10x

Editor's Note: Protectionism or just protecting?

India's recent imposition of a 2 percent import duty on polished diamonds seems to be an unfortunate necessity.

In this day and age, the normal response would be to see such a move as an imposition on international trade. After all, we've long since learned the lessons of the havoc market protectionism can wreak on an industry or, on a larger scale, an economy. Free trade has proven itself as an effective catalyst that ultimately increases the overall volume of global business and, in the process, benefits all involved.

For background among the other major world diamond centers, the United States levies no import duty on imported diamonds, whether rough or polished. Israel's import duty is insubstantial. Belgium, while charging a substantial 21 percent internal V.A.T., has imposed no duties on diamond imports since 1998.

Individual nations that indulge in unilateral market protectionism often do so to nurture fledgling business categories that could otherwise fail in the face of overwhelming competition from foreign, more highly developed players. But the last thing India's diamond sector could be called is underdeveloped. The country promotes itself as producer of some nine out of 10 of the world's polished diamonds.

So why the tariff?

What seems to be the case is not so much a desire on the part of India's massive diamond companies to protect their potentially huge and rapidly developing domestic market, but a necessary move on the government's part to stem sleight of hand dealings believed to pose risks to the trade's overall health.

Without going into the details, since the country eliminated its import tariff on polished in 2007, companies have begun gaming the banking and credit system by re-importing and exporting goods to receive subsidizing credit on attractive terms which is then invested in non-related areas.

It goes without saying that we've seen in America recently what lax financing can do to an economy.

Of course wherever there's money to be made--and there's huge, huge money in Indian diamonds--there will be, let's say, shenanigans. So it seems that India's government has set its sights on instituting a duty that's high enough to snuff out these practices for the time being and consequently provide some tough love to this immensely important business category.

The move will, of course, rig the system so that non-Indian diamond manufacturers will face a two percent disadvantage compared to domestic firms in selling polished into the mushrooming Indian market. But while it may be rapidly developing as a consumption center, India's role in the international diamond trade certainly continues to be more important on the supply side. And it seems this current move should really have no effect on diamond prices to jewelers here at home.

 

Going inside a strong heart

Ingrid Bergman once said that “Happiness lies in good health and a bad memory.”

Yesterday, I met a young woman who has as much reason as anybody to wish for a bad memory. But she doesn’t, because she views sharing her story as both a form of therapy and a way to help others.

When Grace Freeman was eight months old, civil war forced her family, which included her mother and three siblings, to flee their native Liberia and resettle in a camp in Ghana that was home to some 47,000 refugees.

Grace wanted to go to school but it wasn’t free and her family had no money to send her. So they struck up a deal with a local woman: Grace could live with her and go to school but, in return, would have to do all of the housework.

The 7-year-old left her entire family behind in the refugee camp to move in with this woman who promised her an education. It wasn’t too long after, however, that Grace discovered she essentially had been sold into slavery.

She never got to attend school and, instead, was awakened as early as 3 a.m. to do a list of chores that it would take a normal adult a week to complete. She was beaten regularly.

One day 11 years later, an 18-year-old Grace was outside working her way through a pile of laundry when she heard a voice intoning her name, telling her, “Grace, go inside.” Though she knew she risked a beating by leaving her work, the internal guidance was too strong to ignore.

She trusted her instincts and entered the house, only to find her United Nations identification card on the table, documents her captor had hidden years earlier in order to claim Grace was her daughter and keep her as a slave.

Grace snatched up the documents and ran to a neighbor’s house, begging the neighbor to hide them for her until she escaped. This act of bravery resulted in a beating that almost ended Grace’s life.

But it also marked a new beginning.

Using the ID card, Grace was able to escape and eventually was reunited with her family. Through her twin brother Gabriel, Grace became involved in The Strongheart Fellowship Program, a non-profit that gives young people who have been displaced or orphaned by conflict a safe place to heal, a chance to get an education and, hopefully, return to their communities to become leaders. As part of the program, all participants design a product or a service.

Grace, along with fellow Strongheart Lovetta, chose to create a piece of jewelry that is part  self-expression, part fund-raiser.

