The Official Magazine of The Independent Jeweler • Volume 6, Issue 2 • March/April 2015 Goldstein Diamonds Page 34 Breuning Anzie Page 35 Page 35 TABLE OF CONTENTS MARCH/APRIL 2015 8 Blue Nile Says Hello To Regular Retail By Frank Dallahan 34 10 How Was 2014 For You? By David Brown 14 Never Bet On A Sure Thing By John Politi 18 Redefine Your Business By Jackie LeBental Insurance 101: What Coverage Do You Need 24 To Protect Your Business? By David Sexton 28 The Top 5 Mistakes of 2014 By Arthur Klein 35 30 How Can You Get #1 Ranking on Google? By Matthew A. Perosi 34 The Style Page May Is Emerald Month: Now’s The Time To Plan 35 36 And Promote The Idea! By Ed Coyne 40 New and Noteworthy 46 Look Book By Jackie LeBental 62 Advertiser’s Index 65 Jewelers in The News COVER COURTESY OF AGTA: Ming-Na Wen, actress Produced and Styled by Tod Hallman for Ivy Eleven; Photographer Andrew Macpherson for Copious Management; Makeup Julianne Kay, for Cloutier Remix; Hair Steven Lewis for Exclusive Artists; Manicurist Tracey Sutter for Ivy Eleven; Dress: Romona Keveza - ruched emerald green cocktail dress Earrings: Erica Courtney, Erica Courtney, Inc. - 18K yellow gold “Milky Way” earrings featuring Opal drops (46.06 ctw.) accented with diamonds (1.98 ctw.) and paraiba tourmalines (2.03 ctw.). Ring: Ryan Roberts, Ryan Roberts, Ltd. - 18K yellow gold ring featuring a 11.25 ct. chrysocolla accented with tsavorite garnets (.56 ctw.) and diamonds (.62 ctw.). Necklace: Robert Pelliccia, J.R. Dunn Jewelers - 18K yellow gold pendant featuring opal accented with paraiba tourmalines (1.02 ctw.), aquamarines (.48 ctw.), tanzanites (1.09 ctw.), sapphires (.21 ctw.) and diamonds (1.13 ctw.). Pendant: Daniel Allen, C. Kirk Root Designs - 18K tricolor gold “Fire Fly” brooch featuring a 15.30 ct. opal. 150 River Rd., Ste O-4 Montville, NJ 07045 Publishers: Andrew Kohler 973-263-2498 ext 18 • [email protected] Get Real Time Metal Prices, News, and Updates Edward Coyne 908-637-8461 • [email protected] every day at www.TheRetailJeweler.com Frank Dallahan 267-229-2475 • [email protected] The Retail Jeweler™ is published eight times per year January/February, March/April, May, June, July/August, September, October and, November/ December by TRJ Publishing, LLC. 150 River Road, Ste O-4, Montville, NJ 07045. TRJ Publishing LLC is not responsible for errors, omissions or typographical errors. Advertisers are solely responsible for the content and accuracy of their advertising. © Copyright 20103 TRJ Publishing LLC All Designed, Produced and Rights Reserved. Subscriptions: $4 per copy; $32 per year. Printed in the USA 6 The Jewelry Business Magazine ORGANIZATION Blue Nile Says Hello To Regular Retail By Frank Dallahan Recently, National Jeweler on-line reported “Blue Nile Goes cutting margins and thereby offered consumers “a good deal.” Brick and Mortar.” The story by Michelle Graff stated: “Blue Nile Blue Nile, to their credit, provided solid information to consumers decided to discontinue its test programs with Nordstrom’s where and did a good job in the education arena. Of course, the they operated in two Nordstrom’s locations.” The new direction Rappaport Report and grading reports added to the ease with by Blue Nile was described as “opening a stand-alone showcase which Blue Nile effectively communicates persuasive information store in one of the country’s top malls.” to the consumer. And, on the face of it, today’s Internet savvy consumer is able to gather all sorts of information on how to There is no question that the Internet has opened a whole brave evaluate the different quality elements of a diamond. Added to new world of opportunity and risk for sellers of jewelry at the the perception by the consumer that jewelry carries extraordinarily retail and wholesale levels. Blue Nile is a classic example of an high margins make these consumers ripe for the logic and the entrepreneur’s idea that took root and blossomed into a profitable ego gratification that comes from an important purchase like a multi-million dollar enterprise. As seen below, $473 million in diamond engagement ring. revenues is a significant number and represents predominantly engagement products. Note however, that 2014 results represent The reality is Blue Nile, as it moves into the regular retail channel, 53 weeks and 2013 represents 52 weeks of operating results. now faces the real challenge of competing with effective, persuasive Comparing apples with apples (52 weeks in 2014 versus 52 weeks individuals at other retail stores who have knowledge, experience, in 2013) would present a somewhat different performance picture. and professional credentials as well as the proven ability to relate to the retail consumer. Establishing rapport, answering questions, 2014* 2013** Variance