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Editorial: The Top Trends That Will Change How You Do Business In The New Decade | January 01, 2020 (0 comments)
Merrick, NY—Just 20 years after Y2K, who could have imagined how radically the world has changed? Today, the kids who were born in Y2K can drive, vote, fight in the military, and don’t remember a time when their every smile, every thought, and every move wasn’t documented and shared with the world at large. Left: Lux, Bond, & Green gets involved hands-on with Christmas Wish CT, just one of many stories on the DiamondsDoGood.com website highlighting the jewelry industry's efforts around sustainability and responsibility.
Much has changed in the jewelry industry as well. When my editorial colleague Michelle Graff, editor-in-chief at National Jeweler, reached out to me to ask for my participation in her review of the last decade’s impact on our industry and predictions of what’s to come, I didn’t have to think terribly hard to identify major shifts—except to narrow down the list enough not to make Michelle crazy. Read her excellent blog here.
Rob Bates at JCK and diamond industry analyst Edahn Golan, two other colleagues who are equally excellent observers and analysts, also had interesting perspectives about both the diamond sector and the jewelry industry at large. Read Rob’s take here and Edahn’s summary of the diamond industry’s key shifts here.
While all of us editors and analysts see the exact same set of circumstances, we each interpret them through our own individual lens of experience. If I may pat myself on the back a little, many of the changes we are now facing—especially targeting female self-purchase—are ones that I was discussing in both articles and industry lectures all the way back to Y2K, so I like to think I’ve got a decent track record of predicting trends. Here’s my own list of issues affecting luxury jewelers in the coming decade. Some are obvious and others are more esoteric big-picture issues, but all will impact your business in some manner.
1. Sustainability. Don’t groan! You may be sick of hearing it, but IMO this is the number-one trend that will impact your business. It goes way beyond reassuring your customers about conflict diamonds or the Kimberley Process. Consumers demanding to know where the products they buy come from. They’re worried about manufacturing’s impact on the earth—climate change, toxic pollution, deforestation, and more—and they’re also worried about the treatment of those who do the manufacturing. Climate activist Greta Thunberg is a result, not a cause, of this trend. To wit, recent issues of Vogue and House Beautiful magazines were entirely dedicated to the issue of sustainability, and the topic is covered to some degree in pretty much every issue of every home and shelter magazine. The popularity of all kinds of cleaning and decluttering gurus (Marie Kondo, Flylady, 40 Bags In 40 Days, etc.) is happening because so many people feel overwhelmed by volumes of stuff.
Action plan: Not knowing where your products come from is not an option. Jewelers need to be able to discuss product origins in depth and source only from suppliers that guarantee sustainability, and they need to be able to share that information with customers easily at the counter. Familiarize yourself with the DiamondsDoGood website, which is filled with information about sustainability initiatives in diamond producing and manufacturing communities, and more is being added regularly. Share stories from it on your social media, and when you do something good for your surrounding community, let DDG know because local retailer initiatives are as important to the site—and the industry—as major companies’.
Also try to reduce your own ecological footprint. If everyone makes a small change, the impact can be enormous. Look into using recycled—and recyclable—packaging, or perhaps provide a keepsake pouch or box instead of a disposable one. Instead of shipping with plastic air packs, bubble wrap, or styrofoam peanuts, re-use good old-fashioned newspaper or other bags or paper. Or when you shred documents, save and use the waste for shipping.
Related: Doing Well By Doing Good, Part II: Real Life Examples Retailers Can Use
2. Lab-grown diamonds. Make peace with them, because they’re not going away and in fact are only going to get bigger (both figuratively and literally). Sell them or not as you wish, but as I said to Michelle Graff for her blog, I see them eventually taking over the low end of the market entirely. But they’re already making inroads into better stores as well and IMO anything that gets consumers interested in fine jewelry is, ultimately, a good thing.
Action plan: It’s all in how the product is positioned. If I were a jeweler, I would position lab-grown diamonds as the entry-level product and natural diamonds on the luxury end. I would use the automotive industry as a guide: A Kia and an Audi both are cars, and both will get you from point A to point B. The difference is in the amenities and performance you enjoy during the ride. You get the Kia (i.e. the lab-grown diamond) when you’re young and don’t have much money and you trade up to the Audi as your finances improve. Or, if you prefer, you get an older, pre-owned Audi (i.e. a small high quality natural diamond) and trade up as your finances improve.
3. Generational shift. Boomers, the nation’s biggest spenders, are aging out of the market for jewelry and luxury goods. Yes, the pundits have been threatening this for a while and it still hasn’t happened, but time marches on and that day is much closer now than it was even five years ago. Right now, the youngest Boomers are 55 but the oldest will turn 80 in a few years.
