Columnists George Prout Applied Marketing 101: The view from Hong Kong

Applied Marketing 101: The view from Hong Kong

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The Boeing 777 is a long-range, wide-body, twin-engine jet airliner manufactured by Boeing Commercial Airplanes.  As Boeing’s first fly-by-wire airliner, it has computer mediated controls; it is also the first entirely computer-designed commercial aircraft. In many ways, the 777 represents the ultimate expression of the art and science of aircraft manufacturing, which is a good thing, since as I write this, I am sitting in seat 4D, enjoying the first of what will likely be several glasses of champagne, on a Delta “Triple Seven” flight en route to Hong Kong.

As part of the process of trying to guess what your customers will want to buy from you this coming December, I attend the Hong Kong Show each Spring. Like influenza outbreaks, many important global trends in jewelry design first manifest themselves in the Orient, and then travel to Europe and America.

Over the next seven days, I’ll literally see tens of thousands of pieces of jewelry. I’ll also meet with dozens of people, including old friends who sell the Majors, as I also try to understand what your chain store competitors are doing in the areas of product development and testing. It’s really quite a process, winnowing down this enormous amount of information about styling and design, to derive the proper merchandising model that will ultimately yield the right direction to go in product selection for the Fall.

Let me note, by the way, that much of what I’ll be seeing in Hong Kong will be wrong for the American market. The designs that China produces for Asian consumption are often totally unsalable in the States, although we sometimes see style evolutions that slowly morph into products that can sell in North America. So part of the challenge is to understand which items are “trendy-East”, vs those that are “trendy-Euro”, and how American consumers - and the boutiques that sometimes  drive the front end of style migrations here - will respond to these looks.

Selecting this Fall’s product assortments will be especially tricky. The American economy is improving, yet most of you saw significant downward pressure on average ticket prices last December. During the past four years, an extraordinary transformation has occurred in the kinds of products that many of you are selling. The Great Recession has blurred the lines between the once strongly demarcated “Bridge” and “Fine” jewelry segments, to the extent that many categories that weren’t previously sold by better Independent Jewelers have now become primary traffic drivers.

As price points collapsed, whole new product segments have emerged, and stores that once defined themselves as “Exclusive” have now raced to become as “Inclusive” as possible. Furthermore, the fact that many affluent female consumers have switched from desiring aspirational “heirloom” pieces, to seeing jewelry as primarily a fashion accessory, has been a further catalyst for merchandising changes.  And here I am, trying to guess how all of this will play out, so that we - and our customers - will be featuring the right items at the right price points, nine months from now.

The American political scene may also have a remarkable impact late in the game on what will be selling. I’ve recently seen focus group studies suggesting that if the current administration is re-elected, Christmas of 2012 will look a lot like Christmas of 2011. On the other hand, if we see a change in administrations, then affluent males may react by sharply increasing their discretionary purchasing budgets. The implications of this are significant. It means that in order to be properly positioned in 2012, we will need to have an  “Obama” merchandising/advertising plan, as well as a “Nobama” merchandising/advertising plan, ready to put in place this Fall, and none of us will know which way to go until Wednesday, Nov 7. Talk about last-minute pressure!

Adding to the challenge is the fact that DeBeers and DPS, which used to be the big jewelry advertising voice each year during the holidays, and gave us no-brainer pre-made offensive game plans like three-stone and Journey, are  no longer in the game.

This all used to be so simple. I would attend the DPS Manufacturers’ meeting in April, learn what they intended to do, and march with everyone else to the DeBeers music, with a little tweak here, and a little refinement there, and maybe a margin hit in a key commodity item to establish pricing legitimacy. Sadly, life has become a lot more complicated without their 50 million dollar December advertising expenditures driving the jewelry herd.

And then, there’s the question of colors and textures. Is gold - as in that nice yellow, buttery color that was so popular 20 years ago - on the comeback? Or will the silver color - and the silver metal - continue to dominate? And what about the bronze tone, and the copper tone, and the green tone? And with all the advertising pressure that rose gold has received, especially from LeVian, will we now see rose rise to the forefront? And speaking of LeVian, now that Kay and Jared have launched their very own knock-off brand “Shades of Australia”, what will be happening with chocolate diamonds? Will black diamonds remain hot? And what about other colors, like yellows, blues, and orangey-reds?

And what about alternative metals? Who would have guessed 20 years ago that upscale retailers would today be selling gents bands that are essentially segments of a shotgun barrel (or a drain pipe?). At least we’re once again focusing on men’s jewelry. And speaking of demographic segments, what about children’s jewelry? As we’ve all scrambled to find lower price point items, from bridal to basics, it seems to me that we’ve overlooked some potentially important categories, and one of them is jewelry for little girls.

Finally, the recent era of red-hot religious (angels, angel wings, and crosses) and secular (peace signs) iconography that originally arose from the boutiques may now give way to a new set of trends. This may cause you to start seeing demand for products unlike anything you’ve ever sold before.

So... off I fly to Hong Kong, with a head full of questions, and no answers in sight. Fortunately, I’m about to be immersed in an ocean of new information, and if my past experiences are a guide, I expect to find some pretty interesting answers.

George Prout is Vice President of Sales and Marketing for Gems One Corporation, and can be reached via e-mail at This e-mail address is being protected from spambots. You need JavaScript enabled to view it , or at Gems One’s New York office at (800) 436-7787.

 
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