MORE THAN MARGINAL SUCCESS

February 1998

Diamonds: News


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 jeweler.

 

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," he says.

 

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 advertising.

 

Buy Better

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 and easy."

– Stacey King




Copyright © 1998 by Bond Communications.


 

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