providing insight when a consumer is considering a purchase Revenues ($millions) $473,516 $450,008 +5.2% and is looking at several diamonds are key factors why strong independent retail jewelers continue to compete effectively with Gross Profit $86,642 $83,651 +3.5% Internet sellers of engagement rings. ($millions) SG&A ($millions) $72,430 $69,343 +4.4% It is a fact of business life that as an enterprise moves up the Operating Income $14,212 $14,308 -.0.7% channel of distribution to acquire a diamond mine for example, or (4 Millions) down the channel of distribution as Blue Nile apparently is doing *53 weeks results now as it makes its foray into regular retail, must of necessity ** 52 weeks results assume the costs of that particular business entity. These include Source: Blue Nile Fourth Quarter and Full Year 2014 Financial Results rent, compensation for staff, promotion and managerial oversight 2/10/15. not to mention the necessary investments in inventory, displays, and training. These will require pricing adjustments in the product There is no question that Blue Nile, in taking advantage of the if profit margins are to be maintained. Internet space, has placed additional pressure on independent retail jewelers with pricing that reflects substantially lower margins There is one additional fact of regular retail life that will be than the retail jeweler typically wants and needs because diamond interesting to see play out. The question of collecting local sales jewelry, historically, represents roughly half of a retail jeweler’s taxes will become an issue. The blurring lines of regular retail business. There is no question that retail jewelers have had versus Internet retail will have to be answered. Will this new mall difficulty in developing effective tactics to combat this Blue Nile effort require the collection of taxes just from the store sales? Or, challenge. And now, we have Blue Nile entering the traditional will some enterprising stste attorney general call into question retail location: the mall. It is interesting to think about why they are sales tax all Blue Nile’s sales. making this move. Perhaps it may be that growing the business has become more difficult and the corporation is looking to a Blue Nile has operated with the tremendous advantage of one combination of bricks and mortar along with Internet selling is a central location, ease of the selling process, and quick deliveries more attractive model. to the consumer. All this may well change as the corporation moves into regular retail. I think it is very interesting Blue Nile is moving toward an actual retail location in a mall, following on the heels of what is apparently an unsatisfactory test in two Nordstrom’s stores and a less than stellar performance in 2014. Blue Nile obviously is looking to grow their Frank Dallahan business and thus this new effort of exploring the retail option. What is interesting is the fact that Blue Nile began operations with co-publisher of The Retail Jeweler the notion that typical retail stores were simply high margin sellers Email [email protected] of product that could be successfully attacked by cutting price and 8 The Jewelry Business Magazine CONTROL How Was 2014 For You? By David Brown By now, December will start to feel like a distant memory and YOUR MARKETING: you will be back into the day to day trench warfare of running • What worked and what didn’t? your business. Did you set any New Year’s resolutions? If so • Did you spend what you intended? how are they going so far? • What medium worked best? • What will you repeat and what will you drop? Like most people you may not have even done the exercise. However, not knowing what the purpose is behind your YOUR FINANCES: activities and why you are in business is no excuse – regardless • Did you have a sales budget each day and how did you of what time of year it is you need to think about why you do perform? what you do. Your personal goals provide the motivation and • How was your cash-flow in January … and how is it now? direction for your business goals. Business goals tend to be more task oriented, but when you see your business or career YOUR SELF MANAGEMENT: as a tool to help you achieve the lifestyle you really want it • Did you keep a daily log book of what worked and what didn’t? takes on a different perspective. • Did you work smart or hard? • Did you delegate effectively? Time to reflect • Were you well planned and relaxed or did you wing it and If you have taken time to reflect on 2014, you have stress? pondered the passing of another year and vowed that the year ahead will be different. It is the perfect time to reassess the past YOUR ORGANIZATION & MANAGEMENT SYSTEMS: year and determine what has been successful and what hasn’t.