Columnists

Squirrel Spotting: Growing Your Business When Unit Sales Peak

ColumnistsMay 31, 2022

Squirrel Spotting: Growing Your Business When Unit Sales Peak

Discount less and sell more expensive products, Peter Smith writes.

Peter Smith is an industry consultant, speaker, sales trainer, and author. He can be reached via email at TheRetailSmiths@gmail.com.
Dan Ariely, the author of “Predictably Irrational,” one of the seminal books on psychology, wrote, “If we see a discounted item, we will instinctively assume its quality is less than that of a full-price item—and then, in fact, we will make it so.”

The psychology of pricing is no easy matter.

In many respects, we see what we want to see, and, absent the safety of company prohibitions, our actions are often the result of personal biases, effected with little consideration for the overall health of the business or the longer-term benefits to customers; pricing becomes nothing more than a baseline for discussion, even as that discussion is often a catalyst for customer anxiety.

Price ambiguity can, at its worst, be a descent into the abyss of unprofitability.

Accepting the profound impact that pricing has on profitability, and, consequently, the health of a business, one would expect a good deal more discussion on the subject, as a moral issue, as a practical matter, and from the perspective of consumer psychology. 

With the amazing run we are seeing with jewelry and timepiece sales these past couple of years, it would be easy to ignore the impact of discounting and pricing decisions in general. However, there are signs now emerging that should signal a note of caution for the near future.

The biggest of those signs is a flattening of unit sales with independent retail jewelry stores.

 Related stories will be right here … 

March’s decline of 1 percent and April’s decline of 2 percent might not yet trigger fire alarms, but they are import indicators as unit sales have long served as a proxy for foot traffic. Put simply, foot traffic has likely begun to recede from the heady days of late 2020 and 2021. 

If you plan on growing your business in an environment with fewer people coming through your door, and fewer units of sales, you must explore strategies to increase your average ticket. 

There are effectively two ways to do that. 

The first is to stop discounting, or at least discount less, and the second is to sell more expensive products. 

In a prominent case on price perception, researchers from Stanford and California’s Institute of Technology tested wines on students while measuring their brains on fMRI technology. 

Without telling the students, the researchers presented the same wine twice. Once, telling the students that the wine was a reasonably priced variety. The second time, telling the students that the wine was a very expensive type.

The reaction of the students was to point to the most expensive wine (again, the exact same wine they had tasted earlier believing it to be a lower price) as the most enjoyable. 

However, rather than arriving at their assessment of the “expensive wine” because they believed they ought to prefer the expensive wine (who among us wants to admit we can’t tell the difference between ordinary and extraordinary wine?), what the researchers discovered was something they had not expected. 

“If you plan on growing your business in an environment with fewer people coming through your door, and fewer units of sales, you must explore strategies to increase your average ticket.”

When the expensive wine was presented and the students were told it was the expensive wine, there was a flurry of activity in their medial orbitofrontal cortices not witnessed when they believed they were drinking the lesser priced wine. That’s the area of the brain where we perceive pleasantness. 

In short, telling the students that it was a higher-priced product actually changed their neurology and improved their enjoyment of the wine. 

Roger Dooley wrote in his book “Brainfluence: 100 Ways to Persuade and Convince Consumers With Neuromarketing” that, “What the research shows is that what customers believe about a product can turn into reality; if they believe a product is better, it will be better.”

This is probably as good a time as any to remind ourselves that we can’t make a silk purse from a sow’s ear. I’ve never seen any research to support the idea that taking a poorly constructed piece of jewelry and marking it up to pretend it is something else is ever a good long-term strategy. 

What customers want more than anything else is to come away from their shopping experience feeling good about what they purchased. They don’t want to harbor regrets about whether they bought the right thing or not and, provided the quality is good and as stated, they actually feel better when they pay more for a product. They assume that the premium priced product is a better quality. 

You may believe your customers want the lowest price. Your salespeople may be primed to negotiate and make a deal with every diamond conversation. You may even believe that you are doing your customer a favor by discounting your products or by under-selling the customer. 

But you would be far better articulating the real value proposition of your products. Understand what customers really want and inspire them to reach and extend themselves to acquire the best products they can. That, ultimately, is the best deliverable. 

You might even include a nice bottle of wine.
Peter Smithis an industry consultant, speaker, and sales trainer, and author of three books, “Hiring Squirrels,” “Sell Something,” and “The Sales Minute.”

The Latest

AuctionsNov 23, 2022
This Sapphire Tiara Once Owned by a Danish Princess Is Going to Auction

The Dec. 1 jewelry sale at Bonhams-owned Bruun Rasmussen will have several other pieces of royal jewelry on the block.

FinancialsNov 23, 2022
Movado Lowers Guidance Amid ‘Uncertain’ Retail Environment

Its Q3 sales dipped as inflation took its toll on shoppers in the U.S. and Europe.

