There is no subject more critical for the survival of retail jewelry stores than how they choose to transition to an Internet economy. All other challenges, the ones faced by most businesses, such as identifying a niche, hiring/retaining good employees, focusing on inventory management, etc., are as important as ever. But without the right Internet strategy, or stated more clearly: Without the right strategy to prosper in the Internet age, independent retail jewelry stores-at least in the United States-will face a grim future. It’s already happening. The number of independent retail stores is declining in the U.S. and the trend shows no sign of abating.
The decline of the bricks-and-mortar retail jeweler is occurring during a period when many Internet e-tailers are enjoying record growth. And jewelry sales overall are not down. They’re up.
At Polygon, we believe that independent retail stores can prosper in an Internet economy. But not without changing a large part of their business model. Here are two side-by-side comparisons of hypothetical retail jewelry stores.
Which one do you think will prosper in the 21st century? -
Acme Jewelers
This store has been in business since the early 1900’s. They occupy a prestigious but somewhat tired location in downtown "Anywhere", in western Massachusetts. Recently a second store was opened at a nearby mall, to leverage the Acme name in the local "Anywhere" market. Joe Acme-with considerable justification-believes he knows how to run the company.
His grandfather started it, and it’s been profitable almost from the beginning. He spends extra to attract quality salespeople. He attends industry conferences to stay abreast of issues affecting his business: gemological developments, labor law, marketing ideas, technology, etc. Acme Jewelers, which focuses on diamond and bridal jewelry, has a nice website, showing their logo, listing a few of the watch brands they carry, and providing solid address and contact information. This company has spent decades developing relationships with suppliers, and Joe knows he’s able to find the merchandise he needs, and get it quickly. Joe only has one real problem: customers aren’t coming in the door like they used to, and he’s not making the sales he used to. Increasingly, those who do come in are mentioning prices they could obtain from Internet e-tailers, and asking Joe if he can meet or beat those prices. Joe talks to them about the importance of buying from a quality store you can trust, but it doesn’t seem to matter to this new generation of buyers. They seem more focused on grading certificates, Rap discounts, and e-tailer “satisfaction guaranteed” liberal return policies. Joe’s revenue is not growing, and his margin is actually decreasing. All the things that used to matter (ethics, integrity, solid value to the customer, long-term relationships) don’t seem to be enough.
Now there’s talk of a recession on the horizon, and Joe doesn’t think that will help his business. Bottom line: he’s worried about the future.
Smith Jewelers
Several years ago Jim Smith took over a failing retail store located in a depressed part of town. He bought the business for almost nothing, as there was almost no business to buy. But the moment the papers were signed, Jim began a complete overhaul of that store’s operation. Finding the traditional bridal business saturated and unattractive, he visited some trade shows and decided on a new niche: Design your own jewelry. Jim’s idea was to go beyond merely using a CAD machine with the consumer looking on. Rather, Jim wanted to give the customer a full “hands-on” experience.
He developed a clever marketing campaign around a “three-step” approach: (1) Create the look, (2) Find the stone, (3) Show your friends the jewelry you created! His motto was Be your own brand!”
The store’s showroom was re-organized around several very-simple CAD systems that required only a few minutes of instruction. Customers were invited to come in for free whenever they wished and play with them. After creating a piece of jewelry (often, of course, with considerable “suggestions” from Jim), the customer was taken over to a Polygon terminal and invited to “shop the world” to find the right diamond or colored stone for the piece they were building. Jim used the mark up feature on Polygon to ensure his profit was in there, but other than that, he let the customer play around with the computer on their own, to find the perfect stone.
Joe never claimed to have the cheapest prices in town. He never suggested that designing your own ring was a way to save money. Rather, he wanted to deliver a unique experience. One of his advertising slogans was: “An engagement ring is a nice gift. Designing it yourself shows how much you really care.”
Jim’s approach was successful, and by the end of his first year the clientele of the store had changed dramatically. Smith Jewelers was now catering to the “under 30” crowd. These people had grown up on video games and the Web. They were more comfortable sitting in front of a keyboard and using a mouse, than they were staring at tiny, glittery things in a brightly-lit showroom. When one of these young twenty-somethings walked into Jim’s store and saw keyboards and monitors, rather than display cases, he felt right at home and knew this was the right store for him.
