that. Give him a large credit to be used at the store or give him back 20 percent of the price on the diamond purchase as well. He’s screwed up big time and he’s responsible. And yes, he should go back to selling naturals only, have all the stones in the store certed, refuse to buy from the supplier of the mounting anymore and tell him to take back any other goods of his that they have and refund the money for the setting. It’s all on him. A costly lesson, but one that more jewelers today should be paying attention to as well. Know your suppliers. Insist they take responsibility and don’t buy off the street. It’s a whole new world out there now.

Stacey H. Chicago, IL

1) Keith should call his lawyer! There’s an excellent chance that some kind of fraud has taken place, and that the real victim is KEITH! Way too many other people handled that ring for Keith to be certain that the other jeweler did not swap out the stone to make him look bad and steal the sale.

He should not admit any kind of guilt; he should tell Ian that he will look into it and get back to him later in the week. If Ian wants a refund, he has to prove that the stone he is returning is the one he bought.

2) Keith should call the GIA and arrange to have his whole loose inventory checked, graded and inscribed ASAP. The appraiser at the store should be sent for more training to recognize synthetics!

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3) Keith should call the supplier for the band and tell that guy he wants a full refund on every piece he has left, and return them all! Maybe his lawyer will write that letter for him!

Michelle S. Towson, MD

Disclosure, disclosure, disclosure. A client can’t get enough of it. In addition, making everything right as far as the client who didn’t get the genuine diamond is a must!

Emily J. Minneapolis, MN

First and foremost, Keith should contact a lawyer for advice. This could have major consequences on his business and he needs to get all the facts before he acts. I would also ask to see the grading report and confirm with the GIA that this was a legit report. I would be more likely to offer a full refund on the ring and take it back, OR replace the diamonds with natural diamonds at no cost and then throw in a free wedding band or another similar bonus. But I don’t think giving the customer an entirely free ring would be my first choice; that’s why a lawyer could be handy to confer with.

Going forward, I would not stop selling lab-grown diamonds, but I would stop stocking the store with them. Have a few rings with lab-grown as examples in a special location, clearly tagged and then just bring in loose lab-grown diamonds by request for custom work.

Susan G. New York, NY

Keith must admit fault and accept responsibility. It’s unfortunate that this happened, but it did and he has to make the necessary changes so that it doesn’t happen again.

Going forward, he must continue to sell natural and synthetic diamonds and make sure he knows what he is doing. His diamond suppliers can help him to identify natural from synthetic. There are also trade organizations and labs that will identify a diamond and colored stones for that matter. Maintaining proper record keeping is important as well.

Mistakes happen; dealing with them is critical to the future of the business.

Jim A. Missoula, MT

The moral of the story is stay as far away as possible from synthetic diamonds. Short-term profits aren’t worth the long-term hassles.

Mack T. Walterboro, SC

First thing I would do is express how deeply sorry I am that this happened and explain to him where the diamond was purchased from and how I too had unknowingly purchased and sold a lab-created stone. I would then replace the lab-grown with naturals of equal grading with GIA reports to accompany them. I would not give a refund, but I would make it right. If explained correctly, the customer will understand and be sympathetic. After all, Keith is just as much the victim as the customer in this situation.

Shari L. Georgetown, KY

I would not give in immediately to his demands, but yes, this needs to be made right. Honesty is best policy. This is a nightmare that I am afraid will become a familiar story.

 


The Rest of the Story: More Insights From Kate Peterson

As many of our Brain Squad members pointed out, Keith had two critical priorities in this situation: To protect himself and his business and, as Ira Kramer (Diamond Exchange of North Florida, Tallahassee, FL) said, assuming he was not being victimized himself, to make his client whole.

Keith called Ian immediately after receiving his letter. He offered a sincere apology for the inexcusable mistake, assured Ian that he would make things right, and asked Ian to bring the ring back to the store as soon as possible. Ian seemed to be reassured by Keith’s immediate response and genuine concern. They set an appointment to meet a week later.

During that week, Keith took a page from Rex Solomon’s (Houston Jewelry, Houston, TX) play book. He researched the synthetic screening devices on the market and after much discussion with his parents, decided to make a major capital investment in a highly rated scanner that works on both loose and mounted goods. The initial expense (nearly $18,000) was painful — but he was thinking forward both to his plan for resolving his current situation and to ensuring that he could use this experience as a powerful brand positioning tool going forward. He took the time to check out the jeweler who handled things for Ian’s fiancée. He learned that the store was very highly regarded in the community and was a part of several major trade organizations. Keith called the owner of the store, Warren Barret, to confirm the details of the situation. He explained how it all happened, and was quite surprised when Mr. Barret said, “You know, this could have happened to any of us. No one on my end caught it either until we saw the GIA report. There is a lesson in this for all of us.” By the end of the conversation, he felt confident that Barret’s was not simply trying to take the sale and that they were not part of any sort of scam. Moving on to the stone in question, Keith examined the GIA report carefully, and verified that, as closely as he could tell, the plot on the report matched the plot done by his own appraiser. By the time they met, Keith was sure that Ian’s story was accurate, and the problem was his to deal with. He had a new diamond (1.02ct, F, VS1, XXX, with a GIA report) as well as four matched melee with an affidavit from the supplier verifying natural origin, ready and waiting.