MajorsNov 23, 2022
De Beers Jewellers Is Popping Up in Connecticut

The temporary store is the result of a collaboration with Betteridge.

Brought to you by
Knowledge and Skills for Today’s Hot Topics

From laboratory-grown diamonds to design to country-of-origin, GIA's Alumni Collective™ has a seminar to suite your needs.

CollectionsNov 23, 2022
Piece of the Week: Rembrandt’s Turkey Charm

Charm fans will gobble up this festive “Piece of the Week” pick.

Weekly QuizNov 18, 2022
This Week’s Quiz
Test your knowledge of the latest jewelry news with this quick test.
Take the Quiz
AuctionsNov 22, 2022
Jewelry Recovered from Sunken ‘Ship of Gold’ Heads to Auction

The S.S. Central America sank in 1857 off the coast of South Carolina, carrying tons of gold from the California Gold Rush.

IndependentsNov 22, 2022
See the Greek Jewels Going to Auction for Charity

Several Greek jewelry designers have donated pieces to the annual Hellenic Initiative silent auction.

Brought to you by
Diamond Shoppers’ 2022 Holiday Wish List

Give your customers the best diamond buying experience this holiday season.

Events & AwardsNov 22, 2022
Hodinkee to Receive Gem Award for Watch Excellence

Plus, see this year’s list of nominees for the Jewelry Design, Media Excellence, and Retail Excellence awards.

SourcingNov 22, 2022
Head of Australian Miner Burgundy Diamond Resigns

The company announced the resignation of Peter Ravenscroft late last week, effective immediately.

SourcingNov 21, 2022
Provenance Proof Launches Online Marketplace for Traceable Gems

Debuting today, it is open to Provenance Proof blockchain users.

TechnologyNov 21, 2022
Version 2.0 of the NDC’s ‘Assure’ Directory Is Now Live

Assure is the program the Natural Diamond Council launched in 2019 to test lab-grown diamond screening devices.

MajorsNov 21, 2022
JK Findings Acquires Intercept Silver & Jewelry Care

Intercept Silver & Jewelry Care distributes anti-corrosion and anti-tarnish products.

MajorsNov 21, 2022
David Yurman Just Opened a Palm Beach Outpost

It’s located on famed shopping street Worth Avenue.

EditorsNov 18, 2022
9 of My Favorite Pieces from the AGTA Spectrum Awards Editors’ Day

Senior Editor Brecken Branstrator’s highlights include a chrome tourmaline ring, a giant opal necklace, and an American mined stone.

CrimeNov 18, 2022
Jewelry Store Security Guard Killed in Armed Robbery

Police in Calumet City, Illinois are looking for several suspects involved in the robbery of a jewelry store in the River Oaks Mall.

MajorsNov 18, 2022
AGS Adds Sumit Dangi to Board of Directors

Dangi is global chief financial officer and treasurer at Jewelers Mutual Group.

CollectionsNov 18, 2022
Piece of the Week: Tabayer’s ‘Oera’ Pendant

The brand’s signature shape is rendered in an autumn-appropriate color palette.

GradingNov 17, 2022
GIA Labs Report Receiving 2 Moissanites Submitted as Diamonds

The discoveries were outlined in the Lab Notes section of the fall 2022 issue of Gems & Gemology.

MajorsNov 17, 2022
Boucheron’s Magical Holiday Campaign Has Landed

“Boucheron Wonderland” showcases best-selling styles, high jewelry, and some familiar faces.

MajorsNov 17, 2022
At eBay’s New Pop-Up, Pre-Owned Luxury Goods Are Currency

The temporary space in New York’s Diamond District lets shoppers trade in one authenticated luxury item for another.

SourcingNov 17, 2022
De Beers’ Oct/Nov Rough Sales Total $450M

As in September, the company’s sales were up slightly year-over-year but down month-to-month.

GradingNov 17, 2022
Professor of Artificial Intelligence Among Additions to GIA Board of Governors

Lake Dai, who teaches at Carnegie Mellon University, joins the board alongside Rosy Blue Managing Director Russell Mehta.

AuctionsNov 16, 2022
One More Big Pink Diamond Heads to Auction, With $35M Price Tag

It follows a few other notable fancy color diamonds at auction this fall, with mixed results.

CollectionsNov 16, 2022
There’s a New Jewelry Destination in Greenwich, Conn.

Serpentine Jewels has branched out from its private jeweler beginnings to a ready-to-wear collection and a Connecticut townhouse.

WatchesNov 16, 2022
Rolex Names New Group President

A filing made in Switzerland shows Nicolas Brünschwig now holds the top position at one of the most popular brands in the world.

Events & AwardsNov 16, 2022
These Pearl Jewels Won the 2022 CPAA Design Competition

The Cultured Pearl Association of America held its 13th annual International Pearl Design Competition this fall.

×

This site uses cookies to give you the best online experience. By continuing to use & browse this site, we assume you agree to our Privacy Policy