Jewelers Retailing 101 – How to Stay Competitive and Maximize Profits

Amid all the economic uncertainty this year — bank failures, a possible recession, higher interest rates, inflation and a slow-to-recover post-pandemic recovery — jewelry retailers have been especially bracing for a reckoning. For the most part, this has proven to be a false alarm, as fine jewelry sales continue to climb for independent jewelers who focus on selling unique designs and heirloom pieces.

As such, a successful jeweler must be mindful of pricing to remain competitive while maximizing profit margins. There are many factors that go into setting a price strategy, including the cost of materials, labor and overhead expenses, and these vary by brand and business structure. The biggest factor in this equation is the cost to produce the jewelry, which can be a variable number based on the business model and relationships with the manufacturer.

For example, a smaller independent store that produces their own jewelry can be more competitive on prices due to economies of scale and purchasing power. Large retail chains like Kay and Signet, on the other hand, must pay a premium to purchase diamonds at wholesale prices from large gem labs. These costs are reflected in the retail prices of their pieces, which tend to be higher than what an independent jeweler would sell them for.

Another key to profitability is diversification. A jeweler must also offer a wide variety of products and services in order to meet the needs of its clients, which is why it’s so important for them to partner with reputable manufacturers, offer quality goods and service and be honest about pricing and value. This will help the client to shop with confidence, knowing that they are being treated fairly and honestly.

This is especially true when it comes to pre-owned and vintage jewelry, as there is much more that goes into reselling than meets the eye. For instance, an open heart necklace from Kay Jewelers — which sells thousands of these every year — might seem like a great deal on paper, but when you look closer, the product is not as good as one you’d find at a local boutique jeweler with better prices.

In addition to being more transparent, independent jewelers often carry a sense of pride in their work that makes them stand out from the national chain competition. They will be more than happy to help a client find what they love, whether it’s a rare vintage diamond from the 1940s or a beautiful non-traditional piece that captures their shared tastes as a couple. This is in stark contrast to the national chain that focuses on mass-producing branded rings to make their corporate profits.

When shopping for a ring, it is incredibly important to remember that the most valuable jewelry is often the most personal and meaningful. Whether it’s an engagement ring that symbolizes the beginning of a lifetime together or a bespoke piece made from the stones of a deceased loved one, each and every piece of jewelry is deeply personal. That’s why it is so important to work with an independent jeweler who will be able to help you find exactly what you are looking for.