As we all countdown the days until Christmas, savvy jewellery retailers are already planning their sales strategies for the New Year.
Until fairly recently, most jewellery stores have managed to avoid the post-Christmas sales wars that have engulfed most mass market retailers.
Now however increasing numbers are going on sale in January.
Indeed Ian Hadassin, the CEO of the Jewellers Association of Australia believes that “going on sale” in January is “a good marketing strategy” for most.
“Unless they are very high-end stores most jewellers will suffer from a negative perception by customers if they don’t go on sale, and as a consequence their business will be badly affected,” he warns.
“January is generally a good sales month for retailers and therefore jewellery retailers should view it as an opportunity to get rid of old stock.
“Unfortunately some jewellers get so wedded to their stock that they can’t bear to discount it.
“However if an item has been in a jeweller’s store for over a year they really should get rid of it – whether by discounting it or by breaking it up and using the metal and stones to make something new – because it is costing them while it is remains sitting on the shelf.”
Hadassin’s view that January is generally a good month for jewellery retailers is borne out by data from the Australian Retailers Association which shows that sales ‘in the ‘clothing, footwear and personal accessory’ category have been steadily increasing since January 2006 (see table)
ARA executive director Russell Zimmerman is nonetheless concerned that this January’s sales may not continue the upward trend.
“(This year’s) sales for clothing, footwear and personal accessories are showing no growth whatsoever and department stores are actually in decline from last year (-0.4 percent),” he says.
“Even the 2010 stocktake sales didn’t excite shoppers into the usual mid-year spending frenzy.”
Zimmerman believes that this year’s lacklustre sales results can largely be attributed to “constant sales”.
“Retailing works in cycles and even in past years of softer retail trade, the mid-year stock take sales still created somewhat of a buzz for consumers,” he says.
“What was different in 2010? Nothing. And that’s the whole point. Consumers have been bombarded with constant sales and discounts from fashion retailers for most of the year, so the usually exciting mid-year sales were nothing different.
“The discounting war fashion retailers have been locked in is creating a new consumer who isn’t impressed by a 10 percent discount when just last week there were offers of up to 70 percent off.”
Therefore Zimmerman suggests that jewellery retailers looking to boost their January sales should “focus on customer service and direct communication with loyal customers about post-Christmas product rather than just slashing prices”.
“If you are going to slash prices, make sure the deal you’re offering customers is actually something worthwhile,” he says.
“Customers are becoming more and more demanding. They won’t just buy because an item is on sale. They need to really want the product in the first place.”
Similarly, Brian Walker, the principal founder of The Retail Doctor consulting company, argues that jewellery retailers do not have to go on sale in January to thrive.
“January is traditionally a good business period for retailers as around 85 percent of Australians visit a shopping centre during the month but despite the increased foot traffic profit margins are increasingly being impacted due to major discounting,” he explains.
“There is now so much discounting going on throughout the year that we have a battle-hardened consumer looking for extra large bargains/discounts after Christmas.
“This will make any ‘sales’ this January less penetrating than in the past because so many stores have been on ‘sale’ all year round.”
Walker, formerly the national retail operations manager for Angus & Coote, says that although sales can be an important part of a jewellery store’s marketing strategy jewellers can still choose not to get involved in discounting wars by developing value-added strategies that differentiate them from their competitors.
“Small retailers have to adopt a guerilla warfare attitude to their marketing as they can’t compete with the big players’ buying power â”€ they can be smart and quick and do great things or they can try and match prices and lose.
“For example even the smallest jewellery store can offer customer value-adds like a diamond polishing service that the big retailers can’t.
“Adopting such value-add strategies means that the retailer can still go on sale in January, or any other time of the year, to get rid of old stock but by and large their customers will still come to them as they want the added value as distinct from the margins.”
Meanwhile a quick survey of jewellery retailers around the country shows that in practice jewellery retailers are adopting a wide range of strategies to increase their January sales – often without going on sale.
For example, the Diamond Boulevard jewellery store in the Pacific Fair shopping centre on the Gold Coast never “goes on sale” in January as it benefits from the increased foot traffic of holidaymakers from around Australia enjoying the Queensland summer sun.
In fact owner John Gough surmises: “We don’t do any special promotions in January because we don’t need to.
