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Driving down the price


#1

All, Tis’ the season of the jewelry wars. They have already started…
75% off sales. I do not understand the business philosophy behind
the jewelry industry. Why would you want to make a product quicker,
faster, better or worse and sell it for less money per piece? I
would think you would want to make the product better, faster, and
sell it for the same or more money. I would bet that most US
jewelry store sales are of mass produced items from large jewelry
manufacturers in Italy, India, Bali, Korea, Thailand, and China. No
US labor is involved and all the jobs required to make this jewelry
are lost in the US. Our bench people are reduced to repair people.
Commercial gemstones are the same. There is now no money to be made
cutting commercial stones in the US. Very few lapidaries are still
in existence. I will not cut commercial goods because I cannot make
a living at cutting them. I cannot have a store front because
commercial cutting will not pay the bills. Custom cutting does not
require a store front. Anyone who is in this business for a lifetime
should be asking the same questions. What is the business
philosophy?

Gerry Galarneau


#2

Hi, Gerry-

The question is, or should be, what are those stores listing as their
"retail price?" Years ago, I have a friend who was a GG and who got
out of the business because he was tired of working for mall jewelry
stores that habitually marked their prices up 200% and more when
running a “50% off sale.” If jewelry stores are having "75% off"
sales, there are few plausible explanations; either the owner has gone
mad and is soon to be out of business, or the store routinely charges
such an obscene mark-up that they can still make a profit charging 25%
of their usual prices, or the tags on their merchandise are listing a
75% discount off of a fictitious, inflated retail price.

If anyone out there is running a true 75% off sale on jewelry that
was reasonably priced to begin with, I’d like to hear about that- why
are you doing it, how can you make money at it, etc.

Lee Einer


#3

Gerry: This unfortunately is the plight of the custom artisan - and
happens to other artisans (weavers, quilters, painters) as well.
Can’t be avoided. And yes it is disheartening, but we all know this
going into the field and you can drive yourself mad over this
practices or accept it as a part of doing business. I make only one
of a kind pieces and strive to appeal to people who do not want mass
produced articles. But yes, there are many who prefer going to the
big discount houses buying “ethnic” jewelry at such cheap prices I
marvel that they can even be massed produced at that cost. I feel
sympathy with the foreign artisans who are paid a mere pittance for
their work so that the “greedy” members of society can do the
proverbial “get something for almost nothing” act.

I painted for years before I began fabricating jewelry and cringed
when the big “warehouse sales” for paintings 30x60, copies of the
great masters, etc. would appear at the coliseum in town and sell for
$30 while I couldn’t even buy the canvas and stretchers for that
price. Naturally you lose some business to this mentality, but would
you really want your pieces owned by people who had no appreciation of
your design and construction abilities? I don’t think so. I just
have to feel that this is just a segment of buyers I don’t have to
deal with. I’m sure if they came and looked at what I do, they’d
probably argue about the price and remind me that they could buy it at
xyz market for a pittance of my price. My comment - have at it.

Thanks for letting me vent.


#4

Dear Gerry, There is nothing philosophical about the market
place…it is brutally competitive and meant nothing more than to
make a profit. If you can make something marketable and sell it for
less, you can capture more market. With increased volume you can make
more money. If you want to play the game while still clinging to your
principles, it is more effective to reorient your methods and seek
out a niche market. I know of several people who do this and are
making an excellent income. One of them , a superb local faceter,
goes to great lengths to seek out only the finest and largest rough
which he painstakingly cuts in classical forms. He has won many AGTA
awards for his efforts and regularly sells at Tucson. In this
instance it is important to recognize the fact that it really doesn’t
take much more time to cut a ten thousand dollar gem than it might
take for a five hundred dollar stone. If you allocate your cutting
effort at ten per cent of the selling price your profit will be a
thousand dollars for the expensive stone while the five hundred
dollar stone is only going to return fifty dollars. Obviously you are
going to have to be ready to shell out mega-bucks for the rough, but
the math is right. Another approach might be that of specializing in
a certain stone or type of cut…this is where the opportunity
lies in conjunction with the web. Ten years ago it would have cost a
fortune to access a specialty clientele using conventional media.
Nowadays we can accomplish the same for pennies on the dollar via the
net. We cannot lapse into retrospective regret…change is
relentless, inexorable and beyond any individual’s control. WE must
change in order to accomodate change. It is often a matter of the old
consideration of whether the cup is half full or half empty. If we
embrace change creatively and optimistically, things will fall into
place. I cling to the belief that ,in the current scenario, there is
unprecedented opportunity for the “little guy” to thrive and do those
things that the voracious mega corporation cannot be bothered
with…and, we owe this opportunity to the CHANGES that have taken
place in technology. Ron at Mills Gem, Los Osos, CA.


