I was sitting in the train a few days back listening in on a conversation. Riders beware, this is a regular event.
One passenger said to another passenger, “I’m embarassed to be carrying this phone, it’s two years old and look at it! Just look at it! I want a new one. I need one so my friends stop making fun of me.”
Could that conversation ever happen about diamond jewelry? It’s the same price point on average for fashion jewelry and for a phone – $50-$500. A phone lasts for less time and has less intrinsic value although it does have the benefit of utility. Is this an unfair comparison?
The average length of ownership for jewelry? Over 25 years? Generations? There is no way to gauge. A piece of diamond jewelry doesn’t fall apart often for decades. It is not a replacement product…yet.
As an industry, what we need to understand is that there are only two rational marketing structures for a jeweler:
A. Jewelry as an investment
B. Jewelry as an accessory
$4,000 to $10,000 wholesale diamond investments, although weak, are still selling at retail for between $5,999 and $12,000, and have reasonable demand when at the right value. This is what I call the “investment” product.
During this recession, Simplex is having difficulty maintaining its stock of sub $100 product. To be clear, we never have enough of it. $21 silver circles, $40 dollar bracelets, and $25 sterling russian eggs are hot tickets. The $200 to $500 sell or $399 to $999 retail, on the other hand, is in trouble. This is what I categorize as the accessory business.
How does a retailer reconcile the fact that they need to sell impulse, “accessory,” items alongside planned “investment,” items?
The investment item branding should communicate to a customer: “This will last forever. It is a solid investment that retains value and even increases in value. It represents love and committment and will be passed down through the generations in my family.”
The accessory item branding should communicate to a customer: “This defines who I am right now. It’s beautiful, and it shows people I am powerful. Men will find me more attractive because of it and women will envy me. As importantly, I love it, and I want it because I deserve it.”
The investment store brand should be reflected with marble, copper, oak and mahogany. Salespeople should be sharply dressed, refined, and wear Ascot or Aquescutim.
The next, the accessory brand should reflect the whims of the times. All white, sharp lines, sexy young salespeople, alongside either refinement or trendiness depending on the price point. The salespeople should wear Dolce & Gabbana, Armani, or Fendi.
The lighting should be bright in one store with heavy yellows whereas in the other it should be dim with reds and blues. One store should have classical music playing whereas the next should have jazz, blues, rock, or indy bands. One should have friendly, yet refined service, whereas in the other the service should be aloof or oppositely extremely friendly and emotive. One should carry timeless inventory adding new styles with control and care whereas the next should turnover styles at least three times a year maintaining a similar feeling but a transformed look. (Of course there should be mainstays but 50% of the inventory at least should be updated regularly.)
Perhaps the one company exempt from this typefied model would be Tiffany’s. Maybe it’s the movie that is its namesake, maybe the strong management, but eventually, the movie will be old and boring to a new generation and the company will have to change. Just as the British tailors lost their control and were overtaken by the French and thereafter the French by the Italians, and then the Italians by the French, so too will the jewelry industry need brands and have brands that win and lose and win again.
The question remains…how do we reconcile the two parts of one industry sold mostly in the same store. How can refined investments live peaceably with trendy accessories?