Articles
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An Exclusive Interview with Hedda Schupak, Editor-in-chief, JCK
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| Hedda Schupak Offers Practical Tips for Jewelry Retailers with No Holds Barred |
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25.01.09
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Retail
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| Hedda Schupak, Editor-in-Chief of JCK |
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Sales in the US during the recent holiday season were the worst in several decades with online jewelry sales falling by 24% and the overall sale of luxury goods declining by 34%.
National Jeweler's annual post-holiday survey indicates that 80% of the respondents stated that their same-store sales declined during the November-December 2008 period compared with the same period in 2007. Few people know as much about the jewelry and diamond industries as Hedda Schupak, a long time veteran in the industry and editor-in-chief at JCK.
Survival tips for jewelry retailers
We asked her what jewelry retailers can do to improve sales. “I think there are a few things retailers can do. First, examine your operation from top to bottom with a fine-tooth comb, and focus on improving business, not just sales. Bring down debt, clear out stale inventory, wean off memo, and make sure staff earns its keep.”
She adds: “Offer sales associates an extra incentive to sell merchandise you own, vs. memo goods. Don’t hang onto stale inventory—if you couldn’t sell it when times were good, who’s going to want it when times are bad? Have a sale to unload it, swap it out with another retailer who might be able to move it, break it apart and melt it down or redesign it, donate it to charity and get the tax write-off, or even try eBay, but get rid of it and get it off your balance sheet.”
Schupak also encourages jewelers to work relationships harder. “Get on the phone with good customers for anniversaries and birthdays, try to partner with other local businesses like restaurants for value-adds, and so forth. Stay relevant to your customers. You need to make your customers’ lives easier and happier, and you’ve got to market constantly to stay top of mind. You need to be different—product, service, community give-back, or all of the above. You have to REALLY set yourself apart from the competition. Make sure what you offer is what consumers want, too—be willing to adapt your merchandising to the times.”
She adds: “In the flush years, a lot of jewelers turned up their noses at “bridge” goods, or inexpensive add-on lines such as bead bracelets, but in lean years, those little sales can keep people coming in. For diamonds, don’t compete on price (you’ll lose) but do find ways to keep the price appealing; for example, a .95 ct. stone looks like a full carat but costs less and can be a great value for studs and pendants, etc. And bring back layaway (as opposed to credit) so the customer can have the piece they want without overextending themselves.”
Staff matters, stresses Ms. Schupak: “Get your employees’ input because the more people weigh in, the more they buy in. Also, they’re invested in keeping their jobs. And the person doing the job is usually the one best suited to figure out how it should be done.”
Things may be shaky at the moment, but she warns against being immobilized by fear. “A boat at sea risks shipwreck, but a boat that stays at the dock risks having the bottom rot out. Don’t scale back marketing or you’ll become invisible and someone else will get whatever business there is to be had. Take the slow times as an opportunity to spruce up the store. Be prudent, manage your cash, and don’t overextend yourself. If a close competitor is going out of business, see if there is an opportunity to buy any good merchandise at greatly reduced rates.”
Less is more
We asked Ms. Schupak if she thought De Beers’ recent “less is more” diamond promotion campaign was effective. She replies that the campaign was indeed conceptually effective and that the industry may reap its fruits if it is willing to be patient.
She warns: “This campaign targets the emotional sale, which is always going to be the bedrock of our industry, but in terms of seeing real benefit from this campaign, it’s not going to be next week, next month, or even necessarily this year. It’ll come when people start to breathe easier about employment and the economy in general. For holiday 2008, I don’t think anything short of winning the lottery could have induced most consumers to spend.”
Generic marketing
The WFDB and IDMA have declared their intention of promoting generic marketing of diamonds. Could this kind of promotion jumpstart the industry?
Ms. Schupak believes that a campaign of this sort could indeed be effective. After all, De Beers has done it beautifully for decades, so it is undoubtedly a proven concept.
