Perfect Harmony: Finding added revenue in giftware

by Habiba Abudu | August 27, 2019 3:15 pm

By Todd Wasylyshyn[1]

 

When Michelle Bankowski opened Diamonds of Detroit in Humboldt, Sask., in the mid-1980s, she was facing an uphill battle, as her shop would be competing with three existing jewellery stores in the rural town. After a few years, however, only Michelle remained. And, if not for Olivia Coffyne, who purchased and expanded Diamonds of Detroit in the 2000s, there might not be a single jeweller left in Humboldt today.

With each passing year we seem to lose more and more independent jewellery stores. How is it that retail sales are continuing to grow when the retailer base keeps shrinking? We’re all acutely aware online merchants are picking up some of the slack, but the truth is new brick-and-mortar jewellery retailers are popping up all over the place right under our noses. They just don’t look as you might anticipate.

Professional sports have minor leagues, where prospects prove their mettle before ascending to the pro-ranks; likewise, the jewellery industry has gift stores.

In looking out for their own financial well-being, numerous gift stores stumbled into our business to the point of competing for important lines with traditional jewellery merchants.

A changing economy

The past 20 years have seen an influx in international brands. At one time, every store selected its products from the same few sales reps, but this is no longer the case.

In the late 1990s, the Canadian dollar clocked in at around $1.54 compared to the U.S. dollar. This value fell to less than $1.25 in 2004 before making its way to par in 2007. Free trade flooded Canadian jewellers with hundreds of options. Always on the lookout for ways to increase profits, mom and pop businesses were so interested in shiny new bridal brands that they put little emphasis on items below $100. Meanwhile, for the neighbouring gift store, offering $50 jewellery items became a way to increase the bottom line. 

Finding the right fit

[2]

Between 2006 and 2011, gold skyrocketed from $400 an ounce to more than $1800.

As these prices began to rise, it became evident gold could no longer create lasting jewellery falling in the sub-$100 price range. Manufacturers tried to make gold more affordable, but, in an era of $15,000 engagement rings, this simply wasn’t a priority. Ultimately, the climbing gold prices led jewellers to admit that perhaps silver, stainless steel, titanium, and other metals might have a place in the industry after all.

The next thing we knew, companies like Zoppini, Pandora, Alex & Ani, and Thomas Sabo not only embraced the use of alternative metals, but re-popularized the idea of buying bracelets one small collectable piece at a time. This allowed these brands to undershoot traditional entry-level jewellery price points, flooding the market with hundreds of designs under $50.

Not all jewellers took kindly to this development. While retailers eventually acknowledged these low-cost items could add up quickly when purchased three, five, or 10 pieces at a time, it was a hard concept to accept, especially given the time commitment on the sales floor for such minimal amounts.

While many jewellers (this writer included) questioned the wisdom of lowering consumer expectations of what a gift of jewellery should cost, gift store merchants saw these low-cost branded lines as ones that could help increase their average ticket and boost their sales per square foot. These retailers made the financial investments and shoved their picture frames, pottery, and knick-knacks out of the way to make room for shop-in-shop display units full of bracelets, beads, and charms. Some of these businesses knew little about jewellery, but a lot about merchandising.

The question of ‘branding’

[3]

The ‘Polar Bear Diamond crash’ served as a warning for jewellers, reminding them not to lose their identity to any single brand.

Twenty years ago, ‘branding’ was a buzzword referring to the creation of a strong, unique expectation for stores. At that time, it was all about developing your own display systems, packaging, and messaging and creating an immersive, branded experience for your customer.

When we talk about branding today, however, most retailers argue there’s a benefit to featuring popular established brands within your business. If you perform a Google search for jewellery retailers in different towns and cities, you’ll find those that carry recognized brand names are no doubt the ones you would be most interested in visiting.

Gift stores have always excelled at creating branded presentations. From filling pastel chalk-painted antique buffets with candles, cookie jars overloaded with colourful bath-bombs, and homemade jams and chutneys on live-edge wood shelving, gift merchants are keen to draw customers in using unique layouts and offerings. While jewellery retailers in the early 2000s tried to emulate the simple homogeneity of Tiffany’s, gift stores remained branded (or at least segmented).

A funny thing happened on the way to the jewellery store…

Having worked as a travelling sales rep for 17 years, I can tell you something you jewellers might not want to hear: even if you maintain an amazing store, you’re not the only option in town.

I spent two years trying to get Keith Jack products into Woodland Jewellers in B.C.’s beautiful Cariboo region before the store’s owner, Cindy Watt, finally made room to stock it. A year later, she literally punched me in the shoulder and said, “Why didn’t you talk me into carrying this line sooner? It’s amazing!”

By contrast, when a second jeweller in another town declined to even look at the line, I visited an attractive gift store around the corner. They enthusiastically adopted the brand, thrived, and have continued to do so ever since. Though the shop wasn’t a fine jewellery store, I did the best thing for the company I represented by finding a retailer that would promote and sell the product well.

[4]

Mind the gap

Jewellers in smaller centres tend to find it prudent to maintain a giftware section to bridge the (often sizable) gap in the jewellery purchase cycle.

I recently discussed this with Ron Caine of Caine’s Jewellers in Rocky Mountain House and Whitecourt, Alta. He sees the value in the strategy, but adds it’s important for jewellers to stock giftware that can’t be found in stores nearby, and that the pieces they bring in are consistent with ‘jewellery-worthy’ celebrations.

Marie Wade (retired, formerly of Ware’s Jewelers in Stettler, Alta.) echoed Ron’s sentiments on exclusivity.

“If we opened a new store, we would have giftware in some shape or form depending on space,” says Marie. “It brings people in who are not necessarily looking for jewellery, but who might try something on while they are in.”

Working in tandem

The jewellery and giftware industries are, without a doubt, linked—if you doubt this, simply look at how critical it’s been for the dates and locations of the Canadian Jewellery Expos to line up with those of the major gift shows.

For Marie, she was happy with a 15 per cent revenue share from the giftware she carried, and you might expect more or perhaps less. Even still, keep your eye on the gift-store owner down the street; they might become your competitor before you know it!

[5]Todd Wasylyshyn stumbled into the jewellery world while completing an arts degree at the University of Alberta in 1987, and still possesses the very first loonie he made in the industry. Having worked retail and been an owner, traveller, gemmologist, and writer, Wasylyshyn has seen the vast jewellery business from many angles, and is always on the lookout for new trends. Currently, he is general manager of Keith Jack Inc. of North Vancouver. He can be reached via e-mail at toddwaz@gmail.com[6].

 

Source URL: https://www.jewellerybusiness.com/features/perfect-harmony-finding-added-revenue-in-giftware/

---