As Mack Thomas (Infinger’s Jewelry, Walterboro, SC) suggested, during their meeting, Ian was far more understanding and reasonable than Keith expected. He said that Mr. Barret had called him and explained that he believed this really was an honest mistake, and asked that he give Keith an opportunity to make it right. In the end, Keith replaced the synthetic stone with a more valuable diamond, replaced the synthetic melee in the ring, paid for all costs associated with getting the GIA report on the synthetic and gave Ian a $500 gift card to use toward his wedding bands. Ian was happy, and by his calculation, the hard cost to the store for resolving the immediate issue was about $2500 all in (plus whatever they paid for the synthetic originally).

Once the situation with Ian was handled, Keith contacted his sales rep for the mounting manufacturer, explained the problem, and let him know he was returning all remaining stock and discontinuing the line. He also laid out a schedule for checking every piece of diamond jewelry in the store with the new screener he ordered. Keith was still left with the task of working out a plan to examine as many of the diamonds sold by the store over the past five years as possible (discretely, of course). He asked his marketing company to come up with a ‘complimentary service’ promotion that would encourage customers to come back into the store once his new screening device was up and running. He didn’t really expect to find more problems, but he was prepared just in case, and he felt much better knowing that he was making an honest effort.

Whether or not to continue carrying synthetics is a question still in discussion for Keith and his parents. Keith is considering whether the brand value of saying (legitimately) ‘all naturally sourced and verified’ is bigger than the potential business loss associated with not offering the alternative for interested customers. His bigger concern lies in how he might deal with the customers who purchased lab grown diamonds from the store over the past year.

What’s the Brain Squad?

If you’re the owner or top manager of a U.S. jewelry store, you’re invited to join the INSTORE Brain Squad. By taking one five-minute quiz a month, you can get a free t-shirt, be featured prominently in this magazine, and make your voice heard on key issues affecting the jewelry industry. Good deal, right? Sign up here.

Kate Peterson is president and CEO of Performance Concepts, a management consultancy for jewelers. Email her at kate@performanceconcepts.net.

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Real Deal

Town Hopes to Immortalize Local Jeweler and Watchmaker with Sculpture

Town hopes to immortalize local jeweler and watchmaker with sculpture.

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EACH YEAR, OUR DECEMBER REAL DEAL tells a story that helps bring to mind the amazing privilege afforded us by our industry, and that reminds us why we do what we do. This year, we are honored to share the story of Stanley Caulkins, a Leesburg, VA jeweler and watchmaker, and the amazing impact he had on the people in his community of Loudoun County.

We’ve all heard the story — many of us firsthand from fathers, grandfathers or uncles. It’s the story of the dedicated American hero who fought valiantly for our country in World War II, came home, and with the benefit of the GI Bill, learned a trade that would become a vocation, a livelihood, and in some cases, a hometown institution. Such is the story of Stanley Caulkins — aviator, jeweler, watchmaker, civic activist, icon of humility and true community leader.

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Gene the Jeweler’s Rule: Never Buy the Same Piece Twice
Gene the Jeweler

Gene the Jeweler’s Rule: Never Buy the Same Piece Twice

Stanley was born in 1925 into a Baptist preacher’s family in Maine. At the age of 12, the family — including Stanley and his three brothers — moved to Leesburg, VA, the home of his father’s new church. He quickly became a familiar face in his new hometown, working to earn spending money through high school as a bellhop at the local hotel. While Stanley’s brothers went off to college (eventually becoming a surgeon, an engineer and a preacher), the self-described “black sheep of the family” chose a different path.

Five days after his 17th birthday in 1942, Stanley enlisted in the U.S. Army Air Corps. He became a radioman, assigned to the 96 Bomb Group, 338th Bomb Squadron and spent a good part of his time during World War II flying food drop missions over the Netherlands. During an emotional 2012 video interview for Loudoun Laurels, a tearful Stanley recounted that time in his life, adding, “I have had ladies in my store who told me they were eating grass till we started dropping food there.”

U.S. Sen. Tim Kaine (D-VA), with Caulkins at a Veterans Day event in 2015.

After the war, Stanley returned to Leesburg with the goal of learning a trade. He chose to follow the path taken by his maternal grandfather, who had been a watchmaker and goldsmith in Brunswick, ME. With the help of the GI Bill, Stanley enrolled at Peter’s School of Horology in Washington, DC, and began laying the foundation for a Virginia retail institution. After his training, he returned to Leesburg and went to work as a watchmaker in a small shop in the back of a local clothing store. In 1956, when a spot around the corner became available, he went out on his own, opening Caulkins Jewelers in the downtown Leesburg location he would operate for decades. His brother Roger — the engineer — joined Stanley in the business in 1970, making Caulkins a true family affair.

