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Overstocked suppliers offer options for jewelers
By Catherine Dayrit
June 30, 2009
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| If a customer has a particular pair of stud earrings in mind but can't find them in-store, a retailer can guide the customer through Stuller's "Custom Stud Earring" program on Stuller.com. |
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New York--With consumer spending down on non-essential goods, retailers aren't the only ones struggling with inventory overload.
Similarly overstocked suppliers have been coming up with various strategies to keep business moving, from customization to online inventory offerings to extra services and products.
In February, for example, bridal company Tacori announced that it would offer Saturday customer support hours to its authorized retail partners. Plus, a growing number of designers are crafting pieces in sterling silver for the first time, offering up a friendlier price point for consumers reluctant to spend on a brand's pricier gold or platinum designs.
Another tactic--and a more controversial one--is discounting.
Russell Shor, senior industry analyst for the Gemological Institute of America, says suppliers can get away with discounting, so long as the price-chopping only applies to a few targeted pieces.
"You don't want to look desperate and say, 'Everything must go,'" Shor says. "If [suppliers] look like they're moving inventory too desperately, people will keep saying, 'Give us a better deal.' But if there is a focused, targeted approach on specific things, it's very effective."
That's a tactic taken by designer brand Gumuchian, which has not gone the way of major discounting, but does occasionally cut prices on best-sellers such as its popular "New Moon" curved hoop earrings, says co-owner Myriam Gumuchian.
Shor says suppliers are better off targeting more common bread-and-butter items versus very high-end, one-of-a-kind pieces, which are often priced high for good reason--because they contain higher quality gemstones, for instance.
Maya Jewels, known for high-karat, handmade couture designs, does not discount because of the craftmanship the pieces involve, says designer Chhaya Kapadia.
"If it is the right retailer, the designs sell," Kapadia says. "They are more art forms than a standard casted design."
So Kapadia is focusing on other strategies such as the company's first foray into sterling silver jewelry with the new "Eclipse Collection."
Composed of bangles handcrafted through an intensive process of inlaying and engraving, the designs retail from $750 to $1,650, significantly below Maya Jewels' gold collections, which include pieces that retail above $20,000.
Like other suppliers, Kapadia is also reaching out more personally to her retailers, especially buffing up marketing programs.
"More than price, retailers are looking for marketing support and something that their competition, especially [the] Internet, doesn't have," Shor says.
The marketing edge
To harness the advantages of the Internet in retailers' stores, industry supplier Stuller is expanding its digital marketing and customization services. Before the holidays, the company launched a "Virtual Diamond Selector" and "Custom Stud Earring" program, both of which allow retailers to offer customers far more inventory than is available in-store, with pieces that are viewed online available for shipping overnight.
"It's our view that the old model of buying a lot of inventory and having it sit there in the case and hope people will buy it doesn't really work anymore," says Kerry Hand, Stuller's executive director of marketing and public relations. "There is an opportunity to embrace a new paradigm shift so that retailers have a richer, more powerful experience for their customers."
Sharon Collins, co-owner of San Diego's Collins Family Jewelers, might add a new bridal line--with her choice hinging heavily on the brand's marketing prowess.
Marketing partnerships with suppliers already play a central role in Collins' business, which sends out a quarterly newsletter, "Your Jeweler and You," customized for Collins Family Jewelers with images of Stuller's finished-jewelry line.
"These times are just so different than anything we've known in the past," she says. "We were down [over the holidays], but I think [the customization within the newsletter] absolutely helped."
Customize it
Providing retailers with customizable options is another avenue that designers are increasingly exploring.
Earlier this year, Gumuchian began offering custom-design services, inviting retailers to let their customers know that Gumuchian can help them refashion old jewelry into new, wearable pieces.
"We're a high-end manufacturer, so we don't normally do that with product that doesn't feature our diamonds," Gumuchian says. "We're not making much money [on the service], but it's keeping everyone busy. We haven't had to cut down days or let anyone go."
Jewelry designer Christian Tse is increasing its customization offerings with new software that retailers can integrate into their own Web sites, allowing them to help customers build their own personalized dream watch based upon models from the brand's "Prismatic Timepiece Collection."
After the piece is crafted, the timepiece is produced and shipped back to the retailer within six weeks.
Having a customer get involved in the creative process can be a big selling point, especially given that the gemstone and diamond-studded timepieces take a lot of thought to create, and can range in price from $8,000 to $25,000.
"When you're able to offer to a customer customization, it offers them more of a sense of value because it's something that they were involved with," Tse says.
Another area suppliers have been focusing on is display pieces, given that retailers are struggling to get rid of old inventory yet still keep displays fresh.
While suppliers such as Stuller and Christian Tse address the issue through online inventory and customization services, another way suppliers are handling the conundrum is by offering leasing programs, the advantage being an availability of pieces that impulsive customers can take home immediately.
The leasing tactic is nothing new, but suppliers say the economy has made it more appealing to retailers.
Arthur Klein of Gabriel and Co. says that leased-display programs particularly make sense for bridal.
"We all know what the economy is, but I think it's making retail jewelers more aware that the bridal business goes on 24/7," he says. "What we're doing is giving retailers the opportunity to have a bridal department and it answers the question of 'I don't have money to invest.'"
For manufacturer Elie International, the tactic is a little different. The company offers up an "Ultimate Partnership Program" through which retailers select the products they like and their only commitment is to pay for half of that product over a 120-day period, says Ed Eleasian, Elie International vice president.
While the strategy might not sound like it makes much of a profit for Elie, Eleasian says the five-year-old program has picked up steam this year and does bring in the green because customers end up doing more business with the company.
"We're really looking at this as a partnership with the retailers," he says.
While staying afloat and thriving, in that order, are the MOs for suppliers these days, being able to reinforce partnerships and stay on retailers' radars remains a key to any strategy.
"I think they know the brand cares about what is happening," Gumuchian says of her company's efforts. "We're not just here when things are good, but when things are bad, we're here too."
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