MORE THAN MARGINAL SUCCESS
Everyone struggles to solve the margin dilemma, but some retailers
overcome the problem through personal innovation
Closing a diamond sale at a satisfactory price grows more challenging
by the day. Still, some jewelers continue to get margins of 50% to keystone,
especially on smaller sizes. Here's a synopsis of strategies they have in
common. Consider which could work for you.
Emphasize the Fourth "C"
Customers think they can buy a diamond the same way they would a Rolex
watch - every one's the same, so go with the best price. Successful diamond
sellers prove the difference by showing a poorly cut diamond next to a diamond
with obvious fire and pizzazz.
When customers get specific, asking for the price of an F VS2 1-ct. stone,
for example, one California jeweler responds with his own question: "But
tell me what it looks like?" Once a diamond is in the customers' hands,
the quote from a price list matters less than how the stones look.
Concentrate on Branded Makes
Some jewelers promote Lazare Kaplan diamonds and Ideal makes in ads,
sales pitches and point-of-sale handouts to increase profits. Because such
goods automatically tout higher prices, though, this doesn't work in some
stores. A jeweler in Kansas City offers cuts "just shy" of Ideal
to promote value.
Specialize in Better Goods
Recognizing that mass-market discount stores have taken hold of the lower-end
market, these retailers tend to offer I-color or better and prefer to deal
in SI or better; some offer only diamonds over a carat.
Train Employees Thoroughly
Hold weekly staff meetings, use training videos from manufacturers and
role-play problematic situations. "We are knowledgeable in such a way
that discounters and mass merchandisers can't compete," says a Missouri
Innovate, Don't Imitate
A niche is effective only if it's truly a niche. One Midwestern retailer
has done great business since the 1970s with his floral and jewelry shop,
and several competitors in his own market have copied the idea, without
the same measure of success. "They don't do either one well,"
Recognize the Niche Customer
Whatever the market, jewelers who get the high diamond margins see demographic
patterns in their sales and point promotions in a profitable direction.
For example, a jeweler in Illinois realized that two of every three bridal
sales were based on the woman's credit history instead of the man's; he
now addresses professional, single or engaged females ages 25 to 40 in his
Some stores form tight relationships with long-time trustworthy suppliers
to get the best deals possible; others shop around constantly for new dependable
suppliers who offer better prices and variety.
Don't Play the Price Game
It's painful, but the jewelers bagging high diamond margins are willing
to let a customer walk rather than drop below a certain price.
"A customer who wants a discount will want the same on every sale,
and you've created a monster," says a jeweler in Redlands, CA. These
jewelers build trust by communicating that they're delivering the best price
possible for the quality.
Build Personal Relationships
The philosophy is that customers will do business with jewelers who understand
and look out for their best interests, no matter what discounts are offered
elsewhere. "I want to create a customer for life; the price is the
customer's problem!" says an Iowa City jeweler. "It's tough to
build that kind of business, but once you're there, diamond sales are fun
Stacey KingCopyright © 1998 by Bond Communications.