When asked about the secret to his long-term success, Stanley said, “There’s nobody that works for me that I wouldn’t give the keys to. I have trust. I have people who love me and I love them.”
Diane Canney, owner of Sunset Hills Vineyard in nearby Purcellville, VA, and friend and customer of Caulkins for over 20 years, says, “The old question is, ‘Who could you trust with your mother’s wedding ring?’ Stanley was my sure answer. Also, he had time to talk. You could come into Stanley’s shop six times, not select anything, and he wouldn’t chase you out.”

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While operating the store, Stanley took a leadership role in a wide range of community groups and civic activities. According to a Loudoun Progress blog post, Stanley was a “member of the local VFW Post, the Leesburg Town Council, an active Rotarian, a source of ‘reliable gossip,’ a voice of reason and man of action in local affairs.” He was a founding member of the Leesburg Airport Commission, and in 1962 helped lead the push to build the original Leesburg Airport. Later, Caulkins helped establish the currently used larger facility, where the terminal building today bears his name. “We built it with blood, sweat and tears,” Caulkins recalled of the effort. “I saw it as an economic tool for the town, the county and the region,” he said. “I was just a dumb watchmaker — but we built it.”

In 2015, a fire forced the Caulkins brothers to move their operation to a new location in the Virginia Village Shopping Center. Roger’s death and Stanley’s health challenges precipitated the store’s closing in the summer of 2017, after 61 years of operation. In the months that followed, Stanley crossed items off his bucket list at a pace few people half his age would contemplate. He spent time on the firing range, toured the Loudoun countryside in a motorcycle sidecar, took flights over the county, and hosted a constant stream of daily visitors and well-wishers at his home. With accomplishments that could easily have filled three lifetimes, Stanley Caulkins passed away Jan. 12, 2018, just three months past his 92nd birthday.

Sculptor Jeff Hall works on the life-sized clay bust of jeweler Stanley Caulkins.

The news of Stanley’s passing left many throughout Leesburg and Loudoun County feeling the sting of grief and loss. For Diane Canney, that loss felt very personal. She began looking for a way to honor the man who had touched her life and the lives of so many and who helped build a community. On the day before a public memorial service, Diane had an idea. She put pen to paper and began to sketch what she believed would be a fitting memorial. Her sketch depicted a bronze sculpture of the Stanley everybody knew sitting on a bench near his original store, with room for others to sit beside him. “Stanley would always make the time to sit and talk with people,” says Canney. It seemed like the ideal way to memorialize a man who did so much for so many.

Canney brought the sketch with her to Caulkins’ memorial service and showed it to his many friends. The response was overwhelmingly positive, and the idea came to life. The next challenge was to find a sculptor worthy of the undertaking. Friends of Leesburg Public Arts, a local non-profit organization, connected Canney with Lovettsville, VA-based artist Jeff Hall, a world-renowned sculptor. Hall apprenticed at the National Cathedral with sculptor Frederick Hart and has made his mark with works found in the Cathedral, at the U.S. Capitol and in other notable public and private spaces. He began the project by crafting a life-sized clay bust created from photographs, and a small clay model of Stanley seated. Hall will work these clay elements into a finished ensemble that will be cast in bronze at a foundry.

Hall has worked hard to incorporate different elements that were important in Stanley’s life into the bronze sculpture, including his signature jeweler’s loupe and penny loafers. He will hold a pocket watch to symbolize his beginnings as a watchmaker, an airplane in his lap for his work forming the Leesburg Executive Airport, and emblems representing his military service, the VFW and Rotary Club. A plaque on the bench will share Stanley’s life story, from his service in World War II to his stint as a Leesburg councilman.
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The last challenge to the Stanley Caulkins Memorial Project is securing the balance of funds needed to complete the sculpture. “We have raised a fair amount of funds to make this happen, but need more,” says Canney. The jewelry industry is the one large component of Stanley’s life that has not yet weighed in. For more information on the sculpture project and to donate via PayPal, go to leesburgpublicarts.org. Checks may also be made out to FOLPA and mailed to Stanley Caulkins Memorial Project, 312-F East Market St., Leesburg, VA 20176. Donations are tax deductible.

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Real Deal

When a Charity Job Goes Wrong, A Jeweler Questions Her Continued Involvement

A project to assist elderly residents at a nursing home takes a bad turn.

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Carole waite always believed in giving back. She had been the store manager at Quinlan’s, an upscale store in a high-end Southwest city, for more than 10 years. It was the community involvement and philanthropic reputation of the Quinlan family and of Anne Quinlan, the store’s third-generation owner, that attracted Carole to the store in the first place, and over the years, the company had supported many of the service initiatives she’d brought to the table.

