How the Impact of COVID-19 is Changing the Retail Jewelry Landscape

State of Digital Transformation Survey Report: How the Impact of COVID-19 is Changing the Retail Jewelry Landscape

In October/November 2020, BriteCo conducted a survey among retail and wholesale jewelers to identify their digital practices and transformation in the wake of COVID-19. These are the results.

BY BRITECO

Why the Survey? A Message from the Sponsors

To say that our world changed in 2020 is an understatement.

Like so many other businesses, the retail jewelry industry experienced dramatic changes from the impact of the COVID-19 pandemic: store closures, stepped up sanitation measures, customer Zoom calls, and more. The abrupt interruption of our face-to-face contact with customers was perhaps the most jarring and unsettling.

At the same time, there is growing recognition that the pandemic has accelerated a trend toward digital communications that has been building for many years. In 2020, we as independent retail jewelers had to reckon with managing a digital presence we may or may not have been prepared for.

To help share how our individual wholesalers and retail stores are responding, a group of leaders representing digital technology enablers — including BriteCo, GemFind, Polygon, and IGS, along with the Facebook group Jewelers Helping Jewelers and our media sponsor, Instore magazine — came together to offer participation in a survey aimed specifically at the digital transformation happening among jewelers today.

This report is based on the results of our survey. We intend that it represent a first step in an effort to provide jewelers with the resources they need to manage the changes we face, and help them succeed in finding a path that combines the best of both worlds — digital and face-to-face engagement.

We invite you learn more at www.JewelersGoingDigital.org.

Introduction

JBT President Erich Jacobs explains that, among jewelry retail stores having a rough year in 2020, “Those who were struggling had zero online presence.” They lacked both e-commerce capability and a sizable social media following.

“Everyone who was struggling had neither of those. That was the common factor.”

A coalition of leading retail jewelry providers and professional organizations has surveyed the industry landscape to get a clearer picture of how jewelers are managing the digital transformation of their sales and marketing operations, which has been accelerated by the demands of a global pandemic.

Among 450 responses, more than 200 retail jewelers from throughout the United States completed the survey. Of those respondents, 50% had a single store with an online presence (website and social media). 10% had multiple stores with online presence.

The impact of COVID-19 has made the digital transformation of retail jewelers more imperative than ever before.

By limiting face-to-face in-store visits, either through mandated closures or consumer fears, jewelers have been forced to consider their marketing spending and, in many cases, they have focused on a bigger and hopefully more effective online presence. Still other jewelers appear to be cautiously marking time, even reducing their promotional spend during the pandemic.

The stakes are high, especially as another wave of the virus appears to be impacting the industry once again.

Even as the pandemic has curtailed in-store visits, two out of three retail jewelers still rely on in-store visits as their primary sales channel. While there is surely no replacement for face-to-face contact in making a fine jewelry or watch purchase (Blue Nile, for example, is now opening its own retail locations), COVID-19 has inevitably accelerated what can only be called the digital transformation of the jewelry industry.

Executive Summary

This report is divided into the following two sections:

· The Impact of Covid on Retail Jeweler Operations

· Marketing Digital Tools Jewelers Use to Connect with Vendors and Customers

Each section contains major takeaways based on our survey results, along with recommendations and resources for jewelers to take action in managing their digital transformation.

Part 1: The Impact of Covid on Retail Jeweler Operations and Marketing

With nearly half of stores being closed for two months or more, significant numbers of retail jewelers cut staff and hours. Sales bounced back for about half of respondents upon reopening. Engagement rings and self-purchases lead the demand.

More than half of respondents reported an increase in online store traffic this year, yet 30% of stores in the survey indicated they made no changes in their marketing mix. Those who did make changes posted more on social media platforms like Facebook, Instagram, Twitter, etc. (58%), followed by showing inventory on websites (30%) and offering e-commerce purchasing of jewelry online (25%).

Most respondents (41%) kept their advertising budgets the same, but another 26% cut their promotion budget, while a small minority (11%) increased their budgets. Perhaps most disturbing is that 27% of retail jeweler respondents either stopped advertising or don’t advertise at all. Those who stopped advertising or don’t advertise at all saw the biggest downturn in sales.

Part 2: Digital Tools Jewelers Use to Connect with Vendors and Customers

Most jewelers who have a website to build awareness of their retail location (41%) drive customers to their store (28%), while another 23% sell directly to customers from their website. Another shocking statistic: 9% of respondents said they don’t currently have a website.

Nearly half of jeweler respondents with a website (49%) are not offering e-commerce transactions. Among those that do provide online purchasing with e-commerce, the Shopify platform is the clear favorite.

What advertising channel did our jeweler respondents feel had the best return on their marketing dollar investment? Social media was the strong preference by more than a third of jeweler respondents (34%), followed by paid search (14%) and email (12%). One out of six (16%) indicated they still don’t advertise.

Conclusion

The COVID-19 pandemic has had an obvious and dramatic impact on independent retail jewelers — and even more so on established jewelry chains. Many have announced permanent store closings, in what some have dubbed a “retail apocalypse.”

Yet, there are retail jewelers who are adapting to the new demands of an always-on, digital marketplace. There appears to be a wide disparity between jewelers who have already invested in an online presence and those who are just beginning to get involved with customers online — a digital transformation gap. But as technology for the jewelry industry becomes more affordable and easier to use, no retail jeweler need be left behind. This survey report attempts to give retail jewelers a baseline and, if appropriate, a starting point for beginning and/or expanding their own digital transformation journey.

Recommendations

· Acknowledge that an online presence through a website and social media has become a necessity to survive and thrive as an independent retail jeweler.

