FJN Voices

Globalization, shrinking margins, the Internet, competition, a lousy economy and who knows what else, has encouraged many jewelers to look beyond the US borders for growth and profitability. Nothing new here; they’ve been hearing about Global opportunities for years.

They were simply doing what mass retailers, jewelry chains, department stores – their ferocious competitors — have been doing for years. I just spent six long days trolling the 80,000 square meters of the Hong Kong Jewellery & Watch Fair in the breathtaking Hong Kong Convention & Exhibition Centre. This year the organizers claimed more than 2,700 exhibitors from 48 countries. I had been guiding a group of 25 American independent jewelers around the Fair — and around Hong Kong — on a “Sourcing Workshop.” Their first impression of Hong Kong was shock enough, but nothing compared to their ‘wide-eyed’ astonishment of the Fair. The range of designs, the diversity of the visitors and the size of the building (from a distance it looks like a small bird with big wings), was notably intimidating. My job was to minimize their shock and quickly guide them to find the product and designs they were looking for. (They made kind of a product “wish list” before leaving the US). I even arranged for them to meet with several manufacturers, outside the Centre, in an effort to develop a few long-term vendor/supplier relationships. I was finally in my Continental Airlines seat, exhausted, but not particularly happy to sit — in one place — for 22+ hours during the flight home. Fortunately, I was sitting next to Bill, a second-generation jeweler from northern Michigan. We had an airline meal (tasted like a Brillo pad), saw a movie, read a magazine and had – sigh — only 19hours to go. Bill took out his laptop and started writing a Trip-Report to his Dad. When he finished, he let me read part of it. To: Bill, Sr. From: Bill Subject: Hong Kong Trip, Feb. 17-21, ’10 Date: Sept: 22 Our first effort in buying direct form overseas was, I think, quite successful. Here are the key points. 1. The styling was wonderful. I never realized that each geographic region has a different design look. I thought Bali, Middle Eastern and Indian styling was especially noteworthy

2. I spent a good deal of time with seventeen manufacturers. I bought 42 samples which will be FEDEX’d within 2 weeks. Of those 17, I had lunch with five, who could fit into our future.

3. The prices here are generally terrific — not surprising since these are manufactures’ prices. I saw several styles that we carry and, as far as I can tell, are about 45% below what we now pay.

4. I also met with six smaller factories who were not exhibiting at the Fair. They seemed more innovative and eager.

I’ll fill you in on their invoicing, payment and delivery schedules when I get back. Now that I know my way around here, this should be quicker and cheaper next year. The “Sourcing Workshop” was terrific. None of us, (there were about 25 jewelers from all over the country), could have done it without the Workshop leaders. Bill.

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My wife gave me a book for Christmas titled The Necklace by Cheryl Jarvis (Ballentine Books, 2008). The dust jacket reads Thirteen Women and the Experiment That Transformed Their Lives. The book got my attention.

If any true story proves what an emotional impact jewelry has on people—especially women—it’s Jarvis’ telling of a “time-share” experiment between 13 women and a white gold, 15-carat diamond necklace. The breathtaking necklace was purchased from Van Gundy and Sons jewelry store in Ventura, Calif.

I’ll try not give away any of the book’s secrets (there are many), but the 13 women pooled an equal amount of cash and bought the necklace together. The storeowner’s wife became one of the 13. As agreed, the 13 “owners” would wear the necklace for 30 days before passing it on to the next owner.

But that process was just a small—even minor—part of the story.

The real message involved the emotional impact the necklace had on the self-esteem, self-confidence and pure joy of the wearer. This jewelry “time-share” (my expression) had a decidedly positive impact on the women and the people around them.

I guess the lesson from Jarvis’ story is that jewelry consumers don’t always buy jewelry solely on looks or aesthetics. The emotional impact that women get from wearing beautiful jewelry is—or can be—a strong purchase motivator. Do marketers spend enough time relaying that message to the jewelry consumer?

I’m not sure. Anyway, The Necklace should be left on every jewelry counter.

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When the recovery starts for jewelers they will face a drastically altered environment. They’ll find new market and profit opportunities: social networking, internet, globalization, segmented TV advertising, new metals, growth of Gen Y consumers, even reduced competition (thanks to disappearing jewelry chains), to name a few.

On the other hand, the recession has changed the attitudes and behavior of many jewelry consumers: – permanently. When the recovery begins, his customers will see jewelry through a different set of eyes.

It will be the jewelers’ job to anticipate these changes, develop plans (from ‘A’ all the way to ‘Z’), and then design a variety of implementation scenarios. That’ll be a challenging job, indeed.

