Beware the double-edged sword of carrying high-profile brands

If there has been one major change in the retail jewelry landscape in the past three years, it’s been the dominance of brands on the marketing landscape. Brands have obviously been around for many years, particularly in the watch market, but there has been a sizable power shift recently: The tail has started to wag the dog.

Many vendors, particularly bead manufacturers, have started to create a niche for themselves in the eyes of the public. There are a number of pluses to this. Major brands such as Pandora have extensive marketing budgets that focus on building product awareness. There is a natural spill-off in terms of sales potential for the jewelers who stock these products. There is also an obvious advantage for a store that’s associated with a major brand: You look like a serious player. If a high-profile brand is happy to have you sell its products, then you’re worthy of a buyer’s trust by association. There also can be disadvantages—like a lack of control. In fact, you’ll suffer from what we call Argyle’s First Law of Branding: The extent to which you can control the decision-making process on a product is inversely proportional to the power of the brand. In other words, the bigger the brand, the less say you have.

This leads naturally to Argyle’s Second Law of Branding: As the brand grows more powerful, your control over how it is sold will diminish. Decisions on things such as pricing, reorders, discounting, selecting new ranges, etc., will be taken out of your control. Now, this is not necessarily a bad thing. Most of these companies have savvy marketing and merchandising experts. Why not let them tell you what sells rather than throw a dart at a board?

Nevertheless, one of the toughest aspects of carrying a brand is dealing with price shoppers. Whereas your unbranded items could be tough to compare, a branded item can be found anywhere that stocks it or searched for online. This puts the branded product in the category of commodity, much like apples or NESCAFÉ.

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To sell brands or not to sell brands?

Brands try to minimize this by insisting everyone keeps to suggested retails, but this can make getting rid of obsolete lines rather difficult. And anywhere there are rules there will be someone to break them. Someone, somewhere will be looking to discount. This can lead to Argyle’s Third Law of Branding: The ability of a distributor to control its brand is inversely proportional to the number of stores that stock it.

Most brands will sell to everyone in their early days on the “more is more” theory, until the market becomes saturated and retailers begin waging price wars—at which point the brand will try to pull back on the number of outlets to control distribution and image.

The sad news is that if you have built your business around selling brands, you are vulnerable to losing out should the brand then decide you are expendable. You may be introducing your customers to a product one day, then waving them goodbye as they head to another retailer when you lose the rights to continue selling it the next.

So what’s the upshot of all this? You have to take the good with the bad with brands. Use them as a traffic driver but don’t hang your hat on them, and be prepared to accept that many things will be beyond your control. In most cases, what’s good for the brand is good for you so trust their knowledge and research to make the right decisions, but be very aware that at any time the ride may come to an end. Keep the right balance between branded and unbranded merchandise in your store. And, as with the proverbial eggs in a basket, don’t put all your branding dollars behind a single brand or vendor.