Jim Langolf remembers the days when a number of vendors would stop by the store each week. “No matter what, I’d always buy something, go out for lunch, and then put the jewelry in inventory,” says the owner of Alexander Fine Jewelers in Fort Gratiot, Michigan.
Those days are “long gone” for Jim and pretty much every retail jeweler in the country since the housing market crash in October 2008. The year that followed, and the mild recovery that still characterizes what many are calling the “new normal,” is the hand that has been dealt to retail jewelers.
To “beat the house” store owners pivoted quickly, adjusting inventory levels downward, buying more strategically, and, of course, embracing the 3-B’s (beads, bridal and buying gold) – profit centers which continue to perform well for retailers.
A few years back, some retail jewelers saw the writing on the wall early on. They began online selling options to create convenient in-market service options while capturing out-of-market sales, consolidated operations, added a store, or moved to a more lucrative location.
A year before the October 2008 crash, Jim’s chief downtown competitor closed his jewelry store. Business at Jim’s downtown location was soft at best. He spent 2009 and part of the following year scouting out a new store location. Five miles north of the dying downtown was a new retail area complete with a mall and some nationwide retail names.
When he opened his new store in 2010 Jim continued to trim his vendor list, ultimately cutting the number by nearly half. And, much like today, he aligns himself with vendors that offer forward-thinking exchange and buy-back stock balancing agreements. Allison-Kaufman Company was a recent addition to Jim’s bridal vendors brought on at the June JCK Las Vegas Show mainly because of the company’s 1:1 exchange program.
“Like many jewelers, I need this kind of reassurance,” says Jim. “Without it, I can’t refresh non-performing inventory. I can’t sell what I already can’t sell, and progressive [exchange] programs like this give me peace of mind.”
The 3 B’s also shook up the retail landscape for Jim and many jewelers. He’d never purchased gold from the public and began that practice. Engagement and wedding jewelry sales continued, but the steady Freddy category experienced big changes that continue for jewelers.
Engagement ring center stones have dropped from one carat to three-quarters. Men can’t afford to spend upwards of $1,200 on gold wedding bands, so they’re opting for alternative metals. And silver jewelry is taking up more linear square footage than ever before.
Plain tungsten, carbide and alternative metals rings for men are so inexpensive they’re almost disposable. To recapture the losses from the drop in gold wedding band sales for men, Jim has been working with special designs for alternative metals.
“We’ve been looking at patterned or intricately designed alternative metals bands that retail from $300 to $500,” says Jim. “Now more than ever, our job as retail jewelers is meeting people where they are [economically] and then working with them.”
Watch sales dropped off precipitously for Jim after the housing market crash, but he’s bringing them back. He knows competing with Big Box retailers on price isn’t a winning strategy. Better quality watch brands with retail prices ranging from $500 to $900 are filling his display cabinets.
Off-site charitable events for Jim bring him to the market instead of trying to bring the market to him with traditional marketing methods. Community outreach is working well for Jim and other retail jewelers, so he continues with his store’s crowded calendar of charitable events.
“Bark for Life,” a charity to raise awareness for cancer research, is one of Jim’s largest pushes of the year. At press time he was running a lengthy “People’s Pets” social media photo contest linked to the June event to continue interest in the charity while building up his Facebook fan base.
He’s also holding an annual one-day special pricing event called Kiss & Tell. Typically held in the late spring, the six-week telephone customer database outreach by sales associates before the sales event helps bring in an added month of revenue. And, for customers that didn’t make the one-day event, residual sales occur for the following month or two.
Media is another big change for Jim. He once invested heavily into traditional media (print, radio, and TV). Now he has strategically placed billboards. His website is enhanced for better mobile device viewing. And, most promotions are done through social media – chiefly Facebook, monthly e-newsletter communiqués and e-blasts as needed.
“Our average ticket sales are about $125,” says Jim. “Lower ticket averages mean we need to drive more sales, and trimming operating costs is all part of what helps us improve sales figures each month.”
In response to the market crash, big changes also happened for Necker’s Jewelers. David Necker and his brother DJ, co-owners of two jewelry stores in Davenport and DeWitt, Iowa, decided to go from traditional marketing to event-based marketing in early 2009. And, they haven’t looked back since.
The Necker brothers are currently starting their fifth year of record growth. “In 2009 we had a record year,” says David. “And, in 2010 we beat that record, and have been breaking sales records ever since.”
Perhaps one of the biggest wins for Necker’s event-based marketing successes is their social media and electronic marketing programs. The brothers started their Facebook page three years ago. In that short time they’ve developed an incredible following with more than 36,500 “likes” and counting.
“Based on what I know of Facebook accounts for independent jewelers nationwide, we have one of the largest fan bases in the country,” says David. In addition to being a Facebook leader among their jewelry retail peers, the Necker brothers also have 10,000 mobile phone numbers as part of a text messaging m-marketing program and 15,000 e-mail addresses for their e-newsletters and e-blasts.
Building such massive databases in these three must-have customer profile categories came with some heavy lifting. Like many retail jewelers, in 2009 Necker’s held city-wide mobile device gaming scavenger like hunts for young bridal customers.
David and DJ liked the idea, but not the execution from an industry-friendly service provider. So they invested heavily into developing their own mobile gaming software program. “We’ve done four, soon to be five scavenger type hunts – one per year, typically in the fall,” says David. “Since developing our own program, it has gone from a significant promotional investment to a small profit center for us.”
Scavenger like hunts have helped capture cell phone numbers and e-mail addresses for m-marketing and e-marketing, but the social media component needed to be developed in tandem with the two emerging marketing platforms for Necker’s. To quickly develop Facebook fans, the two brothers decided to roll the dice with lucrative gift-with-purchase programs, starting with Black Fridays a few years ago. Coupled with notable contest giveaways, the two-prong approach continues to build their Facebook fan base.
In June Necker’s ran a Facebook-based ultimate proposal contest with some huge prizes for contestants. In addition to winning a $10,000 Hearts On Fire diamond ring, the winner also had the chance to go on stage with country mega-star Jerrod Niemann.
These types of big giveaways have attracted hundreds and thousands of Facebook fans. And, with such a massive Facebook following, even smaller product-related social media-driven events attract a big Facebook following and big sales, such as price-point-friendly jewelry gift-with-purchase events.
But even with Necker’s enormous successes in social media, m-marketing and e-marketing, David admits that the ROI (return on investment) for these marketing platforms remains somewhat difficult to measure. But the real benefit to the business is customer “touches.”
“Any time you can get people to interact with your brand, that’s a good thing,” says David. “And, given today’s retail landscape, I’d rather take a risk on an unknown for the sake of change, rather than doing what I’ve always done and not innovating.”
With regards to buying more silver, the Necker brothers brought on beads and added more silver lines in 2007, more than a year before gold began its white-knuckle roller-coaster ride. “In the last few decades, we’ve seen buying trends go from buying color, to diamond jewelry and then bridal,” says David. “Although bridal remains a strong-selling product category, women are accessorizing more as part of the self-purchase demographic. Given gold prices, beads and silver jewelry are an integral part of that.”
David sees bridal and accessorizing sales as the leading trends for the foreseeable future. And, for the Necker brothers, their strategy for continued growth is to stick with what they know is working such as public charitable events, developing software to better handle inventory, implementing new lines of jewelry at price points and designs that attract wider demographics, and investing more time and resources in training staff.