What made the whole concept work was that while the customer was turned loose, Jim and his staff were always right there, ready to answer questions, ready to help a customer with a problem, etc. It was a level of hands-on attention that no e-tailer could provide, yet the customer still gained the thrill of creating their own piece of jewelry-and finding the stones to go with it, often from a full continent away. With Polygon, Jim’s customers were able to find a Thai ruby from a dealer in Bangkok, a diamond from a DTC Sightholder in Bombay, and even South Sea pearls…from Tahiti!
After the business model was proved in the store, Jim began moving elements of it on to his website. Now he could promote his business Web-wide, and give the customer a full array of choices: come into the store and build it yourself, build it on our website, or choose one of the designs already there and ask us to build it for you-perhaps with a few modifications. Jim made sure that every page of his website included not just a phone number and email address, but also an SMS texting address and an Instant Messenger address. He wanted customers to be able to reach the store in whatever way the customer found most convenient. And by providing these other forms of contact info, Jim was making a subtle statement that Smith Jewelers was Internet-Capable. Smith Jewellers used other technologies from Polygon to enhance the power of the website, such as SiteInfusion to showcase thousands of watches, with lavish branding information provided from the vendor; an e-catalog to showcase some of his own designs, and also designs from customers who were thrilled to have their own work showcased to the market. Jim even launched a blog on his site, which turned into kind of a self-help venue for Jim’s customers. Acme became so successful with this model, that inquiries began drifting in for franchise possibilities.
Jim used Polygon’s TradeLock technology to provide information to other jewelry companies wanting to do the same thing, under license. In two years, Jim turned a failing, bricks-and-mortar traditional jewelry store into a fast-growing, highly-profitable business.
The difference between these two stories is that Acme Jewelers failed to realize how completely the Internet had changed the market, and thus were not able to change with it. Smith Jewelers, by contrast, saw the Internet and related technology as an opportunity, and built a profitable business around it…yet it was a business still centered on a physical bricks-and-mortar retail jewelry store.
These two examples are entirely fictitious. The point isn’t that every retail store needs to put keyboards and monitors in their showroom. The point is that every retail jeweler needs to find a way to evolve into the Internet economy. Every store will need to do it a little differently, based on their own market, and their own goals. Fortunately, most independent retail stores are run by intelligent, driven, and entrepreneurial owners. Those who put their minds to it will prosper fully in the Internet Age.
The decline of the bricks-and-mortar retail jeweler is occurring during a period when many Internet e-tailers are enjoying record growth. And jewelry sales overall are not down. They’re up.
At Polygon, we believe that independent retail stores can prosper in an Internet economy. But not without changing a large part of their business model. Here are two side-by-side comparisons of hypothetical retail jewelry stores.
Which one do you think will prosper in the 21st century? -
Acme Jewelers
This store has been in business since the early 1900’s. They occupy a prestigious but somewhat tired location in downtown "Anywhere", in western Massachusetts. Recently a second store was opened at a nearby mall, to leverage the Acme name in the local "Anywhere" market. Joe Acme-with considerable justification-believes he knows how to run the company.
His grandfather started it, and it’s been profitable almost from the beginning. He spends extra to attract quality salespeople. He attends industry conferences to stay abreast of issues affecting his business: gemological developments, labor law, marketing ideas, technology, etc. Acme Jewelers, which focuses on diamond and bridal jewelry, has a nice website, showing their logo, listing a few of the watch brands they carry, and providing solid address and contact information. This company has spent decades developing relationships with suppliers, and Joe knows he’s able to find the merchandise he needs, and get it quickly. Joe only has one real problem: customers aren’t coming in the door like they used to, and he’s not making the sales he used to. Increasingly, those who do come in are mentioning prices they could obtain from Internet e-tailers, and asking Joe if he can meet or beat those prices. Joe talks to them about the importance of buying from a quality store you can trust, but it doesn’t seem to matter to this new generation of buyers. They seem more focused on grading certificates, Rap discounts, and e-tailer “satisfaction guaranteed” liberal return policies. Joe’s revenue is not growing, and his margin is actually decreasing. All the things that used to matter (ethics, integrity, solid value to the customer, long-term relationships) don’t seem to be enough.
Now there’s talk of a recession on the horizon, and Joe doesn’t think that will help his business. Bottom line: he’s worried about the future.