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 kate@performanceconcepts.net

About five years ago, one of Carole’s best customers mentioned that she and her husband had moved from their large home into a condo in Cliffs Vista, a highly regarded retirement village just outside the city. That conversation got Carole thinking. ‘The Cliffs” was an expansive, gated community with housing options ranging from independent living houses and condos to full-service nursing facilities. Knowing that there were a good number of Cliffs residents on the Quinlan’s customer list, Carole and Anne approached the community’s activities director with an offer to provide a weekly “concierge” service — free consultation and jewelry cleaning, as well as repair and appraisal take in/pickup and delivery — focused on residents in the assisted living buildings and others who might appreciate the added convenience of having a jewelry professional come to them. Their proposal was accepted, and Carole began donating three hours of her time each week to the project.

Response to Carole’s weekly visits grew steadily over the years as happy residents spread the word within the community. By 2017, the average number of repair and appraisal jobs taken in at the Cliffs each week had risen to just over 20 (though most were done at significantly reduced prices as a courtesy to the residents, and many were even free). In addition to the slight uptick in repair revenue though, Anne felt confident that Carole’s effort with the Cliffs community was an important contributing factor in the store’s consistent growth in sales and profitability.

In mid-May of this year, Carole ran into an especially challenging situation. Judith Gordon, a longtime Cliffs resident, brought her a strand of lapis beads in need of a new clasp. It was a fairly common request: replace the lobster claw with an easier-to-use magnetic ball fitting. The job was done to Mrs. Gordon’s specifications and returned a week after take-in. Carole took care to explain to Mrs. Gordon how the new clasp functioned and how to ensure that the magnet was secure when the necklace was on. It was working perfectly, and Mrs. Gordon seemed happy. The week after delivery, however, she brought the strand back to Carole again, complaining loudly that the magnetic clasp was defective and demanding that she have the original lobster claw re-attached. Carole could see that one side of the magnet had somehow been pulled from the clasp. She could also see that there would be no reasoning with Mrs. Gordon, so she refunded the amount paid for the repair (the store’s cost) and took the necklace back in as requested. It was returned the following week and it seemed that everything was fine.

In early July, Anne called Carole into her office and handed her a letter she had just received:

To the storeowner:

I falsely assumed, given a month, I would be able to overlook a grievous error made by your company’s Cliffs representative, but if you’re assuming I’ve overlooked it, you’re wrong. It still bothers me. I have not, as yet, shared my experience with other Cliffs residents and friends, since I consider it only fair that I share this unfortunate incident with you first.

I never had occasion to use your services until about six weeks ago when I met with your representative and left her with a necklace for which I wanted a magnetic clasp. When I picked it up a week later, it looked OK. She explained that I needed to “tip the magnet ball slightly” when attaching and removing. I tried the necklace on when I got home. Since some of my fingers on my right hand are bent due to rheumatoid arthritis, I could easily attach it, but had to have my husband remove it. When he did, following the “tilting” advice, the “magnetism” was no longer viable — obviously flawed. My husband immediately determined it was defective.

I returned the following week with the flawed magnet and explained what happened. Your representative said “interesting,” but she never apologized and acted as though we were obviously guilty of something. I gave her my necklace with the original crab closure to return it to the original condition and she returned my money.

Another week later, I returned and took my “repaired” necklace back home to try it on, only to discover: 1) The closure link is now two small links, making it very hard to work, and 2) the end pieces are twisted and don’t lay flat on my neck.

I have never considered myself to be mean-spirited and I am not one to “get even,” but I find your representative and your repair tech person to be guilty of a deliberate act of vandalism. I will now have to pay a real jewelry expert to repair the damage. I no longer have an interest in keeping quiet about this unfortunate incident with your store.

I am not asking for anything and will not have any further contact with your representative or your store. I just thought it fair to tell you this story first.

Both Carole and Anne were surprised and saddened by Mrs. Gordon’s rendition of the story, and they agreed that they needed to come up with a plan to resolve the situation. That conversation led to a discussion of the value of their ongoing involvement in various community and charity-related activities in today’s consumer climate. From the winner of the $3,500 designer diamond pendant in the hospital fundraiser raffle who demanded she be allowed to exchange it for something “more suitable,” to Mrs. Gordon and her accusations, it seemed that more and more people expected rather than appreciated the support of local businesses, and that the cost of giving back was starting to outweigh the benefits — to the community or to the store.

The Big Questions

  • Should Carole and Anne be concerned about Mrs. Gordon’s accusations and her threats to go public?
  • Is there a way for the store to resolve the situation?
  • In the bigger picture, are community service initiatives as valuable as they once were to businesses in terms of positive PR — or are customer “entitlement” attitudes creating diminishing returns?

Expanded Real Deal Responses

Eve A. Evanston, IL

What a great, appropriate subject! All of us face this quandary!
First, as to donations, we no longer give jewelry. Wherever possible, we instead donate an experience: the winner of the charity auction gets an evening cocktail party for 8, at our location, where they can bring an item to be redesigned, or simply have our designer sit with them and create a design while they enjoy refreshments and a tour, or a variation of this. We also throw in a gemstone and a $100 gift certificate to the winner to get them started (date and time to be arranged).

