From the big data boom to the science of trend forecasting, the newest retail developments are less overwhelming—and more accessible—than you might think
The Information Society
Harnessing big data to make small decisions in retail has never been so popular—or effective
Retailers have always used consumer information to find out what customers want, and how to best market products and services to them. But consumer data didn’t get truly big until smartphones and social networks became go-to communication tools for the majority of humans on earth.
Currently, more than 6 billion people use mobile devices. And every one of them routinely keys in reams of information on websites, apps, and social networks. This huge, swirling mass of information, when analyzed intelligently, can provide broad-stroke insight into human behavior—shedding light on everything from shifting traffic patterns to coffee bean varietals trending in South America.
The Forum for Growth & Innovation at Harvard Business School reports that 90 percent of the world’s data has been produced in the last two years. It’s no wonder that big data—the catchall term for data sets so enormous and complex they can’t be processed on normal computers (think thousands of refrigerator-size servers)—is the buzziest phrase in business right now. And the field of data science is exploding. The storage of enormous amounts of data, alone, is big business, raking in $70 billion in 2013, reports American Public Media’s Marketplace.
Social media sites are crunching huge data all the time: Twitter and Facebook offer up their top-trending items for all to see—an everyday example of big data collection and live analysis. Meanwhile, colossal Internet retailers including Amazon and Wal-Mart rely on big data, both collected and purchased, to help guide organizational decision-making and present us with all those handy upselling suggestions online.
This practice isn’t new, says Carla Gentry, a well-known data scientist and founder of Analytical Solution. Retailers have always netted data and/or purchased data lists from collection firms such as Nielsen to more intelligently drill down on their consumers’ wants and needs. But social media has rendered the snappily named big data a highly trendy area.
“Internet salespeople are out there pitching it,” says Gentry. “If you have 300 million people on Twitter and a couple of thousand are talking about how it’s the greatest field, it will get around.”
The pressing question: Is big data useful to small retailers? As a jewelry retailer, you’re not collecting billions of data points. But that doesn’t mean you shouldn’t be collecting data by the fistful, says Gentry. Consumer information such as names, email addresses, and phone numbers is incredibly valuable and can be closely analyzed to detect shifts in geographics, demographics, and consumer behavior.
And on the community level, open-source information—from average household incomes to home sale prices—can be easily captured through smart Web searches and requisitions at the community courthouse, Gentry adds.
Of course, small and midsize retailers can use big data to stay abreast on a meta level of everything from customer service trends to implementing effectual marketing messages, both online and offline. Big data sets are so huge that they have the capability to define the zeitgeist—painting pictures of consumer behavior that, in best-case scenarios, have real depth.
The applications in retailing are likely to proliferate in the coming years; many retail start-ups are already harnessing the power of data science.
New San Francisco–based lingerie company True&Co, for example, crunched 7 million data points from its clients, including body shape and how often a bra strap slips off a shoulder. The data was fed into proprietary software, which determined there are more than 6,000 different body types within their client base.
As a retailer, how do you process info on that hyper-granular level? That’s the big challenge, says Gentry, adding that even the big guns aren’t analyzing their data like they could be. “When Facebook runs reports on all the data, [employees] are basically just running queries. The company doesn’t even keep their data all in one place.”
If the No. 1 social network in the world feels overwhelmed in the data science department, you know the field is poised for huge evolution. —Emili Vesilind
Stock Exchange
If you haven’t updated your inventory management system with RFID technology, you don’t know what you’re missing (literally)
Inventory control. For many jewelers, it’s the worst part of running a retail business, and often the most maddening.
“My biggest challenge is everyone’s biggest challenge—inventory,” says John O’Rourke, owner of Montica Jewelry in Coral Gables, Fla. “It’s an animal. You deal with it, it costs you a fortune, and you have to address it all the time.”
In jewelry stores, there’s the ever-present peril—one you don’t have much control over—of buying high-ticket merchandise that doesn’t move in the first few months, tying up your buying budget. But the more insidious danger for your business is being in the dark about what precisely is in the stockroom and on the sales floor.
Before e-commerce, a store owner’s ignorance about what was in stock could be passed off as benign carelessness. Now, with every successful retailer selling like gangbusters through multiple online channels, failing to stay on top of inventory levels can potentially poison a business from the inside out.
Most retailers don’t actually “have what they think they have,” says Bill Toney, head of global radio-frequency identification (RFID) market development at leading label company Avery Dennison Corp. “We found the average retailer can distort”—in other words, inaccurately account for—“as much as 35 percent of their inventory a year.” The busy holiday season is when much of the distortion occurs, he adds.
