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US Jewellery Industry Urged to Get its Online Act Together

Is the digital revolution being ignored by jewellery retailers? What is the status of high-quality synthetic stones in a diamond-hungry world? Exhibitors and attendees at America's largest jewellery show tackle the issues of the day.

Photo: JCK Las Vegas: the most glittering event on the US trade show calendar.
JCK Las Vegas: the most glittering event on the US trade show calendar.

Walking down the red carpet at JCK Las Vegas, America's largest jewellery and diamond trade show, feels like a movie premiere, even if the only precious metal you're sporting is a wedding band. Fashion jewellery, exquisite luxury pieces and loose diamonds all combine to offer a glittering backdrop to visiting celebrities and those buyers on the lookout for perfect additions to their product lines.

Despite the glitz, it appears that the jewellery industry is going through something of a transformation. On the one hand, there's a massive consolidation and a steady decline in the small independent stores and, on the other hand, there's growing demand, especially for higher-end pieces.

The industry's global sales of Euros148 billion are predicted to grow by a healthy 5%-6% annually, reaching Euros250 billion by 2020, according to McKinsey, the global management consultant. In line with this, Tiffany & Co, the luxury jewellery retailer, reported a 13% year-on-year net surge in its worldwide sales in the first quarter of 2014.

This saw the company top US$1 billion in revenue, a result fuelled by strong results across nearly all regions and product categories. In the Americas, its total sales increased by 8% to $439 million. Growth was even more dramatic in the Asia-Pacific region, with a 17% boost taking the total to $261 million, thanks largely to sizeable contributions from both Greater China and Australia.

Evolution of Retail Channels

As in many retail sectors, the internet is transforming jewellery shopping. The general sentiment at the show, though, was that the new opportunities on offer were, all too frequently, not being capitalised on.

Addressing the problem, Abe Sherman, Chief Executive of the Buyers Intelligence Group, a specialist jewellery consultancy based in California, said: "We're a fragmented industry and we're decades behind in technology. On the supply side, manufacturers – who used to sell to retailers – now sell directly to the consumer. At the same time, though, they're more willing to sell to independents.

"First of all, consumers are more willing to buy online. Second, even when buying at a brick-and-mortar store, they are more likely to do research and get an understanding of the value and properties of the product. This puts additional stress on the margins, which are inevitably going to decline. Contending with this also requires a greater level of expertise by sales staff."

According to Scott Lachut, Director of Research and Strategy for PSFK, a New York-based marketing consultancy, this changing consumer behaviour can actually open new doors for jewellery stores. He says: "From discovery to fulfillment, the purchase funnel has stayed the same, but now the retailer can understand who that shopper is and meet them with a set of relevant services.

"The way to go is to focus on the 'Omni Point of Purchase'. This creates a seamless shopping experience whether online, on a mobile device or in a store. The approach taps into shoppers' impulses by converting every product encounter into a purchase opportunity.

"When a consumer sees the product in a magazine ad or encounters it through social media channels, you can seamlessly create a purchase."

As proof of his hypothesis, he cited the success of Wired Magazine, a publication where every product mentioned is directly buyable. Given the advances in visual recognition technology and the advent of Google Now [Google's proprietary smartphone-friendly "personal assistant"], which can alert buyers to the presence of products they were looking for in nearby stores, the potential is hard to overestimate.

Man-Made Diamond Debate

New technology is also having an impact – though, arguably, less positively – in other areas of the industry. Man-made diamonds (MMDs) have been around for a while, but the controversy surrounding them is growing as manufacturing technologies continue to improve and the demand for diamonds remains strong around the world. These synthetic gems particularly appeal to the younger generation of environmentally-conscious, cash-strapped consumers.

Assessing the changing status of MMDs, Russell Shor, a Senior Industry Analyst at The Gemological Institute of America (GIA), said: "If diamond prices keep rising, you'll see a market opportunity for better quality man-made diamonds. While De Beers used to look at synthetics as anathema, the world is having to adjust."

