Articles and News
Editorial: Not Just Jewelers, All Retailers Are Wondering About The Future | February 10, 2016 (0 comments)
New York, NY—Jewelers aren’t the only ones feeling anxious that everything they know seems to be changing. A recent report in Women’s Wear Daily reassured our industry that we’re not alone: across the board in retail there is a definite shift in consumer behavior and the shopping landscape.
On the plus side, it’s nice to know that consumers haven’t singled out the jewelry industry for a collective snub. And luxury jewelers in general had a pretty good year last year—mixed results for the holiday season, but a solid year overall.
Let’s take a closer look at the situation. First, WWD polled various retail-industry executives to get their perspectives on the future, and some of their observations are relevant to luxury jewelers and well worth sharing. Click here for the full article, but here are a few highlights:
Things like oil prices, weather, stock market fluctuations, election-year rancor, strength of the dollar, and so on, can impact jewelry sales, but they are short-term factors. Long-term changes include—of course—the Internet, but also the growing shift in spending on experiences instead of things, or spending on technology over other product categories, and increasing income disparity in the United States.
Many of the executives interviewed by WWD emphasized the importance of service and of brick-and-mortar retail as entertainment because simple acquisition of stuff can be accomplished online at the shopper’s own convenience. If the merchandise selection isn’t compelling and stores are understaffed and disorganized (an issue with many department and big-box stores), it’s a real disincentive to shop, especially for busy career women. “Nobody realizes how time-short Americans are,” said Britt Beemer, CEO of America’s Research Group.
Luxury jewelers already have a leg up on exceptional service, and pampering customers the way we do also fits the concept of retail-as-entertainment. But every jeweler has more ability than they realize to glean a long-term view of what’s happening in their own sales. For instance, the Centurion 2015 Holiday Sales Success Index found more jewelers reporting a higher volume of smaller sales this holiday season than the same period in 2014, and quite a few respondents said the kind of major sales that put their holiday numbers over the top in 2014 were absent this year.
Now, one season—or even one full year—does not a trend make, and there are certainly micro-economic local factors that play into every store’s revenue in a given year. But knowing what we do know about Millennials’ values (and what we’re learning about Gen-Z, their younger siblings), Boomers aging, and how the Internet has fundamentally changed consumer expectations about shopping and pricing, it makes sense to do a deep dive into your own books. Not just month-on-month or year-on-year total comparisons, but literally every piece sold each month and to whom, for the past few years. It’s time-consuming, but that’s how you’ll see what trends are really relevant to your business, not just food for the pundits. For example, if you are seeing a slight but steady increase in smaller sales, it might not be noticeable from month to month, but when you look at 24 or 36 months, it suddenly jumps out.
Ask yourself if you can drive even more sales and attract more customers by adding more entry-priced merchandise? Do you have enough of the kind of merchandise that appeals to the modern luxury customer who prefers understated Warby Parker eyewear, M. Gemi shoes, and Everlane cashmere to costlier status brands? Food for thought: this article in Business Insider UK suggests the reason Tiffany’s holiday comps dropped 5% is because Gen-Z—now in their teens—are even more practical, frugal, and less status-driven than their Millennial-age siblings, whom we already know are more frugal and less status-driven than their Boomer parents.
Also try a breakout by customer to see the total spend of your entry-luxury customers and if that figure has changed over the past five years. Look to see who converts to bigger tickets with successive visits, see what your newest customers are buying most often, and see if any of your regulars used to spend more and have scaled back? Is there a reason? How have their lifestyle or needs changed? Is that a trend among a significant base of your regulars?
Conversely, study your mega-sales. If the super-big sales to super-rich customers are what you do best, compare how much those contribute to your total revenue over the course of a few years. If a few mega-sales are regularly contributing a significant proportion of your revenue compared to ordinary day-to-day sales, could you rethink your entire operation? Could you earn the same profits with lower overhead by reducing store footprint and hours and concentrating on your super-rich clientele?
These are the kind of questions that all luxury retailers, including jewelers, will need to address as the shopper landscape continues to evolve. The future will be different—but isn’t that always the case? After all, less than 15 years ago, smartphones didn’t exist. Now most people will say they can’t live without one.
Doom-and-gloom reports are click-bait and they sell newspapers and airtime, but remember that “different” doesn’t have to have a negative connotation nor does it have to mean doom. In fact, it can be liberating once you have all the facts and identify exactly what is different, because then you know how to deal with it with confidence.