Modern Jewelry Trends

Almost $1 billion in diamond jewelry sales take place during the last week of December and first two weeks of January. Post-holiday sales have been growing in importance thanks to the gift card boom. The Diamond Promotion Service is hoping to encourage more consumers to use their gift cards and shopping money to purchase Journey diamond jewelry. The Diamond is Forever holiday commercial promoting Journey will continue to run after Christmas this year. In addition, DPS is contributing $250,000 to a co-op fund to pay half of retail jewelers’ Journey television commercials during these three post-holiday weeks. To qualify for up to $20,000 in television co-op dollars, just create a television advertising plan with Spot Runner, the DPS television ad partner to run a Journey television spot in your local market. You can pick your ad, customize it and create a media plan yourself online. Here are the details. Since the opportunity is first-come, first-served in each market and expires on December 10, contact DPS right away if you are interested.

Store traffic and sales were up a bit as shoppers opened the holiday shopping season on Black Friday, but average sales per customer were down slightly. According to the National Retail Foundation, traffic at stores last weekend was up 4.8 percent but the average amount spent dropped 3.5 percent, probably due to fewer big ticket TV sales. Although sales are still ahead of last year, the media coverage was surprisingly negative, possibly affecting consumer confidence (and the stock market isn’t helping either.)

Now data from the opening of the online shopping season shows a similar trend, with the exception that traffic is up much more dramatically. A study by comScore reports that Cyber Monday sales were up 21 percent to $733 million this year. The number of buyers online during the day rose 38 percent from one year ago but the average per-customer purchase fell 12 percent.

Major online retailers did well this year. According to comScore, Amazon.com, Wal-Mart, and Target were the top three website destinations for consumers. According to the Hitwise Retail 100 Index, traffic to top retail websites on Cyber Monday rose 26 percent over 2006. CyberMonday.com received more than 1.5 million unique visitors on Cyber Monday alone, five times more than one year ago. Although there is some debate about the concept of Cyber Monday, especially since several other online shopping days are more important, the concept has legs. Internet service provider Akamai reported that its metrics for 300 monitored retail sites yielded 4.6 million visitors per second, making it the single largest day of Internet retail traffic in 3 years.

Several online jewelry retailers reported big sales boosts on Monday. At Diamond.com, traffic rose 58 percent and sales increased 65 percent. At Ice.com, with a discount offer, traffic was up 70 percent and sales increased 82 percent.

But there’s much more to come, of course: as of Sunday, November 26, the average person has completed 36.4 percent of their holiday shopping, the same as last year at this time, the NRF says. One in 12 has finished their holiday shopping. (And of course, we hate them.)

Online jewelry retailers are placing more emphasis on Cyber Monday, today’s symbolic beginning of the holiday online shopping season. Shop.org’s Cyber Monday promotion site has a large list of jewelry promotions from Ice.com, Blue Nile, HSN, QVC, Shop NBC, Jewelry Television, eLuxury, Overstock, JC Penney and Nordstrom’s. Seventy-two percent of online retailers will offer special holiday deals on Cyber Monday, up from 43% two years ago, according a Shop.org survey. But the general retailing community is doing less promotion: a BDO Seidman survey of chief marketing officers reported that only 39% of all retailers are conducting special holiday promotions to boost online sales.

Shop.org’s Cyber Monday site does benefit a cause, but the cause is creating more online retailers, which seems a bit self-interested: participating retailers agree to donate a percentage of proceeds to the Ray M. Greenly Scholarship Fund, which provides scholarships for students interested in an eCommerce career. Is that really the best cause they could find to motivate consumers? (I suspect another organization that promised to donate 5 percent to benefit sick children or breast cancer research could get a lot of support.)

But on to the deals. Many retailers are offering free shipping this holiday, the most popular promotion with consumers. (According to Forrester, 61 percent of consumers are more likely to shop at a site that offers free shipping.) In addition Ice.com is offering 20 percent off and Jewelry Television is offering 10 percent off. (Compare those discounts with the 70 percent off offered by major brick-and-mortar retailers on jewelry on Black Friday and you’ll see why most consumers assume that jewelry in stores is marked up much more.)

Online jewelry leader Blue Nile, which is offering free overnight shipping this holiday season, is also taking advantage of some promotional partnerships this season, which have been getting them a lot of press coverage. Starting today Blue Nile is offering 20 percent cash back on purchases made with PayPal, up to $50 per account. They also are offering $100 off on a diamond purchase as part of a Google print ad promotion. (If your customer is determined to buy online, give them the coupon code: it’s SMARTER100.)