#5

Gerry,

I agree with Kay - it is getting tough to compete directly with the
imports. I’ve been working in sterling for the last 15 years or so
and have gone back to gold this summer. I buy the best stones I can.
A knowledgeable customer who is looking for hand-crafted work will
recognize the quality. Potential customers can be educated.

The folks who want to buy the sale stuff at the mall aren’t your
customers.

Hang in there,

L.J. Smole White Fox Workshop Ozark Mountains, USA


#6

Dear Gerry,

Ah, yes … the joys of capitalism. There is a market for the
inexpensive “precious” jewelry sold in mall stores. For many of these
people, the options may well be buying the $199 “diamond” tennis
bracelet or buying no jewelry at all – not everyone can afford a
$1,000, $5,000, or $10,000 custom made piece. As long as the pieces
are properly represented – which is all too frequently not the case
– I don’t think this is cutting into the market as much as many
people think. In your experience, is the $10,000 customers really
likely to opt for the $199 bracelet instead, if both are presented
accurately?

The jewelry industry tends to focus on competition from other jewelry
to the exclusion of all else. In many cases, I suspect that $10,000
customer who just bypassed the jewelry counter may have opted not to
buy jewelry because he/she just bought a 52" television set, the new
Sony Playstation 2, and a Mediterranean cruise instead. After all,
even I – who sees lots of great design adn have a great deal of
respect for the people who create jewelry – generally opt for the
trip to London or Bermuda (or almost anywhere!) instead of buying new
jewelry.

So, any thoughts out there how to convince people like me to buy
jewelry instead of jetting off to Tahiti or buying a new computer?

Suzanne


#7

Hello Gerry, Ron at Mills Gem points out the hard facts about how
profit happens - either with large volume and low prices, or low
volume and high prices. A car dealer can sell 100 Geo Metros or one
Rolls and come up with the same income… of course if no one buys
the Rolls, it’s a big hit. Most dealers try to cover a variety of
price points. I deal a lot with agricultural folks who have been hard
hit with the recent drought/low prices/high energy costs/etc. They
are looking seriously at diversification. Continue to grow the huge
mono-crops like wheat or corn, but hedge their income with another
crop/activity. Maybe that’s a punkin’ patch, or a corn maze with a
petting zoo. We can do the same (and I think many do). We develop a
"bread & butter" item to cover the low price/high volume arena, as
well as create some more expensive quality, unique fine jewelry using
wonderful components. In addition, we should find and use
opportunities to let folks participate in the process, so that the
final product is partially theirs. A friend who creates incredible
raku ceramic work, occasionally has a people-friendly openhouse where
she lets folks glaze some basic things (like wall tiles or cylindars)
which are then fired. It’s like a magic show. Here’s the kicker.
Not only do people love their own special piece, but they really
appreciate her more costly works because they’ve seen first-hand what
is involved. The sales naturally follow. My last thought is this: I
encourage people to buy what they like… to trust their instincts.
Jewelry is not an investment (as DeBeers would have us believe), but
an expression of each person’s personality, memories, and interests.
Judy in Kansas, where I’ve just returned from a thought-provoking
church conference. Celebrate your life and the life of those around
you!

