The American Consumer
Mindset, Post-Pandemic
According to a report by McKinsey,
more than 50per cent of U.S.
consumers expect to spend extra by
splurging or treating themselves, with
higher-income millennials intending to
spend the most. Says David Bouffard,
Vice President, Signet Jewelers, “Our
research indicates that consumers are
excited to go shopping. They want to
return to the mall and other brick and
mortar locations, and start meeting new
people and dating again.” The gradual
return of normalcy is already showing
results in the sales of companies.
Take the case of Signet. In the First
Quarter of the current financial year,
its total sales were $1.7 billion, up
98.2per cent year-over-year, in the
13 weeks ended May 1, 2021, on
a reported basis, and up 96.4per
cent on a constant currency basis.
The total same-store sales increased
106.5per cent year-over-year.
E-commerce sales stood at $346.3
million, up 110.3per cent from the
prior year. Brick-and-mortar samestore
sales increased 105.7per cent
year-over-year. Bouffard also notes
that people are continuing to spend
more on those closest to them. “This
works to our advantage because
fine jewellery is an iconic gift that
people are willing to spend more for when they want to celebrate those they
love, which we saw during Valentine’s
Day and Mother’s Day,” he adds.
The jewellery segment has been fairly late in embracing technology, even in the U.S. Traditional jewellery retailers, including the mom-and-pop stores, are aggressively engaging in digitisation and not having an online presence is not an option anymore. However, this does not mean fully pivoting to onlineonly retail, but having the online option to complement the physical stores. Retailers are capitalising on engaging with consumers online to bring them to their physical stores. “Once cities opened up, people wanted to get out and get away from their computers. Jewellers are really just in the infancy of e-commerce; we are all paying more attention to it now. But if you watch the headlines, even strong e-commerce brands are now looking at brick and mortar, starting flagship retail outlets, or setting up pop-up shops. Basically, retailers are all expanding to a broader omni-channel approach to reach their customers everywhere and in every way that they like to shop,” says Richard Eiseman, President & CEO of Dallasbased Eiseman Jewels.
Overcoming Challenges
According to diamond industry
analyst and researcher Edahn Golan,
jewellers in the U.S. lost $4.76 billion
in business between March and May,
during the lockdown in 2020. Much like
India, the jewellery retail landscape
in the U.S. is an amalgamation of
behemoths like Signet Jewelers,
which own Kay Jewelers, Jared, Zales,
Jamesallen.com and so forth, and
family-owned independent jewellers.
Business owners across the spectrum
suffered and continue to endure
the pandemic-induced challenges.
“The pandemic certainly presented
challenges but our Path to Brilliance
growth strategy, which we started two
years prior to the pandemic, positioned
us well to accelerate our plans to offer
customers new ways to shop with
us. Now, with the next phase of our
growth plan, Inspiring Brilliance, we’re
focused on our growing connected
commerce approach — integrating
our physical stores into the digital
customer experience — with datadriven
in-store consultations, buyonline-
pickup-in--store, and curbside
pick-up, and increasingly seamless
interaction across our websites, stores
and inventory pipeline,” adds Bouffard.
This Anytime, Anywhere approach now
enables customers to download Signet’s
mobile apps in order to shop, virtually
try-on products, upload photos, visually
search for similar products, chat
with an agent, leave and pick up the
conversation later, and schedule both
virtual and in-person consultations at
any point in the shopping journey.
Last year alone, the number of business owners in the U.S. decreased by 3.3 million, about 22 per cent. This is the biggest decline on record. Stores owned by minority and marginalized communities were affected even more. Black-owned enterprises experienced a 41 per cent drop in trade, Latino-owned businesses saw a 32 per cent decline, and Asian-owned businesses saw a 26 per cent decrease – as per the findings of National Bureau of Economic Research (NBER).
