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Brian Watkins, Ritani Head, Dishes On Bricks, Clicks, Millennials, And The Future Of Luxury Jewelry | February 19, 2014 (0 comments)
Scottsdale, AZ—In the past 30 years, luxury has evolved from formal to casual to digital. Luxury jewelers, meanwhile, have evolved from believing nobody in their right mind would buy a diamond online to earning top scores for online customer engagement, and luxury jewelry brands are finding more and more ways to innovatively blend bricks and clicks.
Bridal brand Ritani is one of those brands leading the charge. With an executive team that has top-notch digital pedigree—president Brian Watkins is ex-Blue Nile—the brand last year implemented a bricks-and-clicks strategy designed to capture the all-important Millennial bridal customer where they hang out (online) and bring them to their local jeweler.
The Centurion Newsletter caught up with Watkins during the recent Centurion Show in Scottsdale. In an exclusive interview, we asked him to share his perspective on the future of luxury jewelry online and off. He and Mark Keeney, Ritani’s vice president of marketing, offered some unique insights.
Click here to watch an exclusive video interview with Brian Watkins.
The Centurion Newsletter: As a relative newcomer to the jewelry industry, what’s your view of our business?
Brian Watkins: The jewelry industry continues to change rapidly, and those who embrace it will continue to do well. The statistics are clear: there were 30,000 jewelry stores 10 years ago, and fewer now. It was a perfect storm: some retailers innovate but customers are changing rapidly with very high expectations. Millennial shoppers have drastically different expectations [than earlier generations] and we as an industry were late to the party with technology.
The Centurion: What’s the most urgent change the jewelry industry still needs to make?
Watkins: We’ve been telling customers they have to pick: you shop at Blue Nile, you don’t have a store, or if you shop in a store, you don’t have e-commerce. But online and offline needs to be a seamless experience. Look, kids get their first [smart] phone when they’re 12 or 13. By the time they’re buying an engagement ring, don’t tell them they can’t do that [online]. The customer has said they want to shop online and integrate that with a local, trusted brand.
Mark Keeney: Young men need the assurance they’re making the right decision. They need the retail component!
The Centurion: Millennials are used to turning over both fashion and electronics regularly, and at least in non-bridal jewelry, they care much more about design than materials. How can we convert them from fashion jewelry to fine jewelry?
Watkins: When I look at the data for U.S. jewelry sales, I’m not convinced of that. $10 billion is spent on branded goods, $30 billion on diamond basics, and $30 billion on everything else. There’s a place for both. We see people make a substantial purchase and accent with trendy. It’s the same in fashion—lots of people walk around with expensive handbags and trendy clothes, or diamonds with jeans.
Ritani’s core customer is a 24-27 year old male, very educated, who lives in or near a big city, and is very tech-oriented. But our second customer isn’t bridal; they come for pieces like diamonds on a leather bracelet. Think about the Tiffany heart bracelet—it may have been overexposed, but that wasn’t a bridal customer.
The Centurion: Luxury has evolved from formal—like fancy china and the living room you weren’t allowed to play in—to casual. You might still spend $20,000 for a sofa, but the kids and the dog are going to pile on it, and a $1,000 place setting goes in the dishwasher. What’s next for luxury?
Watkins: Part of luxury is becoming very limited or exclusive. There’s the six-prong engagement ring, and there’s the six-prong Tiffany engagement ring. Luxury through brand accessibility has grown, but the higher tiers are going to be around exclusivity or branded stores.
Keeney: Now that everyone has smart phones, you can tell the stature of an executive by the ringtone.
The Centurion: Changing topics, do you believe synthetic diamonds pose any threat to the luxury marketplace?
Watkins: No. I think consumers value the story and classiness of [natural] diamond. When you propose, you want something romantic. It’s a question of the story, not of the production.
The Centurion: What about in fashion?
Watkins: We already see lots of jewelry with Swarovski crystal in 18k gold. I think there’s a place for it.
Keeney: Remember, Millennials value authenticity.
The Centurion: With increasing diamond prices and no new mines coming online soon, is there going to come a tipping point where consumers stop seeing the value of a diamond; where they just see a small stone with a high price and say ‘that’s not worth it?’
Watkins: Maybe. But right now the diamond pipeline is stocked. I’m a firm believer of the marketplace: either there will be a supply separation and we create other products to serve the engagement concept, or demand will change.
What you have to avoid is rapid change. Rapid change isn’t good. As long as change is gradual, you can bring people along, but when change is rapid, they lose confidence.
I encourage all retailers to go back and see where their new growth can come from. I see retailers backing away from engagement rings and extending Rolex. That’s great, if you want to harvest the customers you already have, but look at how retail is changing and how you can translate that in your local market.
Keeney: For example, Millennials are now drinking Scotch. They’ve gone from Pabst in college to fine single-malt scotch. Nordstrom has maintained its brand promise [of service] by continuing to innovate online and offline. The average in-store and catalog customer is older, but their average online or online/in-store customer is younger, and the upscale retailer just co-sponsored the 25th anniversary of Sub Pop records, the Seattle-based label responsible for bringing grunge bands like Nirvana to the forefront of a generation.
Watkins: We’ve had disruptions in the industry before: they’ve come from consumers, from Rapaport’s price sheet, even from diamond certs. Disruptions will continue, and those that progress are those that adapt.