“We just stick to the same promotional strategy that generates us sales throughout the year – eye-catching window displays.
“I decided long ago that people don’t decide to buy a piece of my jewellery while driving along listening to an ad on the radio but when they walk by the store and see something they like in the window,” he says.
“Therefore we try and promote our products in our window every single day. Basically we change the display regularly and make sure to always include some items at good value prices to attract customers inside.”
Similarly Gerard McCabe from Gerard McCabe Jewellers in Adelaide says his store very rarely goes on sale in January – but for a different reason.
“We’re positioned at the higher end of the market so we’re not terribly interested in post-Christmas sales,” he says.
“We only go on sale every two or three years when we want to clear some stock out as I think constant sales can be a bit damaging to our brand.
“It’s not that we haven’t ever gone on sale but it’s not really a strong part of our culture as I believe that only about 15 percent of customers really buy on price.
“Everybody is after good value but at the end of the day there is no doubt that people want a lot more than just a cheap price when they are buying jewellery – they want to know they are getting what they paid for and they want expert knowledge and service.
“I also just don’t think that a customer who has spent $20,000 with me for a Christmas gift would be very happy to see a similar item on sale for half price a week later.”
McCabe says he generally “just rides out” the start of January and then begins promoting Valentine’s Day in the middle of the month.
Nonetheless he readily acknowledges that some stores do exceptionally well from January sales.
“When you are clearing out old stock, and old stock is old stock, then you have a bona fide reason to go on sale.”
John Whitaker, the owner of Whitaker Jewellers in Newcastle, NSW is another retailer who won’t be going on sale in January.
“We are a high-end store and our core business is engagement and wedding rings so we don’t tend to promote or discount in January,” he says.
“We are promoting all year but we only discount once a year in April to get rid of old stock. April is a nice time to be on sale as no one else is pumping out the whole ‘sale’ message and everything has settled down after Christmas.”
McCabe says his store’s main marketing focus is “a service and follow-up system we call ‘clientelling’”.
“Basically each member of the sales team has a book of clients they look after and talk to at least twice a year.
“Whenever a person buys an item of jewellery from us we follow-up within 90 days and get them to come back and have it cleaned. We then begin developing a relationship with them by creating a “wish list” and getting their partner or husband to come into the store too.
“…Once we know the client’s birthday and anniversary dates we contact the partner or husband in the month before and check what his plans are for the event etc and then suggest jewellery he might like to look at.”
McCabe says clientelling relationships are not suitable for all customers but “there are a lot of people out there who really welcome it because they just love the whole idea of being looked after”.
“Clientelling certainly works for us,” he says, adding that he doesn’t feel any pressure to go on sale to compete with other jewellery retailers.
“I run my own race,” he says.
“I am mindful of what other jewellery retailers are doing but I do what I believe works best for me.”
Chris and Gary Mellon from Gary’s Leading Edge Jewellers store in Gosford don’t have a major sale in January but they do run a “selected half prices sale” to bring in extra customers.
“We put old stock for sale at half-price throughout the store to get rid of it,” says Chris.
“We also put ‘blackboard specials’ outside the front of the store.”
She says the blackboard specials, which feature just one half-price item at a time, are an “an extremely effective” way of selling.
The Mellons also promote the store by “changing the look as soon as Christmas is over” and by beginning to promote Valentines Day in the final week of January.
“I find that so many people have more cash after Christmas than before as so many receive cash rather than gifts for Christmas – and they want to spend it.”
Ross Duff from Duffs Jewellers two stores in Geelong is also reluctant to go on sale in January.
“We rarely have a traditional sale,” he explains, “as I think there are so many sales on around us all throughout the year that they all eventually just become white noise to customers.
“Normally we only go on sale once every 18 months or two years to liquidate our excess stock so it really does mean something to our customers.
“If you start going on sale you run the risk of getting caught on a bit of a roller coaster as you can essentially train your customers to only shop at certain times – because if they know a sale is coming up in another six weeks they just wait.
“If you just bide your time and really do have something you want to promote or just want to liquidate some stock you make a much bigger impact.
“We like to try stay fiercely independent and not get seduced by the discount game. I think there is a lot more to than offer than just discounts.
“Customers are looking for good value and service – if they love something they don’t need it to be on sale to buy it.”