But wait, there’s more. To add to the challenge, jewelers should start the planning process now – not wait for the Wall Street Journal’s recovery signal. They could/should be the first ‘kid’ on-the-block, so to speak, to reach their new customers.

Now that he has stuck a pitchfork in unnecessary expenses, the jeweler should be running a relatively mean and lean operation. Because of that, now would be a good time for the jeweler to develop an Analytical Initiative. Management analytics is the best and fastest (and latest) way for the retail jeweler to keep up – or even pull ahead – of the pack.

It is virtually impossible to plan for this uncertain future relying on incomplete data, gut estimates and soft information of the past. Without vigorous disciplines for gathering, sharing and analyzing data, plans can be a waste of time and money (at best), or risk the company’s future (at worst). “Stinkin’ thinkin’,” as they say, can be a time consuming and an expensive process.

Analytical Management, also called Evidence-Based Management, Management Without Blinders or Management by Analytics, is simply a way to use the latest data-collection technology and analysis to wring every drop of profit and value from all business process and employees. Management analytics technology, such as Customer Relationship Management System (CRM) – among others — is readily available.

By becoming an Analytics Competitor the jeweler will discover what his current customers wants but also how much they are willing to pay for it. He will learn what keeps them loyal. And, he can track existing inventories but also predict and prevent future inventory problems – domestic or global – as well. Electronic Commerce Backbone Systems, (ECBS) is a popular example of inventory analytics technology.

By being an Analytical Marketer, the jeweler will know the relationship (linkage) between his prices, his ad expenditures and his sales team. If he doesn’t know this, he should.

So, how does the jeweler start an Analytical Initiative? Here are four steps.

• Lead Analytics from the Top. The jeweler must lead an analytics-focused organization. If a jeweler lacks the background in the use of mathematical formulas, he could work with his accounting firm or consult experts in the jewelry industry. He must endorse the changes in culture, processes and skill sets that analytics will mean to his organization.

• Create a Single Analytics Initiative. Place all data-collection and analysis under one manager. Make it easy to share data and encourage consistent reporting with common report formats, definitions and quality.

• Hire the Right People. Hire people who are comfortable and familiar with quantitative-analytical skills. They should be able to express complex findings in simple terms and, at the same time, work well with the jeweler’s team. And, by the way, recruiting the manager with the necessary skills should be easier in a soft economy.

• Use the Right Technology. Understandably, the jeweler should be prepared to purchase some of the required – and necessary — software. In addition to the popular Microsoft Office Suite, Enterprise Resource Planning Systems (ERP) is a good program to start with.

Why would a jeweler prepare specific plans for a difficult future without accurate information on his past? It is perfectly acceptable to make assumptions on the future, but with an Analytical Initiative, there is no need to speculate on the past. Doing so could turn out to be very expensive, indeed.

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Remember that old line from the Woody Allen movie, “Annie Hall”? “Relationships are like sharks; they move forward or they die.” The jewelry industry has to move forward too or it becomes irrelevant – or at best – an after thought.

As we know all to well, consumers are gripped by an “electronic gizmo revolution.” How can – or will – jewelers develop a ‘relationship’ with the revolution, or at worst, capitalize on the sales and profit potential of the movement?

How can jewelers develop a framework for electronic innovation in an extremely competitive environment that is changing at warp speed?

Several innovative-focused firms – here and overseas — have started their ‘electronic innovation building’. A few come to mind. Paragon Lake (Boston) developed a virtual design/inventory system for jewelry consumers using enhanced computer technology.

Dongwoon (South Korea) creatively combines silver jewelry with flash drives. Artco Group (Texas) recently introduced an interactive computer system to produce customized timepieces.

These firms – there are others – are technology leaders in an industry (jewelry) which is generally late to use technology to advantage. It’s no surprise that firms that are the first to use – or offer – technology have the potential for considerably higher profits and hold a significant competitive advantage. Just ask Microsoft and Apple.

The new technology requires the jeweler to do things differently; this means not only a new approach, but also a refusal to be bound by the old rules that applied in the jewelers of the past. There are several ways to spur innovation in your store:

1. Look outside. When faced with the need to innovate, most jewelers turn to their inside talent. Instead, reach across corporate boundaries to your extended network.
2. Mobilize passionate individuals. There are likely customers out there who are passionate about your designs, ideas, or store. Find these people and connect with them so you can use their ideas to innovate.
3. Embrace new technology. Look to younger generations of employees to see what technologies they are using. Support and embrace these technologies as they may be the source of your next innovation.
4. Purchase Technology from outside the industry. It is no surprise that other consumer product industries have innovative marketing, inventory or administrative systems. Keep your eye open for these systems for purchase. This is, of course, may be the simplest and easiest (did I hear cheapest) technology that could be acquired.
5. Licensing. Certain marketing technologies that are not easily purchased can be licensed for a fee. TV producers license their programs (through simple V-chips), for a royalty. This is especially effective if the program stars a personality which appeals to your target consumer.
6. Trade Technology: A jewelry retailer could contact a cosmetic retailer and exchange (trade) technology applications such as inventory control terminals and in-store marketing deliverables.
7. Partnerships and joint ventures. Jewelry stores from around the country could form partnerships or joint ventures to pursue or design specific new technology. (Jewelers now use these partnerships in volume purchasing arrangements).