The piece is a tiny replica of an old door that stood in the house where she was held captive for 11 years inscribed with the phrase that launched Grace to freedom, “Go Inside.” Off its hinges and leaning on the wall, the door was a place where Grace used to take refuge.

Today, its reproduction on a necklace is a reminder for her, and for anyone who wears the necklace, to look inside themselves for strength when the situation is bleak.

I had the opportunity on Monday to speak at length with the now 22-year-old Grace about her experiences. To say she is remarkable young woman does not do her justice. There are simply no words to describe a person like Grace, who endured more pain and suffering in a decade than most people will experience in a lifetime.

I had to ask her, though, if it ever gets old sharing her story, if she ever gets tired of telling the tale. The answer is yes, sometimes it is difficult. But that doesn’t mean she’s doesn’t keep it doing it, because she sees value in it for other young people around the globe who find themselves in similar situations.

“If the message is good,” Grace said, “You’ll always like to share that message.”  

The pieces designed by Grace and Lovetta are on display at the designLab through today at the JA New York Winter Show, with their sales benefitting both the individual designers and the Strongheart program as a whole.

All members of the jewelry industry, from retailers to designers to wholesalers, also are being invited to become part of Strongheart’s new “Inner Circle of Guardians” program, being organized with the help of Beth Anne Bonanno.

To begin the program, Bonanno said they are designing a free widget retailers can place on their websites that will open up a second window displaying the Strongheart website. There, users can purchase jewelry and learn more about Grace, Lovetta or any of the other Strongheart fellows.

In exchange, the company will be listed on the site as being in the organization’s Inner Circle of Guardians.

For more information on becoming involved with The Strongheart Fellowship Program, contact Beth Anne at eab@elizabethannebonanno.com or call (646) 528-8299.

Kill'em with kindness

Here's a story we just published about Amazon being rated the best company for customer service.

Without question.

Eons ago, when I was working my way through college in the service industry, management taught us a golden rule: "Kill them with kindness." In other words, treat the customer with such respect and such a high level of service that they can't help but be won over to your side.

Easy to say. Harder to do.

But any retailer hoping to succeed in the new world order might want to learn from the example being set by Amazon.

This is a company that apparently has told its service staff to make customers, especially good customers, happy--at almost any price.

I've been an Amazon Prime customer for several years now, and my relationship with the company continues to grow.

When it comes to shopping, "relationship" is a term I don't throw around lightly. But Amazon has won that through consistently exceeding my expectations.

The most recent was for an order I placed two weeks ago. I'm a pretty thorough analyst of information before I buy. But in this case, I placed my order for a relatively cheap item based mainly on the accompanying photo.

When the product arrived, it wasn't what had been represented in the picture. So I set out to return it using Amazon's simple and friendly return system, which I've come to have full confidence in. But when I began, the system simply responded that I should keep the product free of charge anyway. What?!

Even to a pretty seasoned consumer, that one was a shocker. But as I mulled it over and over throughout the remainder of the day--"how.......what.......is it possible.......what the........."--I finally realized it wasn't shocking at all. In fact, Amazon has responded positively, beyond expectations, for most service interactions I've had with it.

And because I shop there a lot, thats a fairly large body of evidence.

But I'll tell you right now, that I'm a huge Amazon fan. I mean, it's not that I spend my personal life trying to figure out whether I like certain retailers or not. Fact is, I just love Amazon.

So I recently bought two Kindles as gifts. One of them was a Fire, and I bought it instead of an iPad, regardless of how highly I also think of Apple.

Good service. Kill'em with kindness. Go figure.

The allure of Anthropologie

I was intrigued to learn that the new CEO of industry stalwart David Yurman Inc., Glen T. Senk, comes to the company from Urban Outfitters Inc., where he is credited with helping to grow the company’s Anthropologie brand from a single-store prototype into what it is today.

That is: a $1 billion-plus brand with stores all over the country, as well as a few now outside the U.S., and a strong online presence.

According to Yurman, Senk was selected for his “creative vision” as well as his “exceptional record of success in developing and expanding powerful multi-channel, multi-national retail and wholesale brands.”

If Senk had a hand in developing Anthropologie, which I believe offers one of the best retail experiences available today, then it certainly seems he will be an asset to an industry that is in need of a creative spark, both in stores and online.