Black Friday door-buster sales will include fine jewelry once again this holiday season. Most of the deals at major retailers, previewed on sale news sites like BFads.net which are becoming an increasingly important part of Black Friday shopping culture, are deep percent-off discounts off of all fine jewelry. JC Penney is advertising 65 percent plus an extra 20 percent off their entire stock of gold jewelry. So 85 percent off? What kind of markup are they working on? Kmart has 70 percent off all fine jewelry and 50 percent off sterling silver jewelry, JC Penney also has 60 percent off sterling silver jewelry, and Sears has 50-70 percent off all fine jewelry. Kohls is featuring half-carat tw champagne or black diamond jewelry in 10k gold for $215 and 1 ct tw diamond jewelry for $579.99. JC Penney is promoting a 1 ct tw ring and earrings for $499.99 Wal-Mart has quarter-carat tw studs for $48.84, 10k gold rope or figaro chain, 18” or 20” for $24.88, and 10k gold hoop earrings for $8.88.

Think social networking sites are just for teen party photos and favorite bands? According to a new survey from Unity Marketing, 40 percent of luxury consumers visited Facebook, YouTube, MySpace, or another social networking site in the past three months. The fact that these consumers have an average income $150,200 and an average age of 43.6 years doesn’t mean they don’t like to waste time online.

“Even middle-aged affluent consumers are networking online,” says Pam Danziger of Unity Marketing, who surveyed 1,074 consumers who made a luxury purchase in the last three months. “Young affluents, those 40 years and under, were the most active social networkers, but even one-third of the over 40 year old consumers reported visiting a social networking site.”

Jewelers are already interacting with potential new customers on social networking sites. In this month’s Modern Jeweler, we interview retail jewelers who are marketing on Facebook and MySpace in Online Marketing 2.0.

Of course, the 40 percent figure includes visits to YouTube, which isn’t primarily a social networking site. Videos on YouTube include a wide range of topics, from how-to to how much. (Modern Jeweler’s Million-Dollar Bling: Basel for Billionaires video has been viewed 3,405 times in the last six months.) LinkedIn, the business networking site, would have been better addition to the question. LinkedIn even has a few De Beers executives as part of its community.

The conventional wisdom about many consumers now researching luxury products online before buying was supported by the study: 46 percent of buyers of luxury fashion, fashion accessories, cosmetics, jewelry and watches used the Internet in support of their recent luxury purchases and spent 12.5 percent more on average.

“They used the Internet both to research purchases, especially to compare prices and read other customers’ reviews, as well as to make purchases,” Danziger says. “The research also shows that they will visit a retailers’ website to browse before they head out to the store. The lesson is that luxury marketers and retailers which offer their customers a website get a significant return on investment in terms of more spending.”

The consumers surveyed say the convenience of shopping at home is the top reason to shop online, followed by a wide selection of merchandise. They also report comparing prices and evaluating product features. “When asked what features were most important for a luxury shopping site to offer these luxury consumers, they were adamant about three features – in depth product information and specifications, detailed product pictures and a flexible return policy. They were far less concerned with company or brand news, lifestyle content or a store locator,” Danziger says.

For the first time, Diamond Promotion Service has established a $750,000 co-op fund to help retailers run Journey television ads in their local markets through Spot Runner, the first Internet-based advertising agency. DPS will cover 40 percent of your Journey diamond jewelry TV and radio campaign up to $20,000. To qualify: you have to sign up by October 22 and run the ads in November. DPS consumer research shows that most diamond jewelry purchase decisions are made early so they are recommending advertising in November as well as December. The Spot Runner Journey ads leverage the DTC national Journey campaign. The ads are exclusive to jewelers in their local market on a first-come first served basis. Journey diamond jewelry is expected to sell well again this holiday season after generating about a billion dollars in sales in the first six months of its launch last year. You can create a customized Journey ad and buy television time to run it using Spot Runner’s website. Two 30-second Journey television commercials created by Spot Runner are available, along with 30- and 60-second Journey radio commercials that retailers can use in conjunction with a television campaign. All ads include your location, phone number, store logo and graphics, and website address if applicable. Customization also includes a voiceover produced specifically for each retailer. Eligible air dates for co-op funds are October 29 to November 25 and orders need to be placed by October 22. Sign up at DPS on Spot Runner or call Spot Runner at 888-943-7768.

What item are consumers most likely to buy online? Computers, of course. In fact, in 2005, 47 percent of all computers were purchased online, according to NPD Group. Etailers like Dell are poster children for how the web will transform all retailing. But a funny thing is happening to computer buyers: they are starting to return to stores. In the first five months of this year, 60 percent of all computers were purchased the old fashioned way: in person.