Smith Jewelers
Several years ago Jim Smith took over a failing retail store located in a depressed part of town. He bought the business for almost nothing, as there was almost no business to buy. But the moment the papers were signed, Jim began a complete overhaul of that store’s operation. Finding the traditional bridal business saturated and unattractive, he visited some trade shows and decided on a new niche: Design your own jewelry. Jim’s idea was to go beyond merely using a CAD machine with the consumer looking on. Rather, Jim wanted to give the customer a full “hands-on” experience.
He developed a clever marketing campaign around a “three-step” approach: (1) Create the look, (2) Find the stone, (3) Show your friends the jewelry you created! His motto was Be your own brand!”
The store’s showroom was re-organized around several very-simple CAD systems that required only a few minutes of instruction. Customers were invited to come in for free whenever they wished and play with them. After creating a piece of jewelry (often, of course, with considerable “suggestions” from Jim), the customer was taken over to a Polygon terminal and invited to “shop the world” to find the right diamond or colored stone for the piece they were building. Jim used the mark up feature on Polygon to ensure his profit was in there, but other than that, he let the customer play around with the computer on their own, to find the perfect stone.
Joe never claimed to have the cheapest prices in town. He never suggested that designing your own ring was a way to save money. Rather, he wanted to deliver a unique experience. One of his advertising slogans was: “An engagement ring is a nice gift. Designing it yourself shows how much you really care.”
Jim’s approach was successful, and by the end of his first year the clientele of the store had changed dramatically. Smith Jewelers was now catering to the “under 30” crowd. These people had grown up on video games and the Web. They were more comfortable sitting in front of a keyboard and using a mouse, than they were staring at tiny, glittery things in a brightly-lit showroom. When one of these young twenty-somethings walked into Jim’s store and saw keyboards and monitors, rather than display cases, he felt right at home and knew this was the right store for him.
What made the whole concept work was that while the customer was turned loose, Jim and his staff were always right there, ready to answer questions, ready to help a customer with a problem, etc. It was a level of hands-on attention that no e-tailer could provide, yet the customer still gained the thrill of creating their own piece of jewelry-and finding the stones to go with it, often from a full continent away. With Polygon, Jim’s customers were able to find a Thai ruby from a dealer in Bangkok, a diamond from a DTC Sightholder in Bombay, and even South Sea pearls…from Tahiti!
After the business model was proved in the store, Jim began moving elements of it on to his website. Now he could promote his business Web-wide, and give the customer a full array of choices: come into the store and build it yourself, build it on our website, or choose one of the designs already there and ask us to build it for you-perhaps with a few modifications. Jim made sure that every page of his website included not just a phone number and email address, but also an SMS texting address and an Instant Messenger address. He wanted customers to be able to reach the store in whatever way the customer found most convenient. And by providing these other forms of contact info, Jim was making a subtle statement that Smith Jewelers was Internet-Capable. Smith Jewellers used other technologies from Polygon to enhance the power of the website, such as SiteInfusion to showcase thousands of watches, with lavish branding information provided from the vendor; an e-catalog to showcase some of his own designs, and also designs from customers who were thrilled to have their own work showcased to the market. Jim even launched a blog on his site, which turned into kind of a self-help venue for Jim’s customers. Acme became so successful with this model, that inquiries began drifting in for franchise possibilities.
Jim used Polygon’s TradeLock technology to provide information to other jewelry companies wanting to do the same thing, under license. In two years, Jim turned a failing, bricks-and-mortar traditional jewelry store into a fast-growing, highly-profitable business.
The difference between these two stories is that Acme Jewelers failed to realize how completely the Internet had changed the market, and thus were not able to change with it. Smith Jewelers, by contrast, saw the Internet and related technology as an opportunity, and built a profitable business around it…yet it was a business still centered on a physical bricks-and-mortar retail jewelry store.
These two examples are entirely fictitious. The point isn’t that every retail store needs to put keyboards and monitors in their showroom. The point is that every retail jeweler needs to find a way to evolve into the Internet economy. Every store will need to do it a little differently, based on their own market, and their own goals. Fortunately, most independent retail stores are run by intelligent, driven, and entrepreneurial owners. Those who put their minds to it will prosper fully in the Internet Age.
Prospering in the Internet Age
Taking The Trade To New Dimensions