Shannon Faulk/Getty Images
Do you have what you think you have? One surefire way to nail down your inventory is to invest in RFID technology.
Not having a handle on your inventory can hamper sales when consumer demand is present, but the product is not. Tight stock control is also essential to running a retail business optimized for the barrage of new technologies gurgling up—from selling on social media sites to integrating your inventory on popular third-party apps such as House Account.
With consumer demand channels shifting, retailers who don’t keep accurate inventory numbers can expect a consistent degree of chaos within their operations.
Take, for instance, price tags printed with UPC bar codes. These have been the norm in retail for decades. But tallying an entire store with bar scanners, which require a clear line of sight, takes forever—which is why many stores do a physical inventory only once or twice a year. What’s the future of inventory management? Toney says it’s already here: tags inlaid with RFID chips that allow employees to inventory huge swaths of a store in minutes—25,000 units can be scanned in an hour, making weekly inventories a realistic option.
“It optimizes inventory accuracy, which allows the retailer to [streamline] processes and get better data at a more granular level,” Toney says. “It’s a very simple model.”
Major retailers are embracing RFID in droves. In July, fast-fashion chain Zara announced a complete overhaul of its inventory system—including a move to RFID tagging—that will track items from factory to point of sale, allowing for lightning-fast restocking. But RFID does more than tally stock; its potential applications in areas like consumer experience and data mining are only now unfurling.
Jewelry brand Ritani recently debuted an RFID scanner designed to lie flat behind a jewelry case. When salespeople take product out, RFID kick-starts an iPad program displaying images of the rings in hand, along with detailed info on each style.
And this summer, Microsoft, Accenture, and Avanade introduced Connected Fitting Room (currently in all Kohl’s stores), which uses RFID tags to ID items as they come into fitting rooms. Items are displayed on a big touch screen, which shoppers can use to request different sizes and colors.
Of course, technology is only truly effective when it’s paired with best business practices. And in the fine jewelry industry, there are a number of proven consulting firms ready to school owners and salespeople in effective inventory management. Focus Business Management Institute, for one, holds its retail clients to rigorous standards when it comes to turning over stagnant merchandise.
O’Rourke finally got a handle on his inventory situation with help from Edge Retail Academy. “They took our point-of-sale software and all our inventory data and put it on steroids,” he says. “Now we have a game plan for inventory management.” —EV
The Pinning Season
For jewelers, Pinterest is a social media gold mine
The stats, data, and intel are in: Pinterest is officially the most important social media website in retailing.
Eager to boost sales? Let the pinning begin!
The aggregation site, which allows users to collect and share images by pinning them to virtual corkboards, drives twice as much traffic to e-commerce sites as Facebook—10.9 percent versus 5.3 percent, according to a recent report by Experian Marketing Services.
The network also inspires more online purchases than Facebook. Of 7,431 online shoppers surveyed about social networks by Bizrate Insights, 70 percent said they “use Pinterest to get inspired about purchases.” And 1,000 brands found that an average pin (a user-linked image on Pinterest) generates 78 cents in sales, and drives two visits to the company website.
While Twitter and Facebook still trump Pinterest in sheer user numbers, both studies showed that Pinterest fans are among the most affluent of all social media users and spend more time on the network per month than users of Twitter and Facebook combined.
How did the 5-year-old network pull ahead of more established sites in the race for return on investment? By offering an endless fountain of eye candy, its fundamental design flat out inspires purchases. Pinterest also has a highly visual mobile site and app, which lure mobile-centric (younger) users. The company revamped its mobile products in February, and reported then that 75 percent of its daily traffic originates from mobile devices. With big, beautiful imagery at the heart of its appeal, Pinterest could easily have botched the move into mobile; instead, it jumped the divide with aplomb.
“Pinterest is very addictive because of the visuals,” says Anna Bennett, an independent Pinterest marketing expert and founder of White Glove Social Media. “In social media marketing, there are still some [who] think Pinterest is only about women pinning a bunch of pretty pictures. Not true.… Your market is gathering there. If you’re not waving your brand flag there, you’re missing them. [Pinterest] creates more purchases and brand engagement than any other social platform—its growth has been nothing short of fantastic.”
Bennett claims there are powerful psychological forces at play, layered deep in Pinterest’s DNA. “The subconscious mind is directed toward the things you concentrate on,” she says, “so, if on Pinterest you’re looking at images of things you covet over and over…you will eventually be drawn to saving for, looking for, and buying those items.”
