|Laura Stanley of Stanley Jewelers Gemologist, Little Rock, Ark., hosted Master Diamond Cutter Mike Botha of Embee Diamonds to teach consumers about the diamond cutting process. The event was televised on a local news station.|
The internet has had a hugely disruptive effect on the jewelry industry in recent years, as it has with most industries. Our rapidly shrinking world has led to an increase in transparency, access and an explosion of product choice. The side effect of this is that many traditional jewelry businesses throughout the value chain have seen their margins erode.
A lot of traditional "taker" businesses that, in the past, have had to accept the prices of their suppliers, and who have historically been able to set their own prices with little challenge from their end customers, now cannot. These taker businesses range from local diamond wholesalers to Mom-and-Pop jewelry retailers that have been around for generations. Customers can quickly jump on the internet to compare prices, so these businesses have had to find ways to survive by adding value to their end customers.
The companies that have thrived in recent years are the "makers" - the ones that have taken tradition and redefined it. There are many great examples of companies that have built brands that focus on design, craftsmanship, great personal service and trust. The byproduct of doing the tangibles well are the intangibles that form the basis of their innovation and ultimately the intellectual property that other companies struggle to understand or replicate.
|Customer picking up his purchase at The Village Goldsmith, Wellington NZ.|
The internet breeds monopolies and no more so than in the jewelry industry. The top tier diamond companies are becoming more and more dominant by the day, helped by natural economies of scale and their purchasing power. Much of the reason for this is that ‘Mom and Pop’ retailers from the US to New Zealand have the same access to diamond inventory lists as do the major online global jewelry retailers. Consumers are able to access diamond pricing information and descriptions instantaneously, make comparisons and choices at the touch of a button, and this has led to the erosion of traditional margins for retailers. Diamond companies’ margins are also getting tighter as they fight to remain competitive, ensuring that they need to innovate to stay relevant.
Why is this good for the end customer? Well, it forces companies throughout the whole value chain in the jewelry industry to genuinely look at clever ways to create better products and experiences for their customers.
|A master jeweler at Inspired Jewellery sets a diamond on a ring.|
Retailers big and small that continue to focus their efforts around the needs of their customers are seeing strong growth. In a recent report big retailers like Nordstrom attribute customer service as central to their strategy and recent growth. They are using different store types and brands to appeal to different customer profiles and age groups. They’ve recognized the need to connect with the younger generation as they will be tomorrow’s customer and are using an omni-channel strategy to support this. Burberry is another luxury brand that is going to great lengths to connect the retail store experience with the online experience.
Recent research conducted by Bain and Co. stated that when consumers were selecting which jewelry store to buy from in Western markets they valued quality service over all other factors.
A local US retailer that has recognized this is Stanley Jewelers Gemologist in Little Rock Arkansas. Vice President Laura Stanley recently hosted Master Diamond Cutter Mike Botha of Embee Diamonds (see top photo). The aim of the “Southern Stars: Meet the Cutter” tour was to teach consumers about the diamond cutting process so that they are able to make more informed decisions. Laura Stanley said that the theme of the event was to get to know your jeweler better. The event provided Stanley’s customers with an authentic experience of what goes into cutting a diamond - a craft that is not often showcased to consumers.
If “price makers” want to retain that position they must continually innovate and provide more intangibles for their customers to prove that the price they set is worth paying.
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