As shoppers seek more personal contact and buy more online, many jewelry brands are bypassing wholesale in favor of direct-to-consumer sales.
When it comes to consumers, connection is key, and in recent years that connection has become increasingly direct. More and more jewelers are selling their own brands directly to shoppers – whether online or in their physical stores – rather than distributing their products wholesale through multi-brand retailers.
And people are buying. In 2021, about 60% of Americans shopped at a direct-to-consumer (DTC) brand, according to public relations firm Diffusion’s 2022 Direct-to-Consumer Shopping Intent Index. Although this number is down from 79% in 2020, it still represents a significant market share.
Additionally, branded fine jewelry is on an upward trajectory, according to the June 2021 State of Fashion report from luxury magazine The Business of Fashion and research firm McKinsey & Company. This report forecasts a compound annual growth rate of 8% to 12% from 2019 to 2025, which is about three times faster than the growth of the total market.
The figures highlight a trend in fine jewelry – and in fashion generally – to develop deep relationships with consumers, and the McKinsey report suggests that this trend will only grow: “Competition among jewelry brands from Established luxury, fashion brands and new direct-to-consumer businesses will heat up as players compete to win customers who turn to brands that reflect their distinct viewpoints.
The missing link
Of course, some brands have known this for years.
“We started with vintage and antiques, and we realized we were missing something,” says Elizabeth Doyle, co-founder of the New York jeweler. Doyle & Doyle, which opened in 1998. “We couldn’t get what our customers wanted.” She launched the Heirloom by Doyle & Doyle collection from her store in an effort to offer accessible prices. “We try to do vintage and antique in a way that feels new and fresh. We wanted our branded products to match that.
Brian Gavin, CEO of an eponymous online store and physical showroom in Houston, Texas, made the decision to launch a DTC line 13 years ago after parting ways with his former online company, WhiteFlash. The fifth-generation diamond cutter drew on his family’s years of experience in the jewelry business to create his new brand. “There’s a huge story here,” he says. “De Beers has history, and we claim history too, especially in a market like this where there is so much choice. Consumers know our history and our company.
Yet until fairly recently, small businesses like Doyle’s and Gavin’s had to rely on retail partnerships to build relationships between them and consumers.
“For the past 20 years, only powerful brands could speak directly to the consumer,” says Marie Driscoll, managing director of luxury and fashion at the consultancy Coresight Research, specializing in retail and technology. “Part of the advantage of being in a department store has been discovered. You can now be discovered online or in hotel lobbies, and there are plenty of digital native brands out there. Consumers use online to shop and are comfortable with the discovery there. »
Connect to the web
The pandemic has further accelerated the shift to online shopping, Driscoll notes. “[Brick-and-mortar] stores were closed, and even when they reopened there was social distancing. Stores like Tiffany & Co. are great [spaces], but many stores aren’t, so you don’t necessarily feel safe there.” In addition, she says, “there is [digital] advance where you can virtually try things out and you can work one-on-one.
Capitalizing on digital connections has allowed many small businesses to compete online.
“People are so much more comfortable buying products they’ve never seen,” Doyle says. “Virtual dates have become a thing, and people have loved them. It has expanded our customer base dramatically. Today, the majority of our customers are non-New Yorkers. And sales on the site have exploded. Our branded merchandise has grown even more than our vintage, as we have more of our branded inventory at lower prices and we have more items to give away.
Gavin, too, credits the Web for expanding his customer base.
“People see us as a brand, not a store,” he says. “I think with a store, you serve customers in a certain area. The Internet medium has allowed us to build a brand.
Overall, online diamond jewelry sales have statistically doubled over the past four years, according to Mike Simoncic, chief executive of Alvarez & Marsal Consumer Retail Group. This bodes well for fine jewelry brands considering a DTC move.
“Clearly the pandemic has caused everyone to buy more online, but it has mostly continued in jewelry,” he says. “And consumers do a significant amount of research online before going to a store.”
finger on the pulse
Being able to identify specific consumer needs and quickly pivot to meet them keeps DTC brands nimble, says Driscoll. “Direct-to-consumer brands have a relationship with the consumer. They get immediate feedback and know who their customer is. They see what consumers are buying and what they are looking for.