“The supply chain is stressed. Planning has necessitated the close scrutiny of how we reorder items that we want to have in stock, how we communicate with our team and customers, as well as who we do business with to get what we need,” says Connecticut-based John Green, President & CEO of Lux Bond & Green, which has six stores in the east coast, and is one of the oldest family-owned jewellers in the U.S. In spite of the problems posed by the pandemic, Lux Bond & Green emerged even stronger from the crisis, thanks to its strong community appeal and the one-to-one connect it has with its customers. At present, Green is also concerned about the inflationary pressures on diamonds and precious metals, and the impact it has on the labour, as well as the staff. Things have been particularly difficult for small stores, as they don’t have the economies of scale. Lay-offs have been rampant and store closures have become a normal occurrence. Many companies have vanished into thin air because they didn’t build their companies with the future in mind – long story short, the pandemic hit those who were already weak the most. “Stores that have a good balance in their business - diamonds, estate, watches and designer brands - fared the best. If or when one category lags, another will pick up and pull you through,” adds Eiseman.
Government Aid Bolstered Hope,
But…
The Coronavirus Aid, Relief, and
Economic Security Act (CARES Act)
was signed April last year, providing $2
trillion in aid. The provisions allowed
retailers to retain employees and iron
out costs and also granted loans to
small business owners – this helped the
industry ride through tough times.
In March 2021, President Joe Biden
made amendments to the Paycheck
Protection Program (PPP) as his
administration focused on improving
the condition of small businesses. The
amended program helped jewellers
with fewer employees as well as those
who were self-employed. “The PPP
was greatly appreciated by us as our
team is our family, and it gave us the
ability to support them through this
crisis,” says Green.
Smart Inventory Management
The pandemic has also changed the way retailers look at inventory. Stores are stocking on items that are moving fast, and businesses are noting some changes in customer preferences. “Classic diamond stud earrings were the winner last holiday season and watch collectors have grown in their enthusiasm. People don’t want to wait to celebrate, they want to start enjoying today!” says Bridge. Working with its trusted vendors, Signet has kept a productive level of newness within its portfolio. It is bringing merchandise across categories and across price points that resonates with customers. “Bridal is benefitting from couples who are getting engaged. In fashion, we continue to see strong performance in gold, which we attribute to our ability to strengthen our core assortment, based on the insights of our data analytics. In addition, our consumer insights reveal that men’s fashion is trending. We built in additional assortment ahead of this quarter and customers are responding,” adds Bouffard.
For Lux Bond & Green, platinum, yellow gold and diamonds are winners right now and stores are witnessing a decent growth in all these categories. People are buying finer and more important pieces, as opposed to items that fall in the category of short-lived trends. “If they are buying a lower price point piece, it will be something they can add to the pieces they already have. An example would be someone buying a Messika bracelet to wear with the Cartier or Van Cleef piece they already have. If they are buying emeralds, they want a really fine quality, deepgreen stone. An investment piece and a generational piece, is what they are going for. In the watch category, we are seeing more refined styles, not quite as big, but with more complications and more generational pieces,” says Eiseman.
Stocking up on the right kind of inventory requires more than looking at reports, believes Green. “It is talking with our managers and sales professionals to get their feedback. For every sale and customer interaction, there needs to be an understanding of what we need to have next in our inventory, keeping in mind the fastoccurring consumer evolution,” adds Green. According to Eiseman, “It is critical to work closely with designer brands on aged inventory in a way that can be a win-win for both. The key is not inventorying consigned goods that compete with your owned goods. Also, I suggest paring down the number of relationships with designers/brands so that you can be more important to fewer. In that case, you can call upon them to substitute your inventory in challenging times.”
Strategies to Stay Strong
For most jewellers, buying relevant and
well-designed pieces at the right price
seems to be the way forward. “Buying
beautiful and well-designed items at
the right price, giving extraordinary
service to customers and helping them
in their purchase journey, be it online,
via email, phone or text, and believing
in all the wonderful diamonds,
jewellery, timepieces and gifts we offer
to public - that is what is important. The
execution of this strategy, the people
we employ, the education and training
needed, and the culture in our stores
-- all need to be aligned to make this
happen,” says Green. For Ben Bridge it
is about maintaining the strong connect
with consumers. “We are going to
continue to connect meaningfully with
our customers and find new ways to
keep in touch and provide memorable
experiences,” declares Bridge.
Eiseman expects in-store events
will fall short, whereas one-on-one or
small group experiences with added
value will better serve his stores. “We
all learned during COVID that life is
about moments (as opposed to large
gatherings with people you don’t know).
Basically, less is more. We plan to keep
creating unique and meaningful smallscale
experiences for our customers
and helping them really celebrate
life’s many fabulous occasions and
milestones,” he adds.
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