Beading a path to your door: Beads and charms still hot sellers among consumers
by charlene_voisin | June 1, 2012 9:00 am
By Jacquie De Almeida
Gerry Gilroy isn’t surprised the bead and charm craze is still going strong. In fact, the owner and president of Independent Jewellers in Edmonton says his clients flock to the counters looking for the next piece to add to their bracelet. He also says that while bead and charm buyers may have started out loyal to a particular brand, there tends to be a bit more flexibility these days when price, design, or availability are factored into the equation.
“The great thing is that most bracelets and beads work together,” he says.
No doubt, the bead and charm sector has taken the lead in the last few years as one of the few categories jewellers could bank on for sales, and in some cases, help them stay in business. A simple line of jewellery sold in a small store in Denmark has led the way to a $10-billion industry with countless similar bead lines sold around the world.
Yet, with the news its biggest player—Pandora Jewelry—recorded a 30 per cent decline in revenue in the second quarter of last year due to price increases, many questioned whether bead jewellery had lost some of its previous shine.
John White, Pandora’s president North America, says pricing is a sensitive issue regardless of brand power. When the company upped its prices in the United States by an average of 40 per cent, consumers reacted with fewer sales, and the company soon underwent a strategic review across the board with the help of external consultants. Its response was to reduce its prices in January an average of 20 per cent in North America on 300 design variations of its most popular pieces.
“We believed that if we were going to take action to make a difference, it had to be on our best-selling items to get maximum benefit,” White explains.
Earlier this year, Pandora also offered retailers a one-time, time-limited inventory swap allowing them to return non-sellers for best-sellers without incurring restocking fees.
The global campaign is expected to cost $90 million to $140 million US. To avoid a buildup of slower-selling items in stores, White says Pandora will be using point-of-sale data to analyze retail sell-throughs more regularly, as well as inventory levels.
“We’re going to be much more in tune with our retailers to ensure this sort of thing doesn’t happen again,” he said.
At your service
Kit Junya, president of Ohm Beads, says it’s important from a customer service perspective to understand that trends change and an inventory-swapping program can be a win-win for both the manufacturer and retailer.
“We consider our retailers as partners and not just customers,” Junya says. “We do what we can to help them sell our product.”
Although Ohm increased its prices on silver pieces, Junya said the company’s sales in the first two months of this year were up 30 per cent from the same time last year.
“The bead business is still there,” he notes. “You just need to come up with good design ideas that consumers want.”
Creating beads that can be used with various systems is a consideration. The other, he adds, is an eventual decline in the number of companies offering bead lines.
“There are so many bead companies out there and some will go out of business,” he says. “When there is a boom, people try to get into it. That’s the nature of any business. But it’s not just about product and price—it’s also about customer service and maybe that’s what some of these companies lack.”
Raj Tilokani, owner of Alpine International, says he noticed a significant drop in the number of bead companies exhibiting at the Hong Kong International Jewellery show in February. He believes this may be a sign that consumers are more inclined to stick with brand names, rather than look for bargain-basement copycat product.
Apel Camgozlu, administrator for Mary Jewellery, believes the abundance of bead lines may give the impression the market is saturated with product, but when it comes to a hot-selling fashion trend, there may still be room for growth.
“If someone doesn’t have the money to spend on a higher-end product, they’ll still want it and are probably willing to go with a less expensive choice,” says Camgozlu, a wholesaler of two bead lines. “As long as something is hot, people are willing to spend the money.” Still, he believes every market has a cap and that beads are no exception.
Camgozlu says he’s spoken to many retailers who are considering picking up a bead line. While some decide against it believing the bead ship has sailed, others find they’re willing to go all in.
“It comes down to how much they’re willing to invest,” he explains. “If the investment matches the return, then they might still get into the bead business.”
A trend for all seasons
Laryssa Johnson, executive vice-president for Rembrandt Charms, says charms continue to be a strong category for retailers, with consumers not only adding them to their bracelets when celebrating a birthday, anniversary, or milestone of some sort, but using them also as pendants.
“With high gold prices continuing to influence shopping trends, consumers are buying a lot of sterling silver charms,” Johnson says. “Sterling combines a fashion-forward style with product and price diversity.”
Is there a point where consumers have had their fill of charms? Johnson says the possibilities are endless. “Not only are charms collectible, they are also personal gifts for a wide range of consumers.”
To help maintain its prices, Rembrandt Charms invested in new technology for its in-house manufacturing. It has re-engineered many of its charms to enhance detail and lower production costs.
Only one year into carrying a brand-name bead line, Gilroy says he doesn’t doubt the strength of this category.
“We’re more happy than surprised this market is still as strong as it is,” he adds.
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