Shop smart, sell swift: The pricing sweet spot and colours customers crave

by charlene_voisin | August 1, 2012 9:00 am

By Diana Jarrett

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Coloured stone marketing is poles apart from diamond trading, even though many retailers offer both. The secret for swift sales lies in establishing the right price to move the inventory in one season. Coloured stone jewellery is often linked to fashion, but hues that are hot one season are not necessarily the next.

There’s also a different public perception about coloured stones in contrast to diamonds. A consumer with access to a computer can hop online quite easily and read a cursory explanation about the 4 Cs. For some ambitious consumers, reviewing pricing grids is the next step.

Off the grid

Gemstones, however, offer no universal price lists for public consumption, although they do exist within the trade. Yet, even these guides are bewildering without a sample in hand to establish what the guide’s editor calls an ‘extra-fine sapphire’ or a ‘moderately saturated blue.’

So vendors and retailers in coloured stone goods must be both proficient and prophet to get it right year after year. Randi Bourg, public relations manager at Stuller Inc., explains. “There are no rules when pricing gemstone jewellery, which is why so many jewellers lean on this particular product to make the most profit,” she says. “At the wholesale level, competition and market value are monitored really closely and margins are strategically figured out to ensure competiveness.”

Without a how-to manual for gemstone acquisition, suppliers and merchants have not surprisingly developed their own secret formulas for getting it right—and no two strategies appear alike. Some veteran stone merchants reveal to Jewellery Business just how they pull it off.

Need to know

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Since consumers for the most part have little to no understanding of how coloured stones are valued, they cannot appreciate the wide pricing structure. It should be a given that customers are interested in being educated, explains Marco Bandiera, manager of Bandiera Jewellers, a retailer in Toronto. “We find taking the time to explain colour intensities and other parameters related to coloured stones is key,” he says. “You cannot sell a piece of jewellery today just on the basis that ‘it is beautiful.’ Price is a secondary issue and it should never scare people off. I believe strongly in selling value.”

It could be argued there are as many reasons for buying coloured stone jewellery as there are stone varieties themselves. No doubt, each shopper has their own reason for making a purchase. “When it comes to gems, you either have a customer looking for an investment stone that will be a keepsake to pass on for generations or someone accessorizing their wardrobe,” Bourg says.

Daniel Kundakci, executive director of wholesaler European Design Jewellery in Toronto, observes a pattern emerging with gemstone jewellery consumers. “The trends we have been seeing lately are two categories of buyers,” he says. “One is the luxury buyer purchasing large top-quality precious gemstones at price points based on their personal needs.” Kundakci sees this as a result of the upswing in popularity of gemstone engagement rings, riding the heels of last year’s British royal wedding. “The other category belongs to fashion jewellery buyers who are currently purchasing semi-precious stones usually up to $200.”

Who’s your customer?

Depending on your end user—and where your goods are marketed—price and product can vary significantly.

Edit Simon, artist-owner of Edit Simon Jewelry Design in British Columbia, cuts her own stones and custom-makes jewellery combining diamonds and colourful gems. Price matters, but not completely, she notes. “It really depends on what market you are catering to and the venue in which you sell,” she says. “You have to find your clientele. I believe there is a buyer for all price points. The difficulty is to find them and market your products accordingly.”

Candy Ice Jewelry lights up the red carpet by accessorizing hot starlets favoured by its target demographic. There’s no better marketing trick to creating a following than getting a celebrity to wear a piece of jewellery, which nowadays, for this designer, is leaning toward pretty pastels. “Pink colour palettes are my hottest sellers so I always have them in stock,” confides company owner, Lucy Kilislian. Her colourful concoctions retail into the five figures, but consumers can still get star treatment for less. “The average price point for coloured stone pieces I find most likely to sell is $1000.”

Kundakci tries to make it easy for shoppers to buy his inventory. “With gemstones, our main objective is to supply customers with a large selection of coloured stones in various sizes, shapes, and qualities, all in one shopping experience.” Yet, he never forgets the personalized component. “Gemstones such as birthstones are always in demand and constitute a bulk of our coloured stone orders.”

The price is right, but what is it?

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Finding the pricing sweet spot with one’s customer is more talent than science. “Price points are a tricky subject,” Bourg cautions. “If someone is shopping for a high-quality ruby or sapphire to treasure, they are usually trying to stay within a certain budget. It’s no different than investing in an engagement ring with a centre diamond that is priced differently depending on clarity, cut, etc. The customer will most likely buy the stone they are comfortable committing to.”

But high-ticket items require more shopping around than buying a fashion piece. The stakes are different, Bourg finds. “If someone is making a purchase as an accessory item, I would say the average price point is $250 to $500.”

For haute couture goods, the median price jumps, Bandiera tells Jewellery Business. “The price range is wide, although $2500 to $4000 seems popular.” For deep pockets, however, double-digit shopping is robust, too. “Pieces that cost more than $10,000 sell well in the lines we carry.”

