The Greek crisis and other economic woes may still be dominating the front pages of our newspapers but fortunately the young and not-so-young romantics among us are ignoring the doomsayers and spending their hard-earned cash on the ultimate luxury – diamond jewellery.
Yes, despite job insecurity and unaffordable housing, most couples getting engaged today are still buying the biggest and best diamond ring they can afford.
De Beers’ infamous ‘A Diamonds is Forever’ slogan, created by the NW Ayers advertising agency in 1947, and the company’s long-running multi-million dollar marketing campaigns in the years since, have certainly had the desired effect: When the company first started its campaign to convince consumers that diamonds were the ultimate symbol of love only about 10 percent of US brides received a diamond engagement ring – by 2000 the number was around 80 percent.
Similar growth patterns have been replicated in all the world’s leading economies and there is no doubt that Australian women today expect, or perhaps even “demand”, a diamond ring from their future husbands.
So the task for jewellers today is no longer to convince consumers that diamonds are the ultimate symbol of love – De Beers has successfully done that – but to ensure that they get their fair share of the growing market.
Indeed the Nationwide Jewellers buying group is so convinced that diamond sales are set to increase in the next few years that it has just created a Diamond Sales Growth Manual to help members achieve “significant diamond sales growth”.
According to Nationwide managing director Colin Pocklington, the group identified a “huge potential” for diamond sales in 2000 and has in the 12 years since developed numerous initiatives to help members to take advantage of the opportunity
“Our average member is now selling more diamonds and bigger diamonds than they were back in 2000,” he says.
“Whilst this improvement is very pleasing, we believe that there is scope for further increases in diamond sales.
“With continued increases in the proportion of disposable income for the average person, the demand for luxury goods will grow further.
“Discretionary spending per capita in 2011 is 50 percent higher than the figure in 2000 but as we all know, Australians are choosing to save more than ever before.
“The average Australian saved 7.3 percent of their income in 2011 compared to only 1.8 percent back in 2000 so it is reasonable to expect that discretionary spending will jump in the not too distant future, once the concerns about Europe, cost of living and taxes abate.”
“With this opportunity in mind we first of all identified the five key drivers for diamond sales – marketing, merchandise, merchandising, training and store fitout/equipment. We then developed detailed strategies for different sized businesses within each of the sales drivers. The manual enables a jeweller to select their desired sales level and then identify the specific strategies needed to maximise their sales.”
Nationwide, which plans to launch the manual at the end of May, clearly isn’t the only retailer to have identified diamond sales as a growth market.
Creative Selling
Michelle Black, the owner of Creations Jewellers in Canberra, says her store’s sales have been going exceptionally well in recent times with this January’s sales “up 30 percent on January 2010 which was also a good month”.
“The young engaged romantics are out there and they’re ready to spend,” says Black, adding that diamond jewellery accounts for 70-80 percent of the store’s sales and engagement rings account for around 80 percent of those.
She strongly believes that customer service is the key to selling all jewellery but especially diamond jewellery.
“I think you have to be really sincere and upfront with customers as a lot of them are quite knowledgeable about the jewellery they want to buy with information they have found on the internet or heard from other jewellers.
“They don’t come in cold like they did 20 years ago when I was selling engagement rings on the floor and people just came into look at designs rather than any technical aspects of the jewellery.
“Young people today really like to know technical information (eg, what metals work, why the cut of a diamond is important or why the colour should be considered) so you need to have confident and knowledgeable staff to serve them – particularly since some of the information the customers have found on the internet can be misleading.
“For example a lot of people come in knowing about the 4cs of diamond grading (Cut, Clarity, Colour and Carat weight) and then have it in their head that they want a high colour and high clarity diamond but haven’t taken the cut into consideration but for us it’s really important to look at the cut of the stone as it can make such a difference to its colour, clarity and the way it performs.
“Unfortunately such customers often have tunnel vision in regards to what they should be looking for so we basically try and encourage people to look at the stones so see what they think looks good.
“We show them stones with different aspects and then they understand you can’t just say “I want a D colour in a VVS clarity” and then know you’ll be getting a good stone because you might get a stone with a fairly poor cut that it’s not going to perform like a stone that might have a lesser clarity or colour but does have a good cut.”
“We often show customers three or four diamonds and one will speak to them: the stones might all be virtually the same colour and clarity but the cuts are different, the proportion are different…”
She concludes that retail staff need to have a “certain expertise” to be able to give advice and present the best options for each customer’s specific needs and circumstances.
“I think that’s why people go to a reputable jeweller. Buying an engagement ring is a big deal – it is one of the biggest purchases most people ever make so we owe it to them to give them good advice and guide them so they feel comfortable with whatever they buy.”
Country charm
Judy Cameron, the owner of Cameron’s Fine Jewellers in Victoria’s Swan Hill with her husband Andrew, is another who excels at selling diamond jewellery.