Judy M. Willingham, R.S. Extension Associate 221 Call Hall Kansas
State Univerisity Manhattan KS 66506 (785) 532-1213 FAX (785)
532-5681


#8

Judy, Gerry and All,

I went shopping yesterday and discovered that our local Ross Discount
Shopping store had installed an elaborate jewelry counter set up.
Most of the goods were chains and items without stones…with the
exception of the extensive silver display. It featured numerous
pieces of colored cabochon jewelry. After carefully examining the
goods and noticing that the prices, craftsmanship and selection were
very good, it struck me that the stones were consistently crap. The
Lapis was dull and dyed, the Turquoise was greenish and plasticky and
none of the stones displayed any individuality. I was reminded of the
tradional Taxco jewelry wherein much of the workmanship and design
was high quality, but the stones were junk. ( Taxco has clung to the
belief that inasmuch as they were sellijng their goods wholesale by
the kilo they could cut corners by using junk stones or outright
stone-like concoctions )

I do believe that the moral of the story here is that our best shot
at competing with this challenge is to use op notch stones mounted in
integrated designs. We have the advantage in this regard inasmuch as
we, especially here in Western America, have an abundant supply of
uniquely beautiful semi-precious stones. Gerry is this kind of dealer
and I hope to have my stones on line in the near future ( I have had
a bit of trouble getting the kinks out of our photography…if you
are interested in how important this might just go to E-bay and see
some of the atrocious phography that prevails amongst many of the
dealers therein…look especially in the specimens and rough section
and query for “slabs” …I think that in some instances these people
are actually trying to screw up the photography so as to appear to be
innocent amateurs…or to obfuscate the junk they are trying to
unload !)

Suzanne Wades brave admissions about the competition for the
disposable dollar are another side of the whole equation…jewelry
used to be a premiere choice for a girl or guy wanting to get rid of
a sum of money in a hurry; now there are many more choices to make
AND one of the most desireable choices for many is to hop on a plane
and go to another continent. And what is the principle endeavour
associated with being in another country…you guessed it
!..Shopping. And, for many, that shopping often includes buying
jewelry. And, as if to add insult to injury, sometimes the jewelry
purchase involves buying the exact same thing that might have been
purchased here in the “States” for LESS money ! As I see it, we are
going to have to get CREATIVE ! Not only are we going to have to turn
out goods that are immediately recognizable as being outstanding, we
are also going to have to serve our customers at a very personal
level which involves going beyond merely purveying goods. We should
do everything possible to bond with our clients and get them to think
of us as their personal jewelers. Here again, we are talking about
recognizing what our advantages might be:

department store clerks don’t really give a damn…they are just
trying to get through the shift on a minimum wage and will probably
never see you again. We, on the other hand, will always be there and
the customer knows that you will treat them with courtesy and
individual attention. It aint over til the fat lady sings ! Ron at Mills
Gem, Los Osos, CA.


#9

Jewelry is not an investment (as DeBeers would have us believe),

Actually, Judy, deBeers has never tried to make anyone believe that
diamonds are an investment (as in monetary return investment). They
have been the primary romanticizers of diamonds since they (deBeers)
were formed. With good reason, of course, as diamonds are so common
that they have to come up with some other reason to make people want
them.

Daniel R. Spirer, GG
Spirer Somes Jewelers
1794 Massachusetts Ave.
Cambridge, MA 02140
@spirersomes
http://www.spirersomes.com


#10

Ron “it ain’t over till the fat lady dies” a quote on how many operas
end. Again invariably changed to sings which makes no sense since the
fat lady sings throughout the opera. Bill from Long Island


#11

Suzanne hit the nail on the head!

Most folks, even those with a mega buck bank balance, don’t have a
budget that dedicates x dollars to jewelry. For the most part,
jewelry, trips, & other ‘toys’ come out of the pot called
’discretionary spending’. I, for one have to prioritize my
discretionary spending. Almost the last thing on the list is jewelry
(unless it’s a gift for my wife). I’d much rather get some new tool or
take a class in an area I feel less than adequate in.

I suppose that’s the same with just about all folks. I’ve got a
friend who’s got a mega buck budget, but jewelry (unless it’s a new
Timex to replace the old one) isn’t even on his discretionary list.
They’d rather spend their money on real property. They’re just
starting to build a new 7,000 sq. ft. home with an additional 2,000
sq. ft airplane hanger. Neither of them fly & they don’t have any kids.

It just depends on what’s important to you.

Dave