I don’t shop in many national chain stores. Smaller boutiques like those found around New York’s East Village are more my style. But I do love Anthropologie and will make it a point to go in every time I see one no matter where I am in the country.

I love the way the stores are configured. They’re more like a cozy house--with beautiful wood floors and vintage-inspired furniture--than a store. I don’t necessarily even feel like I am shopping while I am in there, though the credit card bill I later receive suggests otherwise.

On a recent visit to Anthropologie, I noticed that they had launched a do-it-yourself charm necklace feature. Not unlike Pandora, Chamilia or the other bead brands that have become major sellers in recent years, the DIY Charms gives customers the chance to pick a chain style and then build a personalized necklace by choosing their own charms.

Customers are free to pick as few, or as many, little baubles as they would like, with the idea here being that they, hopefully, return to the store in the future for more charms or to swap out old ones for something new.

Sound familiar?

Anthropologie also has do-it-yourself charm functionality on its website, a cleverly designed interactive feature that certainly held my attention for a while. (See one of the necklaces I so lovingly constructed here--the site allows you to take a picture of your necklace and save it to your desktop or, of course, share it via Facebook and/or Twitter.)

But, don’t just take my word for it. Here are a few thoughts from my best friend, who is my age (we’ll say early 30s), also an Anthropologie shopper and who recently bought a suite of bridesmaids’ dresses from the store. After hanging on to the dresses for a couple months during some back-and-forth with her mother about the style, she returned them all for a full refund.

Here’s what she had to say about why she likes the store so much: “It’s not just the vast array of clothing and accessory lines from Anthropologie that I like or the fact that I know when I walk in, the problem won’t be finding something but, rather, finding too much. But it's the accommodating customer service that keeps me a fan for life. No questions asked on returns that can be taken back at any point, which they’ve been nothing but gracious about, emailing my receipts to me when asked, discounts in honor of a birthday and bending over backwards to help when I have questions about merchandise. The always-cheerful staff is obviously trained to know how to cherish their clientele and do everything in their power to keep them happy.”

The ability to establish and keep customers for life; that sounds like an asset any jewelry CEO should have.

Making sense of the holiday sales

As any retailer would tell you, it is difficult anymore to predict the ebbs and flows of the economy. This was as evident as ever on Tuesday, when three of the industry’s largest chains reported sales for the all-important months of November and December.

News from Tiffany & Co. that “sales weakened markedly in the United States and Europe” over the holiday season surprised me. Tiffany has been one of the strongest performers in the market in recent years, seemingly one of the first jewelry chains to begin showing signs of economic recovery after the global meltdown.

Overall, same-store sales in the U.S. were up 2 percent for the chain. Sales declined 1 percent in the brand’s flagship store on Fifth Avenue in New York, with foreign tourists accounting for the bulk of the sales there. Same-store sales were up 3 percent in Tiffany’s branch stores.

Also interesting to note were the results from Zale Corp., where holiday comps were up 6 percent but there was a marked difference between the months of November and December. The chain’s comps climbed 10 percent in November but only 4 percent the next month.

While both Tiffany and Zale comped positive, their overall results have sparked concern among analysts that consumer spending is on the decline heading into the new year.

During a conference call Tuesday morning, analysts asked executives Sterling Jewelers about the results reported by Tiffany and Zale. They wanted to know if Sterling was concerned about Valentine’s Day given what seems to be a pattern of waning consumer spending. (Sterling executives said no.)

Zale’s December comps were less than half of what they were in November.

And Tiffany noted that sales weakened at the end of the year after three “very strong” quarters of better-than-expected sales and earnings growth. In this article, Forbes contrasted the results of Tiffany with that of high-end athletic apparel retailer Lululemon, which had a strong holiday season and raised its guidance. Forbes wonders if consumers are “reigning in their spending on jewelry.”

In reading all of this news over the past couple of days, it brought to mind something I reported early on in the holiday shopping season, during one of our many Black Friday wrap-up stories. In this story, one analyst noted that while consumers flooded stores right after Thanksgiving to take advantage of deals, they were less enthusiastic about shopping thereafter. They were “tapped out,” the analyst said.

If consumers were “tapped out” in late November, how are they feeling now, as they sit amidst piles of bills that they accumulated buying holiday presents, throwing parties and traveling?