Quebec-based art jewellery designer Claudio Pino of Pino Fine Art Jewellery creates for collectors favouring an artistic esthetic. His customers appreciate the sculptural form of his one-offs, making them wearable art forms. Within this niche market, exotic stones fare well, Pino says, since the customer is looking for something original in every sense. “Items most likely to sell fall into the $1800- to $2400-range,” he adds.

The art of the margin

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Establishing margins is a delicate task figured out individually by each designer, manufacturer, and retailer. Price enticingly enough to catch the sale, but don’t leave money on the table. Experience helps interpret the past, and the ever-evolving market reacting to supply and demand dictates prices going forward.

Pino’s complex designs incorporate a number of components, including mixed metals and different stone types. Everything needs to be factored into pricing, but he is firm on putting a 40 per cent cap on things.

Simon takes a more fluid approach, which she says works for her. “Usually the lower-end items have a higher margin, and the more expensive a stone or a piece of jewellery gets, the less I make.” The formula for her goods is pretty straightforward. “My higher-end designer jewellery products are set to a fixed price according to the quality of the materials, the workmanship, and my cost. Margins will be around two times that cost, regardless of other designers’ prices.”

Kundakci prefers ‘the big picture’ approach. “Profit margins are always a tough subject,” he stresses. “Retailers should factor in their location, clientele, and competition when deciding on how much to mark up their merchandise. The profit margin of a retailer with many competitors nearby will be quite different than a retailer who is the only jeweller in town. Once you take into account those factors, the retailer will have a better idea of an appropriate profit margin for their store.”

Bourg concurs. “When you mark up a higher-end item that is more precious, it depends on the area or the community in which that retail store resides.”

Making the short list

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Seasoned veterans whip up their shopping list in short order by factoring in the variables that drive seasonal hot sellers. Still, they keep their customers’ preferences in mind.

Simon leans toward lesser-known stones that complement her original designs, so she scouts out the exotics. “I prefer using tsavorite instead of emerald, or red spinel instead of ruby.” By educating her customers about these gems, she converts them into embracing atypical stones. The best sellers are still diamonds and corundum, Simon reflects, but she’s proud to broaden her customers’ awareness of the range of stones available.

Kilislian underscores the popularity of her perennial best sellers—pink stones—but notes other colours in the same family. “We also sell quite a bit of violet, blue, and purple gemstones.”

For Pino, the process may be slightly different, since his art jewellery never follows trends, but rather caters to clientele who are sculptural art collectors. Observing his brisk movers, “Recently, my best sellers combine shiny black and vivid yellow in coloured stones, such as onyx and citrine or prehnite.”

Although he’s placed emphasis on fire opal this season, Kundakci stays attuned to other hot sellers his customers crave. “We’re seeing pinks and purples move a lot more now—pink tourmaline, pink sapphire, and amethyst.” And cheerful tones like “citrine and yellow sapphire are popular now, as well as London blue and Swiss blue topaz.”

Colour cues

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Colours and styles worn by popular personalities create an almost real-time impact on market demands when it comes to jewellery. Movies, especially period films, turn the public tide toward certain gemstones or colours, like the ‘Heart of the Ocean’ sapphire featured in the blockbuster movie, Titanic.

So vendors are wise to stay au courant. Everything matters to some degree. “We certainly look at fashion and what’s in season, but there are timeless coloured gemstones that are classics and can be worn forever,” Bandiera says.

“Fashion plays a big role in stocking,” Kundakci explains. “We go to jewellery shows around the world and follow fashion closely to help guide how we stock inventory. Seeing a sudden surge of vibrant colours everywhere, we have stocked our gemstones accordingly. An example would be our order of a larger quantity of Mexican fire opal earlier this year due to Pantone Color Institute naming Tangerine Tango the colour of 2012. As we move into the summer months, vibrant colours and Mexican fire opals are sure to be big sellers.”

Simon prefers the experience and personal preference route. “I always choose coloured stones according to my own liking and that of my clientele, but also the deals I can get on certain materials.”

In the end, nothing quite matches the intangible intuition factor. Pino hedges his bets by asserting he “is guided 50-50 by Pantone” for choosing colours. “I always look at the predictions, however, I make my final decision in relation to the thematic concepts I want to explore.”

Sounds like a perfect excuse for a treasure hunt.

Diana Jarrett is an award-winning trade journalist and graduate gemologist (GG). In addition to being a member of the National Association of Jewelry Appraisers (NAJA) and a registered master valuer, Jarrett is a popular conference and trade show lecturer. She writes a syndicated column called “The Story Behind the Stone” for the Southern Jewellery News and Mid-American Jewellery News and is also a writer for magazines such as Texas Jewelers, New York Mineralogical Club Bulletin, and the gem trade blog, Color-n-Ice.

Source URL: https://www.jewellerybusiness.com/features/shop-smart-sell-swift-the-pricing-sweet-spot-and-colours-customers-crave/

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