Our first day in Bali was nothing more that a paid vacation. It was finally time to get to work. Susan took out a raft of computer generated sales, profit, style/type reports. She had done her homework.

Like many jewelry buyers, she was under the gun — so to speak. It was time for her to apply her taste, design knowledge, manufacturing know-how, cost breakdown, experience, negotiating skill, financial knowledge, you get the idea. Her work could spell the success or failure of my jewelry store’s season.

Concentration was key. She had to analyze each design, its cost, markup, quality, customer tastes and who knows what else. She asked me – I was just an observer – not to talk or banter with the owner or flirt with the pretty assistants. Hummphhh.

• She knew what styles and price-points our customers preferred.

• She knew what kind of designs, (basic, fancy, ornate, etc.), our customers bought.

She had to analyze each design, its cost, markup, quality, customer tastes and who knows what else

• She knew what margins, (at least keystone), we had budgeted for the season. Susan would look at each style she had ‘pre-selected’, (these were put in a special tray), and once she went through their entire line, she would ‘review’ the pre-selected tray to be sure each design could ‘carry’ the necessary retail price. If it couldn’t it was returned to the cart.

• Known for its special designs, (she had done her homework here too), she selected styles that had the Bali ‘look’. There was no point in selecting styles that could be bought in other parts of the world — or even in the US. We were, after all, trying to differentiate our store from the competition.

Bali styling was indeed unique. Whether due to the island being remote, the silver jewelry artisans having special skills or who knows what, Bali jewelry had two special features.

The first was Bali’s hand made rope/chain look. Highly labor intensive, (machine made rope/chain jewelry looks like, well, machine made jewelry), the man made designs were beautiful and unique to Bali.

The Bali artisans were also skilled at carving faces and animals on small semi-precious stones. These faces were then set in silver creating beautiful pendants and brooches. Almost one-of-a-kind works of art.

When Susan finished, she would total up the cost of her selection. Since she had budgeted a certain dollar amount for each of the four factories we planned on visiting, she could add a few pieces to the tray or take a few out.

The buying process, however, was far from over.

To Be Continued……

As you probably know, Bali is arguably the most beautiful spot on earth – considered the Australian Riviera. James Mitchner wrote South Pacific with the island in mind. “No wonder you want to go,” the buyer told me.

Bali is arguably the most beautiful spot on earth – considered the Australian Riviera. James Mitchner wrote South Pacific with the island in mind.

The flight, via Hong Kong, lasted 20 hours. When we arrived at the Bali International Airport, we adjusted to the slow customs check-in. (What’s a computer?) Hurry up and wait, (we’re from New York after all). But we had no choice

Other than that, the airport was bedlam — Bali’s definition of organization. We kept our eyes open and hoped for the best. Exhausting.

We selected a taxi – or rather a taxi selected us – and left for the hotel. Our agent-guide-translator would meet us there. The taxi ride was educational.

• Kites filled the clear blue sky. Kite flying is Bali’s national pastime.
• Huge, ornate, carved statues guard many street corners.
• There is no speed limit. We arrived at the hotel shaking and in one piece
• The men are handsome, the woman beautiful
• With an abundance of teak, inexpensive labor and cheap land, hotels were all on one level and gorgeous. Never seen any hotel like them.
• There were lots of Australians.
• One negative. While we were leaving, Al-Qaida blew up a local bar. The island is mostly Muslim.
• Everything, (trinkets, furniture, souvenirs) is teak. Given enough time, (a few days) they will carve anything to your specifications.

We arrived at the first factory early the next day. The rifle toting guard/sentry, after opening the barbed wire-topped gate, let us in. Inside was a bustling compound – a fort of sorts. Much of the factory labor was done outdoors.

We were led inside to a long dark showroom. Everything Teak.

The  Australian owner introduced himself and his two attractive female assistants. The assistants wore typical wrap-around sarongs and spoke no English.

