The New Retail
Unless you’ve been hiding under a rock, it’s hard to imagine not recognizing business has changed. But, what has driven this change? Here’s the answer.
There is no doubt we are seeing a shift in retail. If you haven’t signed up for online newsletters like Retail Dive or Luxury Daily, I suggest you do. Not only because you are in both businesses, but to understand this isn’t a problem the jewelry industry is facing, it’s a problem all brick and mortar retail is facing from luxury products to everything in-between.
What caused the change?
Is it technology? You can’t blame Blue Nile, James Allen or even Amazon for retail business woes. What changed is us. It is people who are changing the way retail needs to operate. People want the technology. If there is anything that is to blame, it might be the industry’s reticence to adapt and be forward thinking.
Yes, the internet has made it tougher. Or as I like to refer to it, the jig is up. Consumers have the ability to price shop just about everything in every retail store. Hell, I’ve found myself in the middle of Lowes checking new refrigerator prices based on the exact brand and model online. I know many of you have done the same. Want a hotel room? Who hasn’t used Kayak or Trivago, which aggregates available hotel rooms from all the top travel sites to find you the lowest price? And now, even the industry online giants like Blue Nile, James Allen, Whiteflash, Ritani, etc. will be facing the same destiny. RareCarat.com aggregates diamond prices from all of these sites to find the diamond internet shopper the very best price. Yes, the road is even becoming tougher for them too.
Here’s why people are setting the tone for the new reality in retail:
People don’t have time. We are working harder and longer. The internet makes shopping easy. Regardless as to whether we feel people need or want to have the tactile brick-and-mortar experience for fine jewelry, everyone needs to understand the shift is going the other way. Yes, no more than 17% or so (various articles spew various numbers) shop for fine jewelry (or engagement rings, specifically) online. However, not more than a few years ago, that number was more like 7%. The numbers are changing exponentially. The new reality is our industry (and specifically independents) is so behind, is there any way we can catch up?
What are you waiting for? It is unfathomable that retail jewelry stores are still providing unacceptable online shopping experiences. Or worse yet, cookie-cutter experiences. I don’t get it. You work your whole life to have a store that’s different than your competitor. But, your website – the very first thing anyone sees – is exactly the same as the guy down the street! The more the pendulum swings for a great online experience, the more you’re unprepared, the more you are personally responsible for driving that consumer to a better online competitor.
People don’t save as much money to burn. Luxury (not just jewelry) is taking a hit. People are searching for the best value. In your everyday shopping experiences, aren’t you? Nordstrom Rack has killed Nordstrom just as Off 5th has killed Saks and Last Call is killing Neiman Marcus. If a brand can be purchased for less, that’s where people are going to purchase it. The new reality in jewelry retail is finding designers that are not easily searched online (and sold at lower price-points online); partnering with vendors who will help you self-brand, and finding up and coming designers who are unique to your market. The new retail for jewelers is also custom design. People find enormous value in something no one else can have.
People are simply more casual. The new retail is price-points under $1,500 and far less bling. For many of you, it’s not what you got into business for, but, it is what’s selling. The bad news is you have to sell way more to pull in the numbers you need. And, how you get more people through your door has everything to do with marketing. In addition, targeting that customer has become a little more complicated over the years. Ten years ago, you’d be listening to marketing experts telling you to “own” a TV or radio station. Nearly 90% of your marketing dollars would have been spent in traditional media. Today, that number is more like 49%. The good news is the other 51% can be highly targeted and measurable. The bad news is for most of you, it’s so new and changing at such a rapid pace, it’s hard to keep up.
The new retail is demanding change.
Change from you. Change in how you buy inventory; change in how you operate your business; change in how you market. It is also time to understand that there is no way in hell you can manage your marketing on your own. You simply cannot keep up with the changes that are literally happening every day. And, that is no lie. Not to mention, your time needs to be devoted to your business and all items any outside professional is not equipped to handle for you. You need to pay attention to having the right inventory for your customers; having the right staff; building a direction for your company; and quite frankly, making the right decisions internally to net the most profit.
Here’s what has not changed: The majority of millennial young women still desire to have a ring on their finger. It may be anything from a basic diamond solitaire; to color as the center stone; to custom. I employ and have employed many millennials over the last few years. And, the percentage of those who still want a bauble on that left hand is still high enough to not cause any concern.
What is a concern is the 65-year-old gentleman who walked up to my booth at JCK who said (and I quote) “I just did my website in 2005”. The new retail will never happen with old thinking.