Regarding Mrs. Gordon and her peers, you have to be proactive. The owner and Carole should go to her, warmly, admit they probably did not carefully notice exactly how her necklace was strung originally (with our cellphones, it is so easy to document a repair take-in!), and also let her know that they respect her. It was a simple error and should not result in World War III.

Karen M. Oneonta, NY

Carole and Anne should consider revising the service offered at the retirement community. By going so frequently (and at considerable expense to the business), the headache it created did not justify the return. Perhaps a better use of their energy would be to schedule a visit twice a year, bringing along a small ultrasonic cleaner, some small hand tools and a laptop or collection of catalogs. That way, residents could have their jewelry cleaned and inspected, browse current offerings and consult about their jewelry needs. Repairs and purchases could then proceed normally at the regular location. This keeps in the spirit of the service but invites fewer problems.

As for the grumbler, Anne should reach out personally to resolve the complaint, but not otherwise worry too much about a spoiled reputation. Most likely, the woman is a chronic complainer and her contemporaries will “consider the source,” before thinking ill of the business.

Jacque E. Bonner Springs, KS

I think one should always be concerned about accusations. However, I don’t think customer complaints carry as much weight as they used to. I feel it is the jeweler’s job to make the customer aware of any issues that could arise when work is being done on a piece and note the issues on the receipt. Personally, I always caution my customers when it comes to using magnetic catches. I don’t like to sell them, so I try to guide them to an alternative. I used to have a customer appreciation promo and would give away a custom-made piece during my Christmas season. When one of my customers won the piece, he told his wife he had it custom-made, but she didn’t like it because it was too dressy and told him to return it. Of course he couldn’t return it for a refund, so he told her I wouldn’t take it back. She went around town telling everyone not to come to my store because I have poor service. NO MORE PROMOTIONS.

Gordon L. Santa Fe, NM

Several things disturb me about this situation. You should be proud of what you do and never undercharge; it devalues what you do in the mind of the customers and leaves no margin if things go wrong. The journeyman IS worthy of his hire!

It sounds like the magnetic clasp was faulty (magnet came unglued) and at this stage, a fulsome apology and explanation was needed.

As to the bigger picture, the jeweler is picking up a bunch of trouble with this setup. Older folks’ jewelry is heavily overlaid with emotionally charged significance and at the same time usually worn out. You touch it, you own it! Find an animal charity to support as you have yourself a lose-lose situation with this one.

Lee F. Reno, NV

Unfortunately the word “entitlement” fits here joined with another word, “elderly.” The words mixed together are more volatile than you might suspect. My suggestion: count your blessings and get out while the getting is good. There will be more to come from others, I promise you (been there, done that). All too sad but true.

Marc F. Houston, TX

It’s hard to put a value on a project designed to generate good PR. However, it is easy to determine a profit from a marketing promotion. To determine the “worth,” it’s all about ROI (return on investment). Let’s say that the company increased outside sales from 20 a week to 40 a week. The question is how much does it cost to service this outside community and how many sales AND HOW MUCH REVENUE was generated. That would be the clear answer.

Now about individual issues (come-backs, charge-offs). In my store, our accountant sets up a 5 percent return/charge-off budget. So on $100,000, the total returns should not exceed $5,000. In this case, charging the customer cost is not good business. More to this particular issue, the customer is always right. A phone call, letter of apology and a $20 store gift card would be appropriate. And I would not accept jobs from her again.

Glyn J. Victoria, TX

It seems Mrs. Gordon and her husband may be on the verge of dementia and not able to follow instructions correctly. The jewelry storeowners should meet with the owners and operators of the gated retirement community and the Gordons and explain the situation to them.

Explain what services they have provided to their residents over the past years. Let them know that if the situation can’t be resolved, that the services will be terminated rather than have their reputation tainted by one displeased couple. Explain that they have gone overboard to try to keep everyone happy and have gone so far as to even lost time and money trying to do the right thing. It sounds as though the Gordons are taking advantage of a good thing. It is a very sad situation indeed.

David B. Calgary, AB

I am going to hazard a guess and say that you will hear many readers say they have experienced something similar. I recall mine was with a Rolex that I refurbished and it stopped working every time the elderly lady left it on her night stand for the weekend. I ate that one as a charity event. Some among us will say that it is the spirit of giving that counts. And I agree, but when you get kicked in the backside over and over, it is hard to keep the spirit of charity in mind. I can say that just recently, I had a client tell me the reason they purchased an engagement ring from me was because of a donation I had made five years earlier. In 38 years in business, that is only the second time I can positively say I had a return on the charity. However, I still give to charities. In a world with such great need, I cannot turn my back. I simply make my choices far more selectively.

Rob C. Laughlin, NV

I would post a copy of this article on the condo’s clubhouse, pool area, and on the mailboxes to explain why she is no longer able to provide this service, but that she will still offer a discount to anyone from the complex that wished to bring in a repair or to make a purchase from her store. Hopefully people will get the correct story about what happened before the rumors fly!