They brought out the trays of silver samples…..We began to work.…..

To be continued…..

There’s more. Goldman Sachs predicts that by 2050, China will most likely have the largest economy in the world, followed by the US and Japan. Even more remarkable, by 2050 China, and its manufacturing partner Japan, will be the world’s dominant supplier of manufactured goods and services.

Here are some examples of the Chinese appetite for silver jewelry: The Chinese economy will grow by 10.1%, compared to an estimated 3% in the US. The Chinese consumer will have plenty of disposable income thanks to the Chinese government’s economic policies.

Jewelry Industry leaders seem to agree and are scrambling to get a foothold. The International Colored Gemstone Association, (ICA), is developing colored stone promotions in China. Not to be undone, the Indian diamond manufacturing association is opening offices in China.

Even non-jewelry companies are going great guns. GM, struggling in the US, had a 2007 sales increase of 35%. China is one of McDonald’s fastest growing markets. Wall Mart is scheduled to open 100 stores in 2010.

It doesn’t take a crystal ball to see the future market opportunity for the silver jeweler, or for any luxury product for that matter. China offers remarkable growth, not unlike the US economy did in the late 50’s and 60’s.

Warning: Silver jewelers that don’t take a vigorous approach to China will face a threat to their very long-term existence. But, how can the uninitiated independent jeweler navigate the bumpy Chinese landscape? What quick and reasonably efficient marketing/sales defensive strategies can the silver jeweler develop? There are many and here are just a few.

“Warning: Silver jewelers that don’t take a vigorous approach to China could face a threat to their…. existance.”

• Web Site. As a first step — a start — one of the easiest and least expensive is to design a web site that appeals to both US, and Chinese, consumers. Have the site translatable to English and both the Mandarin and Cantonese languages. (These ‘Translation’ programs are readily available.) Don’t forget to use a credit card that accepts the yuan.

• Joint Venture. Through any number of Chinese trade associations, (HKTDC, China Trade Center, many others) contact a trade representative (via local call or email) and ask her to put you in contact with a Chinese-based retailer for possible alliance or joint venture. Be sure to do your homework and carefully outline the type, size, region, language and product mix of the potential partner.

• Jewelry Industry Buying Group. Like many diamond and colored stone associations, open a Jewelry Industry Buying Group Office in China or Hong Kong may lead to both sourcing and marketing opportunities, not to mention market intelligence. One US-based Buying Organization has already started the process.

• Attend Chinese Jewelry Trade Shows. Several Chinese jewelry trade associations hold at least seven shows in major Chinese cities annually, (My favorite is the Hong Kong jewelry exhibition). Attending one of these shows may lead to contacts and alliances.

Finally, doing business in China is no longer an exercise in clashing cultures. In reality, working in China is more like doing business in the US than in Japan. Here are a few pointers – a primer of sorts — of doing business in China.

• Chinese politics and politicians are less corrupt than the old days. Technocrats who are smart and well trained now run the government.

• Chinese consumers love foreign brands (including silver jewelry brands), but when it comes to digital technology they still prefer the local variety that caters to local tastes. This was an expensive lesson for Google.cn

• China is diverse, decentralized and fractured. Local retail development means local opportunity – not national. There are few large retail companies so think local joint ventures.

• Lawyers and accountants are required. Since the 1980’s a cottage industry has developed of ‘selling’ relationships. This is an outdated concept no longer needed.

Now that you have embraced the internet, accepted modern marketing and is comfortable with merchandising concepts, it’s time to look east and adjust to an eastern culture.

China offers an important long-term growth opportunity with implication on your long-term future. Developing business relationships in China could be an interesting and enjoyable personal experience. Pack your bags.

This represents a 17-percentage-point increase in penetration over 2000. An even higher percentage would have made such purchases had they more spending money and access to a credit card.