Located on the Murray River approximately 300 kilometres north of Melbourne, Swan Hill only has a population of only around 10,000 but the upmarket store is thriving with diamond jewellery currently accounting for around 40 percent of sales.
Cameron attributes much of her success to regular diamond promotions and good customer service.
As a member of the Nationwide Jewellers buying group, the store regularly runs the group’s diamond-buying promotions − for example the store is currently offering brides who purchase a Tolkowsky diamond ring the opportunity to wear a Tolkowsky diamond tiara valued at over $23,000 on their wedding day for free.
These Nationwide promotions are supplemented with Cameron’s own promotions for their customers’ needs.
“We recently ran a promotion stating ‘Have you had a good year? Well your wife deserves a diamond now’ as all the farmers in the area have had a significant return on their wheat crops for the first time in 12 years. And on a similar theme we ran a promotion saying ‘You’ve worked hard all year so you should get a diamond’.”
However despite the success of such marketing initiatives, Cameron stresses that instore service is critical to garnering actual sales.
“Whether your store is located in the city or country you have to be able to identify on a personal level with your customer and really look after them,” she says.
“You can do really good ads on radio or TV and put up great display in your windows but if you don’t look after the person when they’re in your store the amount of money you spend on advertising is irrelevant.
“If you want to sell more diamond rings you should make sure the customer you’re selling to right now is treated as importantly as the customer who is buying a diamond ring.
“When I’m selling jewellery I don’t try to upsize or upsell the customer I simply try to ensure that what the customer is buying is exactly right for them so whether they’re spending $500 or $30,000 they’re going to be happy with their purchase forever.”
Nonetheless, despite her belief that customers shouldn’t be upsold to a piece of jewellery that is not suitable for them, she stresses there was no reason why all customers can’t be shown a diamond ring or two.
“If a customer comes into the store for a watch battery or to pick up a repair they should be shown a nice diamond: If you have something close by or are standing there tagging something you can just put the piece of jewellery in their hand while they’re waiting and say ‘look what we got in today’.”
While such an initiative might not result in an immediate sale, Cameron believes it helps develop a relationship with the customer who might come back in a couple of weeks or months to “look and hopefully buy your diamond jewellery”.
High Margins
Padros Nader, the owner of Nader Jewellers in Westfield Parramatta and Centro Bankstown in Sydney, has been successfully retailing diamond jewellery for 18 years.
“The majority of my sales, around 80 percent, is made up of diamond jewellery,” he says, adding that “we don’t stock a lot of cubic zirconia and don’t do a lot of plain gold either”.
Nadir also refuses to follow in the footsteps of many of his competitors and sell silver jewellery as I want “diamond-set jewellery” to make up the majority of our sales.
“Our policy is simple: It takes the same amount of time and packaging to sell a $100 or $1000 piece of jewellery so you might as well as sell the $1000 piece.”
He believes there are many ways to encourage customers to buy diamond jewellery.
“When someone comes into the store looking to buy hoop earrings I don’t take them to the plain gold hoops I take them to the diamond earrings that we like to sell.
“I honestly believe that if you show most customers your diamond encrusted jewellery they quickly forget the plain gold pieces.”
“If customers want something made and ask me for cubic zirconia or nine carat gold I say ‘I’m sorry we don’t work in cubic zirconia or nine carat gold, we work with quality.
“I tell them that if they want to work that way they should go somewhere else. It wakes them up when you say that.”
Nader admits that such an approach inevitably means that “some customers just walk away” but says it is better than working for “such a small margin” and most people are happy to pay more for quality if retailers take the time to explain the differences between cheaper poor quality stones and metals and their higher priced counterparts.
“People have got money to spend otherwise they wouldn’t be walking into your store.”
Customising sales
Michael Barwick, the manager of Heirloom Jewellers in Newcastle, 167 kilometres north of Sydney, says that the majority of the company’s income is generated from diamond sales at its two stores.
“Most of our store transactions are for our more affordable branded jewellery (including Thomas Sabo, Chamilia, Swarovski and Najo) but the majority of the cashflow definitely comes from diamond sales.
“We specialise in custom jobs, predominantly engagement rings using larger stones − whether it be making it from scratch or whether we just hand-select a diamond to fit a ring design that we already have in stock.”
Like most of the retailers successfully selling diamond jewellery, Barwick believes that promotions and excellent customer service are critical.
To get diamond buying customers into the two stores, Heirloom Jewellers does “a lot of advertising”, including giant posters in its windows highlighting owner Richard Barwick’s diamond buying trips to Antwerp, and regular promotions such its ‘Assurance of Excellence’ which allows customers to return their diamond for a full credit if they wish to upgrade to a finer diamond within a year of the purchase.
“Basically if a customer buys a diamond (Antwerp certified with laser engraving) they have 12 months to decide whether ‘yes I am still 100 percent happy with this diamond’ or ‘I’ve got a bit more money now so I want to upgrade to a better colour or a bit more clarity’.”
Although customers only “very rarely” upgrade their diamonds, Barwick says they “like having the option as it gives them a sense of security.
