Five forces shaping the future of the industry
June 03, 2014
Las Vegas--At a panel held Saturday during the Las Vegas jewelry shows, four panelists tackled five topics expected to have a major impact on the future of retail.
The session was an abbreviated take on a multi-part blog industry consultant Ben Janowski penned late last year in which he covered the top 10 trends for 2014.
It covered five of the 10 trends outlined by Janowski: lab-grown diamonds, the evolution of retail channels, the Millennial generation, experientialism and environmentalism, and the potential end of growth.
1. Lab-grown diamonds. The topic of a number of panels held in Las Vegas this year, lab-grown diamonds, also known as synthetics, are a growing issue for the industry.
On one hand, the man-made stones can provide consumers with access to colored diamond jewelry they otherwise could not afford, pieces set with blues and pinks that would be hundreds of thousands, if not millions, of dollars if they were set with natural diamonds.
Panelist Lita Asscher’s company, Royal Asscher of America, has a line of lab-grown colored diamond jewelry called Rebel Chique, which she said are being acquired as fashion jewelry pieces. “At this time, it’s not the bridal market, yet,” she said.
However, non-disclosure of lab grown diamonds remains a concern for retailers.
Panelist Abe Sherman, a second-generation retailer and CEO of Buyers Intelligence Group, or BIG, said when stories about lab-grown diamonds being sold as natural get into the press, it will cause problems for retailers, even though they are not the ones responsible for the synthetic-natural mixing in the supply pipeline.
“It becomes a credibility issue,” he said. “We have enough issues with the press taking us to the woodshed for things we haven’t done. It’s a major problem.”
2. The evolution of retail channels. The boom years of mall expansion that the United States experienced in the 1960s and 1970s has long since fizzled out and the number of independent retailers has shrunk.
Markets that once had 15 guild-level retailers now have three or four. But those stores that still are open are, in many cases, making more sales.
With this period of change, “there’s a period of opportunity,” Janowski said.
Panelist Brandee Dallow, who heads Rio Tinto’s U.S. representative office, encouraged retailers to embrace omni-channel retailing: selling both online and in store and allowing customers to move between the two freely; i.e., order online and pick up and return in the store.
Russell Shor, a senior industry analyst with the Gemological Institute of America, said retailers need to think about improving the in-store experience they are offering consumers, which, traditionally, has not been among the industry’s strengths.
3. The Millennials. This is the name given to the generation born between the early 1980s and the early 2000s, also known as Generation Y. There has been much conversation about how to best sell to this generation of opinionated and well-informed young adults.
Dallow said that telling stories is the best way to capture the Millennials, which is something Rio Tinto is doing. In addition to its “Diamonds with a Story” lines, the miner debuted the “Oculus Rift” at JCK Las Vegas, a virtual reality ride into one of its mines that is meant to engage consumers and help them understand how their stones got from mine to market.
She also said that in order to work with Millennials, retailers need to talk to them and understand what they want.
Sherman noted that Millennials are a generation of young adults who are getting engaged later in life and who don’t have as much financial security as their parents did. They are children of the recession and many are buried under mounds of college debt.
If retailers want to sell to Millennials, they better have diamond engagement rings starting at $1,499 or $1,999 in stock, he said.
4. Experientialism and environmentalism. Luxury is no longer about “stuff,” it is about stories that can be retold. In the future, consumer focus will be less about buying objects and more about having experiences, which is why retailers need to make their store an experience.
Janowski also noted that people’s concern about climate change and environmental shifts will have an effect on consumer mentality going forward.
If, for example, certain species of African wildlife are in danger of extinction, consumers may choose taking a trip to the continent to see these animals before they are gone over buying a diamond mined there.
5. The end of growth? No new, large chain stores are expected to launch any time soon and the middle class, at least in the United States, is in a state of dramatic decline.
The end of rapid growth and decline of widespread financial security in the United States raises an interesting question for jewelers: People will continue to accessorize, but with what? The type of jewelry sold by fine jewelry retailers or the trendy, and cheaper, accessories that can be purchased at stores like J. Crew and Forever 21?