Sounds great, right? But marketing on Pinterest isn’t as easy as it looks, experts say. There’s an art to pinning up pretty pictures.
For one, don’t be self-serving. Retailers should resist the urge to use Pinterest as an online catalog, Bennett says.
“I continue to see business after business on Pinterest solely focused on themselves by creating boards exclusively dedicated to their products and services,” she says. “They don’t have even one board—nada—that appeals to a wider audience. This is a major mistake to be avoided at all costs.” The network, she adds, “is about creating theme boards on topics related to your target audience’s goals, aspirations, problems, fears, needs, values, et cetera.”
Vincent Ng, founder of MCNG Marketing and author of Pinterest to Profits With Pintalysis, says the biggest errors he sees retailers make on Pinterest are “not sourcing their pins back to the proper website” and neglecting to “check out what’s being pinned from their website,” so they can follow consumers re-pinning pins from them—a missed opportunity for engagement.
Retailers should also opt to post “rich pins,” says Ng, which Pinterest introduced in 2013 to allow businesses to include more info on pins, such as price, ratings, and (for jewelry and fashion) composition.
But the single biggest mistake retailers currently make when it comes to Pinterest: ignoring it.
Ng compares Pinterest in its current state to an infant Facebook. “I’m sure many retailers would loved to have built a stronger presence on Facebook five years ago, but unfortunately they missed that boat,” he says. He predicts “most will ignore Pinterest…until it gets too large and becomes overcrowded with your competitors’ products. By then, your competitors have already received tens if not hundreds of thousands of re-shares.”
Our recommendation? Pin like the wind. —EV
The Print-it-Yourself Economy
3-D printing gives you the power to create jewelry in front of your customers’ eyes
Here’s a prediction: A few years from now, in your average Main Street jeweler’s back office, behind the coffee machine and the digital workbench, will sit a 3-D printer that produces ceramic cake-toppers, gold pendants, and all manner of office doodads in the span of an afternoon.
Sunyoung Cheong’s Bloom ring earned third place in the 3D Precious Metals Printing Challenge 2014.
While that may seem like an ambitious prognostication in light of how many jewelry retailers continue to cling to traditional, analog ways of doing business, pundits say the industry is on the brink of a new era—and the phenomenal growth of the 3-D printing landscape would seem to support them.
“There’s a paradigm shift going on right now,” says Steve Adler, owner of A3DM Technologies. “For less than $6,000, jewelers can get a full CAD-CAM package and 3-D printer in their store.”
While Adler admits that “3-D printed metal is not yet understood,” he’s an evangelist when it comes to the finished result. At this year’s JCK Las Vegas, he carried a portion of an 18k gold bracelet in his pocket to demonstrate how 3-D printing can produce fully articulated, soft-as-fabric metal jewelry that does not require assembly.
At the New York City office of printer manufacturer 3D Systems Inc., Joshua St. John, director of user experience, is another industry veteran–turned–3-D believer. A onetime gem cutter, St. John was an early adopter of CAD technology. His facility with the software eventually landed him a gig at Geomagic, which was bought by 3D Systems in 2013.
“For the past two and a half years, we’ve been pioneering the idea of reinventing the jewelry designer’s bench,” St. John says. “The CAD tools used today are not designed for 3-D printing; they were designed for subtractive manufacturing. There’s a whole new platform to break down the friction that makes it so darn hard to use CAD and make the most of 3-D applications.”
Once the industry solves the software conundrum, St. John is convinced there will no longer be barriers to getting jewelers to embrace what he calls “digital craftsmanship.”
“It’s how digital craft skills are augmented by traditional bench skills,” he explains. “They’re not corrosive to each other. They’re actually best friends.”
St. John sees a future where 3-D printers, like his ProJet 1200 ($4,999; cadblu.com)—it “can print a ring in an hour and a half”—are standard features in brick-and-mortar stores.
“You could come into the store, print a ring out, go have coffee, come back, make sure you like it, even pop the stones into place,” St. John says. “Then you’re really able to see it. Looking at a screen and seeing pictures of jewelry, there’s an abstraction there. It’s such an emotional purchase, so if people can see the real piece, try it on.… Even if it isn’t the piece that’s produced, just having the ability to materialize matter right there in front of them [promotes the sale].”
Christina Schuhwerk took second place in this year’s 3D Precious Metals Printing Challenge for these 3-D printed hoop earrings.