However, there are several issues that need to be considered: Ms. Schupak warns: “In order for a generic advertising campaign (or any campaign) to be effective, it needs to be sophisticated, consistent, and flawlessly executed—and that costs a lot of money. Not to be negative, but I’ve never seen this industry as a whole be willing to put forth the kind of money it takes to do proper consumer marketing. The watch sector does, but in jewelry, apart from De Beers, Tiffany, and a few of the top global brands, I’ve seen very little else of that caliber.”
As to WFDB and IDMA’s idea, she expresses her hope that it will work. “Having observed this industry in action for more than 20 years, I’ve got to admit I’m a little concerned about the potential for political infighting between the various groups that need to be cooperating, or a push from some members to do it on the cheap which is probably worse than not doing it at all. You can’t promote a luxury product by cutting corners.”
Online jewelry sales
According to a recent JCK–Harrison Group Consumer Jewelry Study, 87% of the respondents replied that they had bought jewelry from a retail store, while 42% purchased jewelry online. We asked Ms. Schupak if she thought this trend is changing.
Her reply is decisive: “Yes. The Internet is here to stay and people are going to keep shopping on it—more so as younger consumers enter their peak earning years. Get used to it, stop fretting about it, and get on it. That said, man is still a social animal so I don’t think the personal store experience is going away either. I think online will find its place in the distribution channel, just as TV shopping did. Remember—it doesn’t matter what channel the consumer shops, as long as they buy from you.”
In
Canada, several small jewelry stores recently established a large website that features scores of virtual shops and several thousand jewelry items. Can this model be useful for other small jewelry retailers who can not afford to set up a website on their own?
Ms. Schupak is all for it. She notes that there is always strength in numbers. But participating retailers need to understand that a website or virtual store is an extension of their brand and it has to reflect their brand exactly. “The site either needs to be customizable to do that, or if not, it must be presented as a service to consumers and it must be on a par with the retailers’ own images. And they can’t just be a sometime participant—they have to treat it like another store that’s open 24/7.”
A few studies carried out in recent months appear to indicate that luxury consumers may well change their discretionary shopping habits once the current financial crisis is over. According to the studies, they will splurge less and “go green.” Ms Schupak agrees. She believes we’re going to see a fundamental shift in consumer behavior for quite a while.
She elaborates: “People are motivated either by greed or fear, and the proverbial pendulum, which has been stuck at almost 100% greed for the last 20+ years, has swung to 100% fear. I also don’t think the economy has completely hit bottom yet and probably won’t till Q4 2009 at the earliest. While unemployment numbers are still rising, people will rein in and clamp down, not knowing if they’re next to be cut. Once the numbers level off and they see they’re part of the percent that stayed employed rather than the percent that were laid off, they’ll relax a bit.”
But pent-up demand may not be the key to recovery: “During this period, as people reduce their debt and increase their savings, they’ll actually have a bit of money to spend when things ease up because the higher savings rate coupled with less debt to service means disposable income will rise. But while I think that we will see some pent-up demand when things rebound, people have had their wits scared out of them and it’s going to be a full generation before we see the kind of rampant excesses in consumption that we’ve gotten used to.”
Green is the future
She concurs that “green” is the direction of the future: “I think it’s pretty clear that between population growth and industrialization of the Third World, we’d better get serious about the environment and not just pay it lip service. Also, note that the last time we saw a serious increase in environmental consciousness was in the 1970s, in the middle of down economic times, so while it could be merely coincidental, I do see parallels, at least in the developed world.”
Hedda Schupak is cautiously optimistic about the future: “Diamonds and jewelry have been highly valued since ancient times and I don’t think that’s going to change. I think we’ll emerge leaner, stronger, and better than ever as an industry, and a lot of bad-business practices that need to go away will go away. But unfortunately I think there’s going to be a fair bit of pain in the process of getting from here to there.”
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By: Rachel Lieberman
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