These are of course, risks associated with developing an aggressive and innovative technology campaign. There are higher costs, necessary customer education, time constraints, quality issues and competitive issues that frequently de-rail the innovative process.

But in the current technological environment, can the jeweler afford to let the opportunity pass?

Read more…

Filed in: Fashion and Trends by Jan Brassem Comments (0)

Let’s take a moment to look forward, because — let\‘s face it — looking back at [Circle one: Lousy Sales/Jewellery Bankruptcies/Impending Inflation/Budget Deficits/Non-jewellery Competition] is, to say the least, depressing.

So, let’s look ahead.

As President Obama said recently, there seems to be a ‘glimmer’ of better times ahead. Economic and financial indicators seem to agree. That should be no surprise to the sophisticated jewellery manager. By all indications, things are not getting bad as fast as before. The Wall Street Journal and the rest of the Wall Street crowd think the economy has stopped bleeding and is growing — a little.

The Wall Street Journal’s “misery index” (the combination of unemployment and inflation), is trending down, from a high of 8.1 only three weeks ago. By way of comparison, during the 1980-Carter inspired recession, the “misery index” hit an all time high of 22.

The US Stock Market is moving up — surging eight percent since the beginning of the year.

Retail sales, although only certain sectors are up, especially in major discount stores and automobiles. IBM, J.P. Morgan and Intel – among others — have made upbeat forecasts. In total, corporate profit reports have been better than expected.

US home construction – an important economic indicator – surged 3.6% in June. It was the third consecutive monthly gain, leaving new-home construction at its highest level since November 2008.

Banks also seem to be getting stronger, led by the blowout earnings report from the Goldman Sachs Group, Inc. (Did someone say “Bailout.”)

So, it’s time for the jeweller to look around and make sure his company is prepared – positioned — for economic recovery. With the risk of being redundant, here is a brief “Pre-Recovery” checklist for the jeweller – or any businessman for that matter. His firm should hit the ground running.

Created an Analytics Initiative. By now, he has placed all data-collection and analysis under one executive with proper technological support. He has by now, based buying and strategic decisions on analytics – empirical evidence – and not on faulty information or wishful thinking. In the ‘old days’ as recently as 2006, decisions were made on memory and gut feel. Nine times out of ten, decisions we were wrong.

Prepared for major changes in the industry. A couple of weeks ago, the Federal Reserve Board decided to buy $1.15 trillion (with a T), in effect putting $1.15 trillion into US circulation. When that happens, maybe not this year, but certainly in 2010-2011, he will be faced with severe inflation.

And, as we all know, the price of gold is directly related to inflation. So, if history is any indication, (inflation in 1980 reached 14%, with gold following to $2,296/oz, after adjusted for inflation) he can expect a significant run-up in the price of gold.

By now he is planning for that eventuality.

Started a Social Network Strategy: YouTube, Twitter, Face Book are just a few players in the exploding social network scene, a vital source of innovation that levels the playing field between small businesses and corporate giants.

By now, the jeweller has developed his own social network strategy and model.

Announced a promotion that will celebrate the economic upturn. The jeweller has by now, developed new and innovative communication concept(s) announcing the new economy. How about giving something free?

Threw out things that have outlived their usefulness. The jewellery manager has discarded unneeded samples, unused desks, meaningless reports, cluttered space and old, inefficient systems. He is ready for action.

Invested in updated technology. The jeweller invested in product development, tools, production technology, jewelry design and such. They were cheaper during the recession.

Pursued mergers and acquisitions. “History shows the best ‘deals’ are made during downturns,” says Shea Fox, publisher of Jewelry Newsletter International, a Houston.-based publication specializing in mergers and acquisitions of jewelry companies. Since sales and profits are weak during a recession (internal) growth is hard to come by. External growth by M&A is a valuable substitute

Refocused his financial model. The downturn changed the way many of his suppliers, bankers and customers think and operate. Successful and nimble jewelers anticipated these changes and adapted their business models to gain an advantage.

Here are some other things he has done.
● Communicated, communicated, and then communicated.
● Economically experimented with new systems and marketing programs.
● Maximized market share, by taking customers from struggling, bankrupt or reorganizing competitors.

Read more…

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