E-tailers such as Brilliance.com are test-driving that exact concept—materializing pixels into tangible printed objects—right now with services like their “3-D print shopping experience,” which allows customers to print a selection of plastic engagement rings in different carat sizes and shapes from their desks. “Brilliance will send you a 3-D file to print at home,” says the company’s promotional literature. “If you don’t have a 3-D printer, they’ll send the already printed jewelry right to your door. It couldn’t be easier or more convenient!”
While printed jewelry may strike some retailers as sterile and lacking in that elusive, traditionally handcrafted quality known as “soul,” St. John thinks the ability to 3-D print actually represents a return to the old-fashioned concept of jeweler as maker. Combine these newfangled capabilities with all the tools and technology that allow you to 3-D scan objects (or people) and capture their likenesses digitally, and the possibilities to please your customers are limitless.
“You can actually print your kid once a year and have a collection for them till they’re 18,” he says. “And that’s the digital thread: You have the data, and once you have the data, there’s so much that can be done with it.” —Victoria Gomelsky
Meet the Futurologists
Trend forecasting isn’t a perfect science, unless you find the right soothsayer
Lucy Locket necklace in rose gold–plated sterling silver on silver chain; $286; Durrah Jewellery, London; 44-207-262-2476; durrahjewellery.com
There’s no getting around it: Trend forecasting is an elusive endeavor. Where’s the evidence for trend predictions, and what’s your recourse if they’re wrong?
While forecasters’ methodologies vary, the evidence they cite for their predictions often boils down to a mix of quantifiable research, years of expertise, and well-honed instinct. But recourse? Not so much.
Still, scores of major jewelry brands and big-name retailers are availing themselves of trend forecasting services that—for a fee—provide insights big and small into product and business trends shaping the jewelry universe. In the fashion sphere, the established agencies are WGSN and Stylesight, which recently merged into one “super-platform.” But for a more jewelry-specific analysis, there’s Adorn Insight, a London-based market intelligence agency founded by Maia Adams and Juliet Hutton-Squire in 2011.
Durrah Jewellery Lagenda ring in yellow gold–plated sterling silver; $270 (available in October)
Adams says Adorn Insight’s tiered membership levels—which start at $3,860 for Select access to the password-protected site—are designed to help forward-thinking retailers, designers, and manufacturers understand the consumer mindset. “It’s about using the information we provide alongside your sales data and knowledge of your customer,” Adams says. “We’re not preachy: Take what works for you.”
Having worked with organizations like Chow Tai Fook, Rio Grande, and the World Gold Council, Adorn Insight—which maintains a team of some 25 freelance field researchers who scour the globe to provide local perspectives on macro trends—is well placed to comment on how the industry’s biggest players are navigating the rapidly changing consumer landscape. “We’re very jewelry focused, but in the course of data gathering, we look at global macro trends, whether they be in retail, technology, new metals, pop culture, or street style,” Adams says. “Our aim is to take that down to commercially viable jewelry ideas across fashion and fine.”
For example, Adams says one of the key ideas the company is communicating now centers on the notion of “hybrid consumption,” or the phenomenon that sees consumers incorporating both evening wear and everyday jewelry into their wardrobes at the same time. “Mixing fine and fashion, brands and nonbranded—it’s a democratic approach to jewelry, and it’s important for jewelers to bear that in mind.”
Phoenix dangling leaf clip with custom-cut pyrite and crystals in gold tone and ruthenium; $295; Alexis Bittar, NYC; 718-422-7580; alexisbittar.com
Retailers who prefer to begin with a more scaled-back glimpse into the future can take advantage of the research on PSFK, whose annual Future of Retail report ($495; psfk.com) is rich with insights into global shopping trends, mobile and social media, and systems that retailers and brands are leveraging to differentiate themselves from the competition.
At this year’s JCK Las Vegas, PSFK director of research and strategy Scott Lachut gave a taste of the future-think his organization specializes in: Consumers, he said, will increasingly be expecting a seamless experience from retailers, whether online, on a mobile device, or shopping in-store, and retailers need to meet that expectation by fusing their digital and brick-and-mortar business into a single entity.
That said, the in-store experience is—and will remain—critical, according to Lachut, who told the audience that industry pundits forecasting the demise of the brick-and-mortar store are not to be believed. “There’s been a lot of talk about the death of physical retail stores,” he said, “but [technology] is pushing us to a place where all the channels are linked together—and the physical store is a huge component of that.”
Regardless of how you feel about the art of forecasting, that’s a trend you can bank on. —VG