Indeed, Doyle does all his marketing through social media and says customer interactions help him build his brand. “It’s a continuous feedback loop. They tell us what they like and we learn.
Buyer relationships with multi-brand stores are different, observes Driscoll. “A shopper in a department store has a lot of variety and assortment, but a lot of it doesn’t sell.”
In that vein, Simoncic thinks the decision to go with DTC should be demand-driven. “The ultimate question is, does a brand have the power to drive traffic to your store?” he says. “The retail trade acted as a trusted advisor and intermediary between the consumer and the product. But the digital environment replaces or augments the need for this, and the role that retailers play is really not needed to the same degree, now that the producer of the product can share directly with the consumer [and] obtain the product directly from the manufacturer.
For many consumers and brands, it also comes down to value, he adds. “By removing the intermediate markup, the manufacturer can obtain a higher markup. The consumer experience is that they get more for their money.
calling the shots
Another big benefit for brands is the control DTC gives them, Doyle says. Having its own range of consumers means it can determine its message, price and market saturation.
“The last year we wholesaled was 2013,” she recalls. “To tell the truth, we’ve never really tried. It’s a lot of work that we prefer to spend on our core business. Now his brand produces deliberately in small batches. “The supply is limited. won’t see it anywhere else. And I can control the prices.
Still, keeping prices stable is a challenge. “We try to keep prices really fair, so sometimes profit is tight,” admits Doyle. “We don’t want our prices to fluctuate. We do not have sales and do not change our prices.
Gavin is less concerned about price, but agrees the wholesale wasn’t worth it. “We used to sell wholesale in the past, but now we are the only place [that sells our jewelry],” he says.
Of course, being solely responsible for your brand comes with other complexities. “You have to fund it yourself, and you have to control it and make sure the brand message is still targeted,” he explains. “Will everyone pay the price we are asking? No. But not everyone buys a Porsche. We are for diamond geeks, diamond enthusiasts who want that perfection.
Moving with the times: Anna Sheffield
Anna Sheffield launched her costume jewelery line, Bing Bang, 20 years ago, “when I graduated from art school”, she recalls. “It was my first rodeo. Back then, you hadn’t created a brand and opened a store. You’ve built an alliance with a retailer like Barneys.
When she launched her first website in 2008, retail was turbulent and her sales suffered. “A lot of big stores were closing. I saw Bing Bang go from high volume to something else.
So she decided to move her company’s infrastructure. “We went from wholesale to a website,” she says. When she then launched the Ceremonial collection of her eponymous new fine jewelry brand, “it was all about direct-to-consumer sales.”
Being independent is sometimes difficult, she admits. “My scale and pace of growth is specific to my budget. I have to choose my battles, even with manufacturing. We need marketing, visual merchandising, and inventory. And human resources are such an important part of that.
Still, even the bumps along the way were educational. For example, his web developer accidentally posted the address of his private showroom online. “People started showing up,” she laughs. “But at least it showed the demand. It was the seed for me to open a brick and mortar store [in New York].” She has since opened another store in Los Angeles and held pop-up events across the country.
Sheffield aims to cultivate more high-end customers. Some of her clients are “really willing to invest” in expensive pieces, she says, “and I want to make jaw-dropping jewelry.” She also focuses on sustainability and community building through her Future Heritage Fund, which supports nonprofit organizations in New Mexico.
His best advice is not to take too much advice. “If people tell you what to do, take it with a grain of salt. Do what feels right, even if you fail. I’ve had entire collections I’ve been dying to do that haven’t flown. Sometimes you find yourself completely off the map, but I love it. I think I strive for it. I love being in this space, being in this no man’s land.
Images from left to right: Elizabeth and Pamela Doyle; Brian Gavin; Anna Sheffield
Article from Rapaport Magazine – April 2022. To subscribe click here.