“Customers are happy because it’s just another indication that we’re happy with what we’re selling.”
And making sure customers are happy is certainly key to Heirloom’s sales strategy.
“If the customer doesn’t understand what they’re buying it is hard to make a sale so it’s important to spend time with the customer to make sure they understand exactly what they’re buying.
“Customers track a lot of information on the internet and a lot come in with their fact sheets and a rough idea of how much things should cost but despite all the information there are a lot of things they often overlook – like polish and symmetry or whether the diamond has an independent certificate and where that certificate comes from.”
Nonetheless Barwick thinks prior research by customers is a good thing.
“I think it just shows the customers want to be prepared − they’ve saved up their money, they’ve talked about it for a while and basically they just don’t want to get ripped off.
“So in both our stores, which are in shopping centres surrounded by chain stores that sell extremely low colour and clarity diamonds, price is often a minor problem when customers first come in with cheap quotes.
“Generally there’s only one factor that they talk about and that is size so it is important for us to educate the customers about the difference in the quality – of course there is going to be a difference between a dark coloured stone and a stone at the top of the chart.
“We really have to make sure that they understand what they’re buying so when they say ‘there is a 1 carat diamond for sale at another store for $5000 or $6000 dollars’ we can say “well it’s that price for a reason” and explain the reason(s) to them.
He says the customers educated in this manner are often happy to pay more for a quality diamond.
“I think that if your pricing is pretty accurate and you have a good source of diamonds and the knowledge is there then the customer will probably be pretty happy to buy from you.
“Some customers who know their partner wants a one carat diamond and have the money to spend might go into a store and find a one carat ring on special for $5000 and then come into our store looking for a similar ring at the same price.
“When we explain the difference in quality he might just say ‘OK’ and be happy to pay more for a higher quality one carat or he might say ‘I only have $5000 to spend’ so we might then say ‘OK, well how about you go down in size but get a better cut and clarity’… It’s up to them but at least they know what they’re paying for.”
Re-educating customers
Meanwhile Joanne Coleman, retail operations manager at Loloma Jewellers in North Queensland, which currently has four jewellery retail stores and is planning to open a bridal jewellery store in Townsville soon, is also enjoying success in the diamond market.
Coleman says that although diamonds are a luxury item that “no one really needs to own” there is always going to be demand for “significant diamond purchases”.
The company uses a variety of advertising avenues, including windows, radio, TV, glossy magazines and “an active Facebook page”, to attract customers into its stores and then follows up with “excellent customer service to complete the sales”.
“We have committed a lot of time undertaking sales training for our staff via webinars in December,” says Coleman, “Sales staff need to be well equipped to find the right product to suit each customer’s individual needs,” says Coleman.
“People come into the storearmed with information they found on the internet.They have their mind set on a particular diamond, for example. It is of paramount importance to establish exactly what it is about that stone that they liked. More often than not they say ‘I don’t know, the internet said it was good’.
“We are in an information age where knowledge is not necessarily power – understanding is.
“Therefore as the retailer we have the responsibility to create meaning for the customer − the internet can’t do that as it can’t ask specific questions of the customer and because customers don’t necessarily have the relevant knowledge to understand the pros and cons of different product attributes to best match it to their needs.
“I believe salespeople almost have to un-educate customers to re-educate them. They have preconceived ideas of what they wanta product to do, the internet cannot provide for them a tailored approach to choosing the right product to match their needs let alone the trusting relationship formed between customer and salesperson. That’s where the artful success of selling is truly second to none!”
Design Trends
Michelle Black from Creations Jewellers believes the main trend in diamond jewellery is the move to quality.
“The customers are looking to spend good money on engagement rings and they really want quality so they’ll often compromise on size to get the best quality stone or the stone that looks the best in their ring,” she says.
“They want something unique that will last and are prepared to wait for something they’re had a bit of design input into rather than a mass produced product or something off the shelf.
“I also think that the younger generation has such high expectations that the guys are under a lot of pressure and don’t want their girlfriend to show off something too tiny when their friends have got carat stones.
“In my day we aspired to have a carat diamond and there were very few around but nowadays most young girls have big stones on their fingers − I think the bench mark is one carat plus.”
Judy Cameron, however, says she can’t really see any significant trends as “jewellery buying is such an individual choice nowadays because no one wants to wear what everyone else has got on”.
“For example you might have a couple of people who buy something significantly bigger and then you might have a run of people wanting multi-stone rings.” with white gold.
Barwick from Heirloom Jewellers concurs with Black that one carat is slowly becoming the benchmark for an engagement ring.
“A few years ago it was half a carat but it’s slowly shifted up and now the majority of customers that want a custom job are aiming for 1 carat,” he says, even though “they might end up with an 85 or 90 point.”
He concludes, that irrespective of trends in diamond size, quality and designs, people will “always want to buy diamonds”.
“An engagement ring is a necessity – it’s the one special ring that you hope you will only have to buy once in your life.”