Photo: Necklaces, bangles…
Necklaces, bangles…
Photo: …pendants and brooches.
…pendants and brooches.
One problem is that the synthetics can be extremely difficult to distinguish from natural diamonds, especially for small independent retailers. As a result, the industry is upgrading its detection technologies and processes. In light of the increased call for the screening of smaller stones and a general rise in demand for its reports, the GIA is now considering adding new testing labs, with India earmarked as a priority.

Offering a rule of thumb for determining authenticity, Lita Asscher, President of Royal Asscher of America, said: "I always say you know it's man-made because it's too beautiful." Asscher has, indeed, embraced this new technology, building its "Rebel Chique" product line around it.

Explaining the company's thinking, Asscher said: "We find it very exciting. We all want a three-carat pink, but we can't afford it. A man-made stone, then, is often bought as a second or third choice piece."

Style and Personalisation

Despite the technological innovations quietly – and not so quietly – rewriting the industry's rulebook, some traditions remain very much in place. For Vatche Derderian, a wholesaler with California-based Vanna K, bridal remains the biggest seller. He says: "Young people are more interested in elegant, daintier pieces – no bulky designs. We're seeing more styles with smaller stones, but sometimes they can be quite expensive, depending on the quality of the diamond."

Amir Askari, a retailer with Florida-based Best in Gold Guys, came to the show to find loose diamonds for his bridal pieces and was pleasantly surprised with the selection on offer. He said: "Most of our customers are looking to spend under $5,000. We are finding that people are moving from solitaires to more extravagant designs, but with smaller center stones."

This demand for elegance was also noted by Bronson Leung, a Director of Hong Kong Universal Jewellery Ltd. He said: "In the US, people like elegant designs – long earrings, long necklaces." Assessing the show in general, he felt it had been quieter than last year, with the Hong Kong International Jewellery Show clearly attracting more buyers from the Middle East, Japan and Korea.

Less critical was Canadian retailer John Zeke, proprietor of Zeke's Quality Jewellers Ltd in Manitoba. He was in Las Vegas to find new fashion pieces that would appeal to his affluent demographic. He said: "Our economy is pretty strong and people are looking to buy better quality goods."

For Zeke, the highlight of the show was meeting entrepreneur Jesper Nielsen, who, after years with Pandora [the Denmark-based global jewellery giant], recently quitted to launch his own brand, Endless Jewelry, with a focus on leather bracelets and charms. Zeke said: "Pandora is still strong, but you always wonder when to get out of the line. Maybe this new brand will take over."

It was the hope of meeting retailers like Zeke – rather than high-profile jewellery entrepreneurs – that brought Virtue, a UK brand, over to JCK. Keen to promote its range of interchangeable sterling silver lockets, Stephen Austin, the company's Marketing Manager, said: "Composable jewellery is still very strong. Retailers are getting it. Even the multiples have come along and showed interest."

The company's line currently features more than 900 lockets that can be paired with a variety of disk inserts. These include semi-precious stones and rose gold plates.

The concept of 'composable jewellery' was taken a step further by Reena Ahluwalia, a Toronto-based jewellery designer, with a distinctly Indian style. Her synthetic diamond rings come complete with a QR code on the flipside that links directly to a personalised app page.

Whoever is giving the ring can then compose a message and upload a picture to the site. Explaining the thinking, Ahluwalia said: "It turns your ring into a digital talisman. It lets you celebrate your special moment and keep it close to your heart."

Photo: Is it natural or is it MMD? Only the experts know for sure.
Is it natural or is it MMD? Only the experts know for sure.

JCK Las Vegas 2014 took place at Mandalay Bay Convention Center from 30 May-2 June. It featured about 2,500 exhibitors and attracted about 23,000 attendees.

Anna Huddleston, Special Correspondent, Las Vegas

Content provided by Picture: HKTDC Research
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