Stacey H. Lincolnwood, IL

Assisted living facilities and old age care homes often house people who are suffering from various forms of deterioration and mental health problems that are not necessarily easy to recognize at a casual encounter such as a jewelry repair. Impaired people can do an enormous amount of damage to a business’s reputation. Maybe if Carole and Anne want to continue to do this, they should get a member of the staff at the facility to witness all transactions in case this kind of thing happens again.

Cheryl B. Coeur d’Alene, ID

I am sorry to say that yes they should be concerned, but there is no fixing crazy. I have customers like this and in this world of speedy packages coming in the mail, it’s a bust. I usually give a redo like this for free. If they have no money in it, somehow it fades away.
We live in a town that always has its hand out. I do many things for fundraising and we do get some recognition for our business. I lately have gone to giving gift certificates. I know that the charity does help get the word out about our business. We have a signature piece that we also will give. It is well known locally and no other company can make it. So my answer is yes, it is still important to give when we can because the clients are off their phones and attending an actual event.

David H. NSW Australia

There will always be cases like this where through no intent, a client becomes aggrieved. It is important, however, to cost all business activities and charge accordingly. If they were making sustainable income from this venture, would they be more motivated to stay? Be very careful which services you wish to discount in the name of charity as “no good deed goes unpunished.” I’ve found “one off” charity donations are more pleasantly received.

Suzanne L. St. Petersburg, FL

Contact the customer and apologize for not replacing it exactly as the original and offer to show her that customer service is first and foremost (even if you have to eat a little, it’s worth it). As far as the recipient of the $3,500 necklace, I would explain this was a donated item and is final.

Marcus M. Midland, TX

Carole and Anne should not worry about Mrs. Gordon. She seems like an unhappy and hateful human being who has nothing better to do. And most people she would try to badmouth Quinlan’s to probably think the same thing. I would also doubt she has many, if any, friends to even complain to. Carole did everything she could to right the wrong and it’s still not good enough. I don’t think you reach out to this mean-spirited woman again. NOTHING will satisfy her, so I would say to keep doing what you’re doing at the Cliff’s Vista and let your solid work speak for itself. It’s tough now days to try to do good in the community. People are so entitled now and don’t seem to appreciate acts of kindness anymore. It’s disheartening, but what do you do?

Joe K. Lantzville, BC

I don’t understand why it took her a month to come forward; it sounds like an easy fix. It seems nice guys finish last. There are people that have way too much time on their hands that come up with these complaints. I would personally talk to her and make it right.

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Real Deal

When A Competitor’s Going-Out-Of-Business Sale Lasts Four Months, A Jeweler Takes Action

For this retailer, the question is … to sue, or not to sue?

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It came as no surprise to local competitors last Nov. 15 when the signs went up at Glenwood Jewelers announcing their going out of business sale. Charles Glenwood had run the city’s oldest and most prominent fine jewelry store for nearly 40 years after taking it over from his father. His friends knew that he had been ready for retirement for some time, but just the thought of closing the fourth generation Southern store had him putting the decision off as long as possible. With their only child a pediatrician up north, no other family members interested and no outside buyers on the horizon, Charles and his wife had finally chosen to engage the transition sale company with whom they’d been talking since the beginning of the year. 

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 kate@performanceconcepts.net

Dale Van Ander was not particularly happy with the timing of the sale. Only one strip center separated his store, Van Ander Diamonds, from Glenwood’s. He knew that it was smart of Charles to run his GOB sale over Christmas, but he hated that his sales would surely take a hit — with his store possibly finishing behind the previous year for only the second time since they opened in 1999. 

In fact, Van Ander Diamonds had long been a thorn in Charles Glenwood’s side. Though Glenwood’s was the “traditional” store and Van Ander’s the more contemporary and modern, Charles still saw them as fierce competitors. Rapid growth, numerous awards and a steady rise to local, state and even national prominence did little to change Charles’ perception of Dale and his company. He still considered them “tawdry newcomers” — a sentiment he was fond of sharing with both vendors and customers.

Despite their challenges over the years, Dale decided to take a philosophical approach to Glenwood’s sale. He and his team set what they believed to be reasonable goals for the season, and worked hard to put their best game forward, relying on their strong client relationships, unique designs, and (in his opinion) superior service and sales ability.

Glenwood’s transition company had done a great job getting the word out for the event, playing up the store’s long reputation for quality while advertising deep discounts, contests and other promotional efforts. Dale couldn’t begin to imagine what they must have spent on online and traditional marketing, banners, billboards, mass media and direct mail. At the end of December, despite their best efforts, Van Ander’s was off nearly 50 percent for the six-week season, and although they’d gone into November up six percent for the year, they finished 2017 two percent behind 2016.

Dale and his team were not happy, but they knew that with Glenwood’s closing, they would get back everything they had lost during the sale and then some. Except that Glenwood’s didn’t close. The sale was originally advertised as “through Dec. 31 only.” In early January, however, they began promoting that the sale was being extended “by popular demand.” Shortly after Valentine’s Day, with the sale still running and his sales off nearly 40 percent year to date, Dale decided to take action.