So why are computer buyers returning to brick and mortar retailers? According to a recent story in The Wall Street Journal, as laptops have become more popular, “people have increasingly sought to touch and test out their computers before buying. Laptop customers, planning to carry their PCs around with them, pay more attention to styling, shape, and weight.” Anyone who has visited an Apple store, one of the nation’s leading experiential retailers understands how the store adds excitement to the computer shopping experience. It’s a fun place to just browse. And that excitement pays off. A successful retail store might reach $600 in sales per square foot annually. (In 2005, the U.S. average sales per square foot for non-anchor tenants was $366.) Tiffany & Co., the most successful large jewelry retailer, has annual sales of $2,666 per square foot. Compare this to Apple’s annual retail sales: they are $4,032 per square foot. The pleasure of shopping at an Apple store may be one reason why Apple is picking up market share and Dell is losing it.

Online retailers are fighting back by trying to improve the shopping experience on their sites. Online video, forums and customer reviews, price comparison features, and streamlined checkout. They are also adding more customer service. But one thing is clear: even in the category that consumers feel most comfortable buying online, there are limits.

Online jewelry sales, now about 6 percent of the market, clearly have a lot of growth ahead. This year, online sales of clothing were higher than computers, suggesting that consumers feel more comfortable buying fashion online. In 2006, online sales of skirts, suits and shoes were $18 billion, compared to PCs, printers, and software, which were $17 billion. That was 8 percent of all clothing sales according to Shop.org. But the transfer of sales from brick and mortar stores to online retailers isn’t unlimited, especially as more consumers consider jewelry as fashion, rather than as a commodity. And if jewelry stores can create a compelling retail experience like Apple has, consumers may even learn to enjoy shopping for jewelry.

s it a sign of a growing trend? The Wall Street Journal’s Cranky Consumer column tried out jewelry rental sites this week. The column gave rave reviews to Adornbrides.com. The WJS rented a pair of single-strand diamond earrings for two days for $90 plus shipping. The bride-oriented site has about 20 pairs of earrings, 14 necklaces, and seven bracelets. Top price is $960 to rent a diamond necklace set with 9.26 cts of diamonds the site values at $26,800. The site doesn’t encourage other renters: it asks you for your wedding date, not when you want to rent and the selection is focused on pretty conservative bride-type items. Other sites mentioned in the story are Bagborroworsteal.com, which we wrote about in Something Borrowed, in May, and two costume jewelry rental sites Borrowedbling.com and Imoveritonline.com. Bagborroworsteal.com is criticized for not including addressed return envelope.

For retail jewelry store owners, one of the most frustrating aspects of competing with online retailers is that many do not have to collect sales tax. Especially on high-ticket items, the difference sales tax makes in the consumer’s final price can be significant. If you are in favor of requiring online retailers to collect sales tax, you will soon have a chance to have your voice heard by someone who can make a difference. Jewelers of America has invited Representative Charles Rangel, the powerful chairman of the House Committee on Ways and Means, to speak at the opening of the JA Show next Sunday morning. Representative Rangel, who JA has been lobbying on a proposed bill to allow individual states to impose sales taxes on e-commerce sales to their residents, will be touring the show and speaking to members of the trade afterwards.

Last week I talked about the successful but not-so-tasteful positioning of Steven Singer, the retailer in Philadelphia that folks love to hate. Another jewelry retailer in Michigan has attracted media attention not for his advertising but for a rather unusual security system: live scorpions in his display cases. Scott Ward of South Lyon Watch & Jewelry in South Lyon, Michigan was featured on WDIV, his local TV station and online on MSN.com explaining his somewhat high-maintenance system. “I’d think twice before I’d smash the glass and stick my hand in a case with a bunch of outraged scorpions,” Ward says. “It cuts down on the chance of a smash and grab.” Drama like this is bound to get attention and is a good way to get a lot of coverage for a special exhibit. At the Sri Lankan Gem Show in 1991, a 393-carat star sapphire, one of the world’s largest, was displayed in a case containing a king cobra. The snake-enhanced security was covered in the International Herald Tribune as well as national media. And today, it’s even easier to spread the news. This kind of video clip, whether produced by a TV station or done in house and uploaded to You Tube, can be pretty effective viral marketing. Of course, like Steven Singer’s style, it has to be appropriate for your target market. Ward says it has definitely increased his traffic although he hasn’t yet seen a boost in sales.