Last year saw several noteworthy retail developments. Wal-Mart, for example, went after the toy business in a big way, and FAO Schwartz declared it would go out of business. Toy stores reported a year-over-year decline of 7.7%, according to MasterCard Advisors in a report by Anne D’Innocenzio of the Associated Press. Wal-Mart is expected to report same-store sales 4%-5% greater than those of 2003.
The AP report noted that the big winner in 2003 was online sales, which soared 29% over 2002 figures and hit $11.7 billion. Consumer electronics rose 6.7%. Home furnishings increased 3.9%. Apparel was up slightly (1.6%) and department stores fell 1.4%. So far, we have only anecdotal information on jewelry store sales, but JCK estimates that chain store sales increased 3%-5% over last year’s figures; better independent jewelers increased 5%-9%; and mid-range jewelers will be flat to down 5%.
Convenience is a key factor in online selling. Consumers are time-poor, and shopping online is convenient. It’s faster, and there are no time constraints. Some reports indicate the uptick in consumer electronics is a function of online purchase and store pick-up.
Wal-Mart offers a different kind of convenience—it sells everything from toys to tires to jewelry. It sells online and in stores. It sells branded merchandise and sells for less. When Wal-Mart decided to focus on toys, its strategy was to pull shoppers into the stores because, once in the stores, those shoppers would buy more than just toys.
There is a lesson here for jewelers.
Jewelry stores are destination locations, similar to toy stores and department stores. Consumers have something in mind when they come in. But shopping patterns are changing. Time poverty, stress, price, convenience, and brand all play a role in what people buy and where they buy it. The question for jewelers is: How do you compete in this changing marketplace?
Look at department stores. As a group, they haven’t had a new thought since they started discounting back in the 1960s and ’70s. Wal-Mart and Target are eating their lunch. Those who dominate a category never seem to see the changes that inexorably transform their marketplace.
A jeweler’s strategy must recognize the changes taking place in the competitive landscape—and I’m not talking about other jewelry stores. The competition is online, mass merchants, convenience, and price. Making jewelry top-of-mind in gift-giving and self-purchase requires constant communication in every medium. That means using advertising, direct mail, and public relations on a regular, consistent basis.
Look at your store hours. Do they suit your customers’ schedules? Look at your sales staff. Are they order-takers, friends, or sales professionals with knowledge and attitudes to match?
With so much of your revenue and profit loaded into November and December, it isn’t too early to consider how you’ll respond to the changing retail environment in 2004.