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Over the last few weeks, on a popular jewelers' web site, the hot topic has been the encroachment of Internet diamond sellers into the retail market.
As a young man in the Army, I had the privilege to train with the Marines. Never did I hear a
Marine complain, and their drill sergeants constantly were saying, "MARINES- IMPROVISE, ADAPT and OVERCOME!" It is for this reason that they always came out on top! They never focused on the problems, only their solutions! If they could not attain an advantage by common means, they created one by adapting their tactics to the outcome they desired!
We, as jewelry professionals can learn a lot from this. Take for example losing diamond sales to Internet sellers. We can continue to do our best to overcome the price objections or we can adapt to the changing circumstances. We must remember that the desired outcome is for us to make money -- and selling diamonds is not the only way to accomplish this!
What irks retail jewelers the most is the mark up the Internet sellers use (very, very slim margins), and how those margins are affecting them! Hearing this tells me that most of the jewelers complaining have their business focused on a portion of their overall sales that is shrinking, and one that is not very profitable. You know the old saying, "Don't put all your eggs in one basket!" Seems to me that this is exactly what most retailers are doing -- placing all their efforts in diamond sales and watching their share of those sales grow smaller and smaller as time goes on.
I know how most of you feel when a customer that you have performed countless favors for purchases a diamond at an Internet seller. Truth is, they did nothing wrong. Is it not true that you also do the same thing when buying a car or any other big-ticket item? It makes no sense to complain that the retail buying public will buy from the business that offer the best price. The Internet has made the buying public all experts. No longer can we stand in front of a counter and offer customers our wares and presume because we are the brick and mortar store and offer full service, that this entitles us to our customers' undying loyalty. The world has changed. The retail customers' only loyalty is to the price they pay.
Let's look at what positive action you can take.
Improvise: = to fabricate out of what is conveniently on hand. The truth is, most retail jewelers never really take account of their strengths.
Adapt: = to modify according to changing circumstances.
Overcome:= to gain the superiority; WIN
We must focus on the advantages we have over the Internet sellers, and I'm not talking about out-flanking them in the diamond sales battle zone. Make a list of all the products and services that you offer that the Internet sellers do not offer, then focus on those areas.
Custom Jewelry Design: This is one area that the Internet sellers cannot offer! Custom jewelry design is a very "high touch" product. Customers insist that there be very close, one-on-one contact with the designer to get what they want. Jewelry is very personal and diamonds are just a part of the entire process. When we look at diamond sales vs. jewelry design, all the real profits are in the making of the jewelry piece, not the diamond. Typically, the profit from a jewelry item that has been custom-made is in the range of 200 to 300%. And the demand for this service has never been greater.
Some ways to get this accomplished;
OutSource your needs to a Rapid Prototype service. There are many RP companies that offer these services to retail jewelers. They can design the piece for you or finish the piece right up to casting.
Create your own design studio: Start using jewelry design software. There are some very high-quality software packages on the market that will really separate you from the so-called "bathrobe boys" (Internet sellers). All you will need is a small space in your store for a computer and a little imagination. Most people who purchase a diamond on the Internet need someone to finish the job for them. What good is a loose diamond? Here is your opportunity to make some real money!
If you are not already using David Geller's blue book for jewelry repair pricing, you need to. Gone are the days of doing repairs because we view all customers as potential big-ticket purchasers. I remember when I was a young man in my father's store, my father would tell me to not charge certain customers for simple repairs, in the belief that they would return at Christmas an spend a boat-load of money. And they did! But this was 30 years ago, and that was a time when jewelers were the only retailers selling diamonds, gold jewelry and the like. David's book works because buyers "believe what they see and doubt what they hear." If we show the customer what we are going to do to repair their jewelry, and show them what we will charge for that service, they can believe and understand the price. For most of you who do not yet use David's book, using it will amount to a substantial increase in average repair ticket income.
Watch Repairs: In the seminars that I hold, we teach our students that we need to be modeling our business after successful models. In the area of watch repairs, the most successful business type to model yourself after is the factory service centers. To quote what I tell my students, "If it's good for them, it's good for you!" If a factory service center charges $225 to service a quartz watch that uses a $24 quartz movement, then you, too, should make $201 on the repair. There is no other department in a jewelry store in which the potential for big profits is allowed to lie dormant, waiting for someone to collect the money. Actually, most retail jewelers turn down watch repairs. Typically, only 5% will perform watch repairs on watches that they do not sell. Anyone who changes batteries in watches, with a little training, can begin performing quartz watch repairs.
So what the Marines have to say to for retail jewelers? Improvise, Adapt and Overcome! You have more than you know going for you. Use it.
© Dan Gendron. All Rights Reserved.
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