He learned that city and state laws governing Going Out of Business sales contained very specific regulations designed to protect both consumers and other local businesses. According to the rules, businesses running GOB sales must secure a permit from the city. By state law, GOB events could not last more than 60 days (unless the merchant applied for a maximum 30 day extension), and could not offer new or supplemental inventory brought in specifically for the sale. In fact, businesses are required to post an inventory list with the state prior to the start of the sale. By Dale’s calculation, even if all of the other requirements had been met (and he was sure they hadn’t), the last possible day for their sale would have been Feb. 13. At the end of February, they were still advertising.

A call to the city’s records department confirmed that neither Glenwood’s nor the sale company had gotten a permit for the event and it seemed nothing was on file with the state either. Unfortunately, subsequent calls to the city solicitor, state’s attorney, attorney general, city police and sheriff’s departments proved to be nothing but a game of “pass the buck,” with no one wanting to take responsibility for the situation, even though Glenwood’s was clearly breaking the law.

On March 5, Dale took the city and Charles Glenwood to court, seeking a restraining order and cessation of the sale. Rather than shut the sale down, the city granted Glenwood’s the permit they were missing for the price of a small fine. Threatened with continuation of the lawsuit, Charles agreed to shut the sale down on March 15, remaining open “only for pick-ups and repairs.”

Glenwood’s did close, and since mid-March, Van Ander’s has seen somewhat of a rebound in their sales. The uptick, though, has not been enough to help Dale cover the nearly $300,000 in gross profit he lost during the four months of the sale. The loss has put Dale in a tenuous financial position for the first time in his company’s history.

The Big Questions

  • Is there anything Dale and his team could have done to better prepare for the impact of Glenwood’s sale?
  • Since the sale was illegal, Dale does have an opportunity to sue Charles Glenwood for loss of business, relying on a statute that has been untested in the state — but Dale is concerned about the expense with no assurance of success. Should he move forward and try to recover at least some of his loss?

Expanded Real Deal Responses

Mark R. Seneca Falls, NY

Every business should get to know the “going out of business” laws for the state or locality. If the ads are not correct, call the jeweler and the city to complain right away. File a complaint with the state attorney general. Keep copies of ads or record commercials. We experienced the same thing back in 2011. We opted not to sue and weathered the downturn. 

Drue S. Albany, NY

I think the best thing that Dale can do is to look forward and never look back. He must stand tall and not discuss what Glenwood did to his clients.

I understand his frustration; in our area, we had a jeweler do the exact same thing, our Christmas sales were impacted slightly and he decided to continue the sale until after Valentine’s Day. It all worked out in the end and we are stronger than ever. I will not work on the pieces that were purchased during the sale for repairs, since once you touch it, you own it.

So Dale, don’t acknowledge any of the jewelry from the sale and put your best foot forward by offering the great service and product that you have had for years. 

Marc F. Houston, TX

I’ve had this experience several times in the last 33 years. The best promotions I used were (and if it didn’t start to work in two days, I would switch them out)

“Going Out For Business,” “We’ll Be Here To Serve You When Others Fail,”

“Sell Us Your LOSING Lottery Tickets Today,” and “Free GIA Graduate Appraisals On Your Diamond Purchased From XYZ Sore Here.” All of these are traffic builders, and when you have traffic, you will have sales.

Let’s remember it is a free market. If your neighbor fails, be kind to them, wish them well and thank them for the golden opportunity they are giving you! 

Buddy B. Merion, PA

My advice is move on. The store that closed did his best to close the store and perhaps he had more inventory left that he needed to unload. The fact that he did not apply for a license or permit in my opinion is noteworthy but should not be cause for a suit or legal action. There are some vague rules that differ from state to state and city to city, and most of them go unenforced. I would just suck it up, move on and look to the future. 

David B. Calgary, AB

I have had GOB sales around me many times over a 38-year history and they will happen again. They do hurt and they often last far longer than advertised. In some cases, I have seen them last a full year. Our city has no laws anywhere near as detailed as those in the story. One thing I learned from a very protracted litigation I was involved in was that you never want to litigate an issue in a courtroom. It is like rolling dice but far more expensive. Don’t send more money down the drain when you are already feeling the pinch. Now when I hear of a GOB sale, I use a strategy from a book INSTORE recommended: have a big sale of my own.

As an aside, I think one of the nastiest sales I had to deal with was a “Going Out For Business” sale. It lasted a year and was very misleading. 

Allison L. Rock Hill, SC

He should spend the money on advertising rather than paying legal fees. A great header would be, “We will handle it from here,” with a message that anything purchased from the closed store can be brought in for repair and inspections going forward and wish the owners happy retirement!

Never let ‘em see you sweat … and we are all sweating something! 