Related: Position Your Business For Long-Term Gold, Not Short-Term Glitter
Also in that vein, keep a close eye on Washington and potential changes in Medicare. Affluent Boomers might not be impacted too adversely if their Social Security is reduced, but the same cannot be said of Medicare, even among affluent seniors. Healthcare accounts for the lion’s share of senior spending, and even with current Medicare benefits its share of wallet still almost doubles between age 45 and 65+. If those benefits get reduced, it will absorb dollars that might otherwise have been spent on jewelry.
Action plan: If Boomers are your primary customer base and generating most of your revenue, you’ll have to make some decisions soon. Staying the course is a viable option if retirement is on your horizon, but if you want your business to grow, you’re going to have to appeal to the next generation of consumers, whether that’s through learning new skills and improving your digital presence, turning more responsibility over to your next-gen heirs, or grooming someone else to buy you out and take over.
4. Resale, upcycling, and sharing. This trend is a corollary to both sustainability and the generational shift. Not only are consumers realizing the destructive impact of disposable clothing, appliances, and furniture, but as Boomers age, a lot of their jewelry is poised to come back into the market in one form or another. This is already a major source of diamond supply.
“Circular fashion” or “upcycling” (i.e. made-over clothing) is the new buzzword in apparel, but resetting and restyling has always been part of jewelers’ lexicon. And as in other luxury categories, resale is hot, especially when it comes to luxury watches—and pre-owned is a great introduction to a brand and often the first step toward eventual purchase of a new piece.
The sharing economy will continue to be an equally important trend in luxury. Many consumers today—especially, but not limited to, Millennials—are content to experience luxury without investing in ownership. Whether that’s by spending $50 for one glass of rare whiskey instead of buying the bottle for $750, or by renting a designer gown for a fancy event instead of buying it, the sharing economy is here to stay at least for the foreseeable future, especially as other financial concerns like huge student loans or, for older consumers, burgeoning healthcare costs take a bite out of discretionary income. To wit: the newly-renovated fine jewelry salon at Bloomingdale's in King of Prussia, PA also includes a brand-new rental section.
Related: The Trend You Should Be Jumping On—Or At Least Seriously Considering
Action plan: Consider hosting more restyling events in store, emphasizing the sustainability aspect of remaking fine jewelry, or setting up a jewelry rental program. Also look for designer lines that feature recycled materials. For suppliers, consider setting up a recycled materials collection or a restyling trunk show featuring your branded designs that customers can put their own stones in.
5. Direct-to-consumer will likely come to fine jewelry. Premium direct-to-consumer brands like Everlane, Warby Parker, Design Within Reach, and M. Gemi are eliminating the middleman and bringing well-made, high-quality and, presumably, sustainable clothing, eyewear, furniture, and shoes to consumers online.
While many attempts in the DTC space have faltered, these brands have become very successful and are now branching out into brick-and-mortar stores. Brands must stand for something to appeal to younger consumers but, as we’re learning, it doesn’t necessarily have to be a decades-old heritage as long as the brand’s story is relevant. High quality without the overhead is quite relevant indeed for Millennials. While there are some online jewelry brands now (apart from the obvious Blue Nile) none have yet reached the level of an Everlane or a Warby Parker—but it would be naïve to think that it isn’t going to happen for jewelry in this space, and probably sooner than later.
Action plan: Make sure you have a selection of well-priced, high-quality merchandise featured on your website. For education and tips on building your ecommerce business, log onto JewelryEcomm.com and be sure to attend Centurion's Ecomm Live events.
6. Existing trends that will continue to impact fine jewelry. These include the increasing importance of female customers (who I suspect will entirely overtake men in jewelry purchasing power within a decade), the continuation of new dress codes (jeans and leggings now are a lifestyle and formal dress will continue to be redefined), and both Millennials and Gen-Z, their younger siblings, have a very different mindset around money than their Boomer parents. They work to live, not live to work, and remember they’re reaching milestones of affluence at a much later age than Boomers did, if at all.
Action plan: Recognize that their jewelry choices are going to be different than earlier generations: smaller diamonds, more informal styles, and often lower-cost items, and make sure you have product that meets their needs.
Related: De Beers Diamond Insights, Part II: Smaller Stones, Lower Cost, And A Huge Terminology Change
7. Global issues can impact everyone. Geopolitical tensions between groups of people demanding recognition and/or equality and those that want to maintain the status quo are on the rise all around the world. Such tensions are nothing new, but social media and the Internet magnify them. Whether it boils over into armed conflict or another kind of crisis remains to be seen, but again, it would be naïve to think it’ll just go away.
Action plan: Prepare yourself as best as possible to weather a recession or other uncertainty and, if there’s unrest in your community, amp up your security.