“Several payment alternatives like debit cards and student accounts not only enable teens to buy on the web but also let parents set spending limits and monitor payment activity,” said Jeffrey Grau, eMarketer senior analyst and author of the new report “Marketing Online to Teens: Girls Shop with a Social Twist.” “Yet rather than offer these options, many retailers seem content to drive online teenagers to their physical stores.”

When it comes to what teens buy online and offline, the largest spending category by far is fashion—consisting of clothing (taking 22% of total teen spending), accessories/jewelry (11%) and footwear (9%). Fashion represented 43% of North American respondents’ spending plans in spring 2010, Piper Jaffray reported in its 19th semiannual survey of teens.

Fashion translates into social shopping for many teens—especially girls—who frequently seek approval from close friends or siblings about considered purchases.

Retailers that use innovative tools to bring that experience online will do best at attracting teen customers.

 
“New online tools are emerging that mimic the way teens like to shop in stores,” said Grau. “Some enable teens to shop online and instantly get feedback from peers about a considered purchase. Other help teens mix and match fashion outfits. Online retailers that are seriously interested in building their teen customer base should put these tools high on their list of web development priorities.”

The Fair, thanks – in part — to the beautiful Centre, has grown to be the largest jewelry show in the world (so they say). This was my 15th trip and it was obvious – to me anyway — that the extravaganza gets bigger and better every year.

I had been guiding a group of American  jewelers around the Fair — and Hong Kong — on a “Sourcing Mission” — as I do from time to time. Their first impression of Hong Kong was shock enough, but nothing compared to their ‘wide-eyed’ astonishment of the Fair.

I even arranged for several jewelers to meet with manufacturers, outside the Centre, in an effort for them to develop a few long-term vendor/supplier relationships.

It was time to fly home. We picked up our custom made suits and shirts — and other oriental “souvenirs” — and headed for the airport. The Hong Kong Airport Express, by the way, is one of the best and, hold on to your hat, fastest in the world.

I was in my American Airlines seat, not particularly happy to sit — in one place — for 22+ hours during the flight home. Fortunately, I was sitting next to Bill, a second-generation jeweler from northern Michigan. We had an airline meal (tasted like a Brillo pad), saw a movie, read a magazine and had – sigh — only 19 hours to go.

Bill took out his laptop and started writing a Trip-Report to his Dad. When he finished, he let me read it. I thought you may find it interesting too.

                                                      INTEROFFICE MEMO

To: Bill, Sr.
From: Bill, Jr.
Subject: Hong Kong Trip, Sept: 17-21
Date: Sept: 22

Our first effort in buying direct form overseas was, I think, quite successful, (but very tiring). I will email you this Memo during my stopover in LA. I’ll go into detail when I get to the office next week.

Here are the some points.

1. The jewelry styling was wonderful. I never realized that each geographic region has a different design look. I thought Bali, Middle Eastern and Indian styling was especially noteworthy.

2. I spent a good deal of time with seventeen manufacturers. I bought 42 samples which will be FEDEX’d within 2 weeks. Of those 17, I had lunch with five, who could fit into our future.

3. The prices here are generally terrific — not surprising since these are manufactures’ prices. I saw several styles that we carry and, as far as I can tell, are about 45% below what we now pay.

“The prices ..I saw…here are generally teriffic….about 45% below what we now pay”

4. I also met with six smaller factories who were not exhibiting at the Fair. They seemed more innovative and eager.

5. I gave the fifteen drawings and ideas, that Sue developed and gave me before I left, to several factories. The designs will be a great nucleus for our new Brand. The factories will design them from scratch via their CAD system as soon as possible. They will be ours exclusively.

6. I know you expressed concern about their quality. I gave them our Quality Control Standards Manual. They also showed me their customer list and even some of the styles they were about to ship to the States. I don’t think quality will be a problem.

I’ll fill you in on their invoicing, payment and delivery schedules when I get back. Now that I know my way around here, this should be quicker and cheaper next year.

Bill.