Kay D. Andover, MA

It is understandable that Van Anders would be unhappy over the impact and timing of the sale, but it is doubtful that it was intended to be intentionally damaging to Van Anders. Glenwood might not have known about strict state guidelines or permit requirements for a GOB sale, but the transition sale company should have known and discussed state regulations with Glenwood. Other factors extending the sale could have also been in play (e.g., staying open through the end of a lease). Even though the GOB sale damaged Van Anders’ bottom line, a lawsuit is risky for multiple reasons. Customers will find out and feel Van Anders is picking on those poor people who didn’t want to close a decades-old family business and may decide to purchase their jewelry somewhere other than the store conveniently located across the street. Van Anders might consider advertising an event welcoming new customers from Glenwood with a special discount; they may well make up all of their losses and then some. Might as well take the high road. 

Elysia D. Spencer, NC

I like to be ahead of the game. As soon as rumors of a sale hit the wind, I would have researched the laws and ordinances and made sure they were followed through from day one. I admire that Dale was insistent enough to follow through legally, but only after the bulk of damage was done. I would have played up repairs — quick turn-around sizings and signage welcoming his customers, maybe with a contest, like bring in your Glenwood’s receipt to win a gift card, spa day, whatever. Get bodies in, collect contact info then clientele (hey, Walgreens just did it with Rite Aid!). 

S. Maroskos Lynn, MA

Dale will probably lose more in litigation processing fees than he hopes to gain. Lawyers are expensive. Not to mention time away from his store and sheer aggravation. He will also lose potential customers that are loyal to Glenwood. 

Laura S. Indianapolis, IN

An attorney once told us that this type of sale has questionable tactics, but at the end of the day, it’s all about the money that a lawsuit will cost for an uncertain outcome. The state laws are only as good as the state’s appetite to allocate the resources to enforce them. In Indiana, the state is not hungry enough to take action. So, respectfully: suck it up and move on. Or as granddaddy would say, saw wood. 

Joe K. Lantzville, BC

They should have jumped on it way sooner; you snooze, you lose. Litigation will only put him further in the hole. I would just let it go and save paying a lawyer. Work on trying to get the closed store’s clientele by offering to service jewelry, bridal, etc. 

Marcus M. Midland, TX

This situation stinks. Sitting in Dale’s position, I don’t think there is anything you could have done to prepare. How could you know that they would continuously run the sale? And seeing that the city seems like it has a “good old boy” mentality towards Glenwood’s is even more maddening. Question is, do you let it go and move on, seeing that they did finally close? Or do you saddle up and ride their little red wagon? 

Bill U. Fayetteville, AR

Dale should sue, stressing the legal and ethical violation of Glenwood and Dale’s own ethical and honest conduct. This is Dale’s opportunity to polish his own ethics and conduct. 

Jim A. Salt Lake City, UT

At the first sign of the sale, go to the retiring jeweler and ask for an endorsement to his clients, to be deployed after the sale. In exchange, offer the retiree a piece of the action on first sales generated from his list. Now, he can do an “orphan” postcard campaign, letting people know that if they’ve lost their jeweler, he’s happy to “adopt” them.

Jumping on the legal action early may have alleviated the problem. Just asking him if he’d gotten the permit and was aware of the rules may have intimidated him into obeying the rules.

As for lawsuit, the company that did the sale probably knows the rules and since they do these things regularly, a suit against them — or the threat of going public with the complaint — may be enough to coax a settlement. Might not get it all, but get some.

Otherwise, ramp up the marketing and sell your way out of the problem. 

Patrick D. Little Rock, AR

Been there several times. Usually, none of the authorities are sympathetic to the jeweler’s loss. They only consider the harmed party to be a nuisance.

Suck it up, put on your happy face and make the best you can of a bad situation.

We have been harmed by many GOB sales. One jewelry store has gone out three times, reopening in a few months at the same location by the same owners.

Use your energy and precious resources to continually provide great service and quality in your unique manner and at excellent prices. 

Jim C. Fayetteville, AR

I despise lawsuits. I think it’s just pouting because you didn’t get your way or because you lost. It’s good info to know about the laws for a GOB sale. However, they could have offered a price match type of discount or built their own value better. In the long run, he should gain a whole lot of new clients. You have to prepare for those tough months and grind through them. We debunk the sales all the time though. Typically, the items are just marked up more to cover the discount. Especially if he was getting in new inventory. 

Rossi Jewelers Lauderdale-By-The-Sea, FL

Wow. It is clear to me, although very unfortunate, that Dale should move forward and let this go. If Dale takes the proverbial high road and moves forward as “the” jeweler in town, he will only gain more customers, more revenue, and much more goodwill in the town. He could even take it a step further and reach out to Charles Glenwood and acquire his mailing list/customer base. Then, start by marketing a special deal to get them in the store and win them over. So, he has the potential to have the best year ever in business. If Dale decides to sue for his losses (with no assurance of success), it will put the store in a bad light, the news will surely blast it out there and the town will see him as a bad guy. Again, very unfortunate, but I would let it go. Pamela Rossi, P.J. 

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