I think the answer is: Nobody really knows anymore.

Silver designs take a rock and roll tour

Thanks to Italian designer Manuel Bozzi, rock music lovers can now wear likenesses of icons from the genre on their fingers.

Bozzi has taken the expressions of Keith Richards, Elvis Presley and Jimi Hendrix and transformed them into a silvery tribute--rings.

From left: Jimi Hendrix, Elvis Presley and Keith Richards.

“Elvis is portrayed on Sunset Boulevard,” a description of the ring states, “he’s fat, alcohol-addicted, nevertheless already of questionable fame.”

While that may not be the version of the King of Rock and Roll that all fans wish to remember, Presley’s blackened sunglasses are a fun feature, and the piece could easily serve as a conversation starter.

The Keith Richards ring “shows his modern mocking sneer, legendary but still modern, with sings of aging, yet increasingly handsome each succeeding year.”

That’s one way to describe the founder of the Rolling Stones.

Lastly, “Hendrix plays with closed eyes and an open mouth, a victim and executioner of his psychedelic, electric poet,” an insightful description for the late guitarist.

Music and silver have always been a winning combination in art for Bozzi, and for this venture the designer choose to portray “decisive moments of three of the most common rock artists’ careers.”

Aside from this “rockmantique” venture, Bozzi has numerous collections and has been featured in major publications such as Vogue, Esquire, Vanity Fair and GQ. Find out more about him here.

Holiday 2011’s new recipe for success

This 10X blog entry was written by Marshal Cohen, chief industry analyst, The NPD Group, Inc.

This year’s recipe for retail success came in the expert blending of the following four parts (not all parts are equal).

Part 1 - Sizzle to fizzle

This is the period of holiday selling through November up to and including the Black Friday/Cyber Monday time period. This year, this time period started out with a bang. For next year’s recipe we need to keep the fireworks sizzling … instead of fizzling…

Part 2 - Lull-or-buy?

This is that post-Thanksgiving lull… the two weeks after the Black Friday Frenzy.

The lull this year was a bit deeper this year than last as consumers were ‘tapped out,’ due their having spent their cash and credit limits (self-imposed or otherwise). 

What was the source of all that spending? According to NPD’s Anatomy of Black Friday and Cyber Monday 2011 study, it was ‘self-gifting.’ Forty-six percent of consumers bought items for themselves on Black Friday, which was up 12 percent from last year.

Part 3 - Bunch ‘o crunch-time

‘Crunch-time’ for holiday retail is the ten days before Christmas. This year the Christmas Crunch was on par with last year’s. As consumers got focused on gifting, their spending remained steady. But it was not over the top like we saw in ‘part one’ of this season. This is the part of the retail season that is ‘the make-or- break’ period for revenue. Will stores get all the sales growth the wished for? Maybe. But we have only seen moderate growth so far for this time period.

Part 4 - Leftovers?

The day after Christmas is all about the leftovers …the leftover business retailers can get post-holiday, that is.  Now, this truly is the make-or-break part for profits.

How much inventory is left to sell-off and at deep discounts will help to determine just how profitable the holiday will be.

And now what…?

The 2011 holiday season was marked by the beginning of several "new traditions." Things like: extended and earlier hours, self-gifting consumption, the "pre-searcher’s" use of online and e-commerce for holiday shopping, a value-centric consumer, and the tapped out consumer. And lest we forget…give them a deal and they will shop…no deal in there they will shop elsewhere.

For 2012 it will be the progressive retailers and brands who will learn from this holiday and make use of these new traditions, building on them throughout 2012.

About The NPD Group, Inc.

The NPD Group is the leading provider of reliable and comprehensive consumer and retail information for a wide range of industries. Today, more than 2,000 manufacturers, retailers, and service companies rely on NPD to help them drive critical business decisions at the global, national, and local market levels. NPD helps our clients to identify new business opportunities and guide product development, marketing, sales, merchandising, and other functions. Information is available for the following industry sectors: automotive, beauty, entertainment, fashion, food, home and office, sports, technology, toys, video games, and wireless. For more information, contact us, visit http://www.npd.com/, or follow us Twitter at https://twitter.com/npdgroup.