· Recognize that stopping advertising and promotion (or not advertising at all) puts your store at a huge disadvantage, as the pandemic has severely reduced in-store visits while making online and smartphone connections the primary forms of communications. Even when the pandemic eventually subsides, your customers (especially the younger ones) will expect you to speak to them via the Internet, text, video, and more.

· You don’t have to reinvent the wheel when it comes to setting up or improving your website and social media posts (paid and otherwise).

· There are experienced providers in the jewelry industry who can help you and your staff build an online presence without breaking the bank.

· Consider offering e-commerce transactions on your website. Applications such as Shopify make setting up and managing online sales easier and faster than ever before.

· Educate yourself and your staff with free resources. Commit to a technology discussion with your people to get input and share ideas. Most of the major platforms, like Facebook, have free online tutorials and educational videos to help you learn more.

The Impact of Covid — Survey Results, Part 1

Covid Impact on Store Operations

Nearly half (49%) of retail respondents said their stores were closed for two months or more, while another 27% were closed for about one month. More than 14% said they did not close.

Since March of 2020, it appears a little more than half the jeweler respondents indicated their staffing and scheduled hours have not drastically changed. However, nearly one out of three stores (33%) say they have fewer employees now, and 38% have cut employee hours. A much smaller number of stores (10%) actually expanded their staffs, with a few (4%) extending employee hours.

Covid Impact on Sales and Marketing

With the reopening of retail jewelry stores, 27% of respondents said sales were down compared to last year. At the opposite end, 33% reported a slight increase in sales, and another 22% showed a significant increase in sales. While this may reflect “pent up” demand when stores reopened, it is a good sign that some stores are actually able to increase sales in a highly volatile and uncertain environment.

Customer Purchasing Habits

In the wake of the pandemic, more than half of jewelers said changes in customer purchasing habits showed increases in engagement ring purchases (56%), while 25% indicated no change. Self-purchases also showed an increase in 47% of stores, with 33% about the same. The other categories of anniversary bands, gift-giving, and milestones purchases were all dominated by “about the same” buying habits.

These results also seem to reinforce BriteCo’s research into how the 2008 recession affected jewelry sales, which showed engagement rings as the category least affected by the downturn.

Online Traffic and Presence

Those retail jewelry store respondents with an online presence saw a big jump in online traffic so far this year, with more than half (54%) indicating an increase.

In reaction to the temporary closing of stores and an increase in online traffic, one would expect that stores would likely want to change how they market themselves to customers, yet 30% of stores in the survey indicated they made no changes.

Those who did make changes mostly increased posting on social media platforms, like Facebook, Instagram, Twitter, etc., (58%), followed by showing inventory on websites (30%) and offering e-commerce purchasing of jewelry online (25%).

Likely taking a cautious approach in the midst of the pandemic, more than half (55%) of jeweler respondents maintained their current advertising and promotion media mix. At the same time, a minority of stores (15.5%) shifted from print and TV to online media, reflecting a turn towards digital media to reach customers.

Perhaps most disturbing is that 27% of retail jeweler respondents either stopped advertising or don’t advertise at all. Those jewelers who stopped advertising or don’t advertise at all saw the biggest downturn in sales.

While retailers might recognize the need for a greater online presence, they also seem reluctant to commit more marketing dollars to promotion. Although understandable in a time of uncertainty, this decision limits their potential to exploit and leverage digital engagement with customers.

Most respondents (41%) kept their advertising budget the same, but another 26% cut their promotion budget, while a small minority (11%) increased their budgets.

The Jeweler Digital Marketing Mix — Survey Results, Part 2

Tools to Communicate Directly with Customers

Survey respondents relied most on email (88%), text messaging (72%), and Facebook Messenger (57%) as the best digital tools for keeping in touch with customers. Zoom, FaceTime, and WhatsApp were also favored, though by much smaller percentages, ranging from 15% to 17%.

Tools to Promote and Market to Customers

Most jewelers who have a website to build awareness of their retail location (41%) drive customers to their store (28%), while another 23% sell directly to customers from their website. Another shocking statistic: 9% of respondents said they don’t currently have a website.

Nearly half of jeweler respondents with a website (49%) are not offering e-commerce transactions. Among those that do provide online purchasing with e-commerce, the Shopify platform is the clear favorite.

When it comes to managing and developing their websites, more than one-third (38%) of survey jeweler respondents hire outside help, while the majority (54%) appear to rely on in-house talent.

The vast majority of jewelers (61%) do not regularly post blogs on their websites to attract customers.

However, customer reviews appear to be much more important. Half of survey respondents post them on their websites, and nearly two out of three post reviews on Facebook/social media pages, as well as on Google.

Besides using their websites to make sales, jeweler respondents chose several other social media platforms. Facebook (87%) and Instagram (70%) proved the most popular, followed by Pinterest (33%) and YouTube (20%).

Beyond their websites, survey respondents looked to Facebook Marketplace, Instagram shop, and eBay as their preferred platforms to sell jewelry.

What Advertising Channel Did Our Jeweler Respondents Feel Had the Best Return on Their Marketing Dollar Investment?

Social media was the strong preference, by more than a third of jeweler respondents (34%), followed by paid search (14%) and email (12%). 16% indicated they still don’t advertise.

Jeweler respondents designated social media as the best return on advertising investment. Of those media channels, Facebook (54%) was by far considered the best return on investment. Instagram placed a distant second (16%), and 22% of respondents do not pay for social media advertising.

About the Survey

This report was written and produced by BriteCo. The survey was conducted in October/November 2020 among retail jewelers to identify their digital practices and transformation in the wake of COVID-19. Among the 460 responses, we analyzed more than 200 completed surveys. The majority of retailers who responded represented independent jeweler retailers within the continental United States.