Gold From Mars Silver From Venus
Cue the Trumpets. Sterling silver jewelry is hereby recognized as a viable and dynamic jewelry category by the “Main-Street” jewelry storeowner. Just ask National Jeweler Magazine.
Wait a minute, there’s an illogic here. Numerous jewelry retail channels have already recognized silver jewelry for what it is; beautiful, creative and especially profitable.
Take Tiffany & Co., for example. Over the years, Tiffany has become a retail channel by itself. Their skilled management team pioneered silver styling, (i.e. remember the 3-pronged Tiffany setting), merchandising, branding, (i.e. Elsa Peretti, Paloma Picasso) and pricing. Silver jewelry has become a strong – if not major -- part of their product mix. How big a part is, of course, a carefully guarded trade secret? They’ve been doing their silver jewelry homework for decades.
Take major department stores, for example. Silver jewelry has become a department store staple. Just check Macy’s, (Judith Jack’s Victorian silver jewelry ‘look’), or check other department stores for popular designer brands. Silver jewelry has become an important showcase profit center.
Take the big TV shopping networks, OVC and HSN, for example. They both have a wonderful eye for combining semi-precious stones, (Malaysian Jade, Lapis Lazuli, Charoite, Blue Lace Agate, the list is endless), with silver. Some stones are even hand carved.
Ritani, a QVC regular known for 18-karat and platinum designs, has just introduced a silver jewelry collection with simulated diamonds. HSN has been selling silver jewelry almost since it’s been in business.
Take the direct sales, or shop-at-home, retail channel, for example. Several companies, selling silver jewelry in the consumer’s living room, have combined sales of an estimated $154 million, (The sales leader is Silpada Designs but new players, like Inspiranza Design and Morgan Dane Designs are not far behind.)
In case you haven’t heard of the shop-at-home channel, also called the Party Plan Channel made famous by Tupperware and Avon, has combined (books, soap, ladies underwear, and such) sales easily totaling $30 billion, (2007, DSA estimate).
And then there are all the miscellaneous silver jewelry importers found on urban streets, (if not street corners) and mall/airport-based silver jewelry kiosks (Tasco Silver is well known), found in most malls and airports. It would take a magician to unravel the sales volume of this channel but is easily in the millions of dollars.
Where did I find all this information, you ask. For almost seven years, I owned a very successful silver jewelry brand. (I sold it a couple of years ago.) I designed and then imported the brand from Hong Kong, India, China, Thailand, Italy, Indonesia, Mexico, Africa and Canada. After all this time, I’ve acquired an understanding of silver jewelry marketing, sourcing, merchandising and pricing.
Dare I say it? I’ve developed a strong bias to silver jewelry.
To be fair, I also owned a large karat gold jewelry manufacturer before it ran into the rather unpleasant Reagan recession – as it were. There were no stimulus packages those days.
I thought it might be interesting to look under the hood and compare the retailing of karat gold jewelry to the retailing of silver jewelry. Some of the contrasts may surprise you. Which brings us to another point: these are my opinions and experiences. I give you the right to disagree with any of them.
Target Customer:
Karat Gold Jewelry: With the price of gold now approaching $1,300 an oz. the gold component has a major affect on retail price. Obviously, the target customer is an, um, older lady with a higher disposable income.
Sterling Silver Jewelry: It’s no surprises that silver jewelry appeals, in general terms, to the younger consumer. Just walk into a high school or attend a wedding party, (chain link bracelet, disk dangle, silver neck chain anyone?), and it’s obvious silver jewelry is a staple.
There are exceptions, of course. On occasion, a special silver jewelry brand bridges the gap between target consumers. Kalim Jewelry Designs comes to mind.
Pricing:
Gold: Since the price of gold has increased the cost of 10k, 14k, 18k jewelry, margins have to be constrained or retail prices will hurt sales. Keystone is the margin here. Obviously, design is important here since there is a need to limit gold content.
Silver: Although the cost of silver has also run up, (silver is now $17 an oz.), it is still inexpensive enough to allow for larger and creative designs. Generally, there is ‘room’ to allow designs to ‘carry’ the larger, beautiful semi precious stones. Margins can still be as high as 4-5x manufacturers’ cost.
In-Store Selling:
Gold: Briefly, and in general terms, the customer’s purchase of a gold item can be a hand wringing, time consuming and emotion filled experience. (Uncle Harry where are you?) Whether its price, gold or concept related, the consumer’s decision-making process is profound.
Silver: In general terms, the consumer’s purchase of a silver design is, usually, on impulse. Gone are the days of wondering if a silver bracelet will turn a wrist green or if an earring will make you sick. Silver manufacturers have solved these problems through improved alloys and product plating.
One last thought. It should only be a matter of time, before watch companies offer silver watches.