While Hong Kong is a wonderful and vital city, it also is the unofficial jewelry center of Asia.

Most countries with a jewelry manufacturing standing have cities with annual jewelry fairs, shows, or exhibitions: Bangkok, Istanbul, Shanghai, and so on.

The Hong Kong International Jewelry Show is no exception. Thanks in part to the beautiful, bird-shaped exhibition center, the Hong Kong show has grown to be the largest jewelry in the world, according to its organizers. The extravaganza gets bigger and better every year.

The range of designs, the diversity of the visitors, and the size of the building in which the show takes place, however, can be intimidating.

The more than 4,500 exhibitors are arranged by global regions: Asia, Europe, Middle East, Africa, South America, and so on. You’ll know you are in the right place when you bump into a buyer from a big jewelry chain, one from a TV home shopping network, or even your competitor.

“Bali’s designs are exclusive to the island, which specializes in silver and gold mesh looks.”

After you have selected and purchased the merchandise you need for the season, start taking notes on what global region appeals to you—and your customer—and will be hard to replicate by your competitor. Once you have picked a particular country, make a point to go there the next time you’re on a buying trip. A few highlights include:

• Bali, Indonesia: Designs are exclusive to the island, which specializes in silver and gold mesh looks. There are also manufacturers that make miniature stone carvings (i.e. faces and the like) that could become unusual pendants.

• China and Hong Kong: These are the places to go for jewelry with unusual details. They specialize in highly complicated handiwork.

• Bangkok, Thailand: If you’re into Victorian jewelry, this is the place to go, since Thailand was a British possession during Queen Victoria’s reign.

Once you are comfortable with the factories with whom you are working, it could be time to develop alliances. An alliance with a favorite manufacture could lead to special prices, delivery, exclusive designs, and a long list of other benefits. It just depends on creativity.

An established alliance could lead to acquisitions, mergers, joint ventures, or any other deal that you, your lawyer, or accountant can devise. There’s nothing like having a formal – or informal — price, delivery, style ‘alliance’ with your favorite factory(s) around the world. They could end up being a partner.

With implementation and foresight, you are now an international company, with the experience and partners to grow globally. You just need imagination and a willingness to become an international ‘player’.

With all the talk of fluctuating prices, how does Tiffany consistently produce excitement and wonderful silver jewelry?

One of the TV hosts on the FOX BUSINESS NETWORK asked me the same question recently.

Back to the store. I took the elevator to the second floor – “Silver and Porcelain”: the directory said. The doors opened to an organized confusion. This is where the action was, at least for now.

Customers, (mostly female tourists with an occasional New “Yhawka”), younger that those on the first floor, (none older than 35, I think) were huddled over the cases, sometimes two or three deep while they passed credit cards to the Ambassadors behind the counter.

Having been in the silver jewelry business for the last eight years, after a decade in the gold jewelry industry, I have a pretty good understanding of silver merchandising and pricing. What was all the excitement?

“With all the talk of fluctuating prices, how does Tiffany consistently produce excitement and wonderful silver jewelry?”

I took a hard look at their silver showcases.

In my estimation, the silver jewelry was merchandised wonderfully. Each case displayed a grouping of branded (i.e. Elsa Peretti, Paloma Picasso, Tiffany 1837, T&CO, Tiffany Signature, and many others), silver designs, especially pendants and bracelets. Prices ranged to cover all major price points.

I could tell from the tailored silver designs (all with a Tiffany “look’), the designing was done exclusively by (or for) Tiffany and probably manufactured overseas and in the US. From what I could see, the quality was very good.

Over the years, Tiffany has pioneered in styling like the well-known, 3-pronged Tiffany setting. There was innovative styling here too. Small total weight diamonds set on silver bracelets, woven silver bracelets, torque designs among others.

They had done their homework.

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.

“Cue the Trumpets. Silver jewelry is hereby recognized as a viable and dynamic jewelry category.”

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.

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.