By Jeffrey Ross and Patti Moloney
For jewellery retailers across Canada and the United States, price comparisons by savvy consumers has created a race to the bottom for non-branded products like chains, diamond stud earrings, or garden-variety wedding bands. With seemingly limitless information at their fingertips, consumers can quickly pinpoint which retailer sells a desired item for the lowest price, effectively commoditizing generic jewellery. Whoever offers the largest discount gets the sale, thus eating up the retailer’s margins and any chance of making a profit. The danger with slim margins is that the slightest dip in the economy could force many of these retailers out of business.
Shop-in-shop displays can help retailers to enhance the customer experience even more and for brands to have a greater presence.
To safeguard against bargain-basement pricing, Canadian jewellery retailers must look to branded items. While it’s true many will need to continue offering generic pieces for the convenience of customers, this type of jewellery cannot be the focus of the business. Consider instead emphasizing branded items, which are more stable in price. Instead of competitive discounting to secure a sale, brands hold their value and are priced comparatively from retailer to retailer. Business owners can rest easy knowing they won’t be undersold by a competitor down the street, says Niraj Dawar, an author and professor in marketing at Western University’s Ivey Business School. “Brands create platforms for transactions with customers, thus contributing to the experience of how a customer purchases and what a person is willing to pay for a product. This downstream activity is where competitive advantage is built,” Dawar tells Jewellery Business.
An added benefit to carrying respected brands is the customer experience they help create. As we move toward a more experience-based economy, consumers are placing lesser value in the product itself. Consumers want to feel appreciated and special; brands can help achieve both. Brands work hard to maintain consistency across retail outlets by providing retailers with marketing tools, display cases, and other materials to assist with advertising and sales measures. All these help create an experience consumers are looking for. According to Dawar, “People don’t buy what you sell; they buy the entire experience, including the purchase experience.”