Trends - How we shop for jewellery

Making it big as a jewellery retailer, designer or manufacturer is about so much more than the jewellery itself. There's branding, the look of your store, personal service and that's it, right? Not so much. With the second hand market for luxury booming thanks to eBay, the way consumers are shopping for jewellery is undergoing a revolution and this is just the beginning.
By Claire Adler

Luxury shopping habits are changing. If once we thought jewellery was a sentimental acquisition, one man I spoke to recently has come along to challenge that presumption. His name is Daniel Nissanoff and his book FutureShop suggests we are fast becoming a throwaway society. Well, almost.

He actually calls it an “efficient, temporary ownership society” and says it's largely thanks to Ebay. He predicts people will increasingly sell items over the internet that no longer excite them and he forecasts a radical shift in the way we buy and sell things.
“Consumers are much more brand educated than they once were and they are valuing items according to their secondary value” says Nissanoff. “We're evolving into a society where we are disconnecting emotion from our possessions. This is being driven by the ease of use of websites which provide valuable ways to get rid of things. Historically, pawnbrokers didn't offer you a value which enticed you to sell. But last year, $60-70 million worth of watches and jewellery were sold on ebay and this is just the start.”

In total last year, eBay's 180 million users made $44 billion in transactions, but only 5% of those who bought also sold. Already, eBay “drop shops” are starting to appear on British high streets. 7000 have opened in the USA in the last two years, according to Nissanoff. These are places where individuals can outsource the tasks involved in selling things on eBay - from photography, writing compelling descriptions of items, answering customer queries and shipping. Certainly, auctions are the ultimate in free market economics – by orchestrating competition for an item, supply and demand are pushed to their very limits and the best price is achieved.

At the same time, Nissanoff predicts a margin squeeze on standardised pieces of jewellery. For example, there are plenty of unbranded versions of entry level Tiffany pieces on the market. Genuine Tiffany pieces will have a healthy resale value in five years time, says Nissanoff, while others won't, which means you are likely to be far better placed to invest in the branded piece. Looked at in this way, it costs more in the long term to buy something cheaper and unbranded than to buy something branded. This is also likely to lead to people thinking about what they buy in terms of its long term value and to decisions which mean they are only filling their branded jewellery boxes with the things they really, really want. Any stigma attached to buying secondhand goods is tempered by the fact that eBay allows you to be anonymous in your purchasing and no-one needs to know you are wearing something previously owned.

So does this mean extra pressure on jewellers to communicate their brand image to engender trust and thus add long term value? Nissanoff, perhaps unsurprisingly a web entrepreneur himself and cofounder of www.portero.com, which specialises in the resale of luxury goods, believes it will. “Today, less than 12% of jewellery is branded, which is up from 5% three years ago. Trust is easy to satisfy if you have an established brand. Till now, Tiffany and Cartier owned this space along with Van Cleef & Arpels and Harry Winston. But others are becoming more well known, like David Yurman and John Hardy. We're likely to see more jewellery designers becoming prominent too, just like artists.”

As satisfying as a ruthless clearout can be - Nissanoff has claimed that every home in the States has around $2200 of unused goods in it - and despite the attraction of netting a healthy profit from the exercise, it is still hard to believe that the notion of heirlooms is disappearing from our society, as he goes on to suggest. Nissanoff is also quick to point out that personalised engraving on watches and jewellery makes for an average 30% price reduction on eBay.

While I sceptically listen to Nissanoff explaining that estate jewellery sales happen precisely because heirs of the estate don't want it, two hefty volumes appear at my door – with detailed photographs of hundreds of beautiful, antique jewellery and silver objects once owned by Her Royal Highness, Princess Margaret, and up for grabs at Christies in London this month.

So what does this all mean for jewellery manufacturers and retailers? “Hoarding jewellery used to be quite good news for manufacturers,” says Nissanoff. “If that jewellery is now competing with new jewellery, then maybe it's not so good. But, if it means people are driven to spend more on lots of jewellery, that's a great opportunity.”

Given the resale, or “residual” value of branded goods in the marketplace, Nissanoff suggests manufacturers would do well to establish licensing agreements with brands or alternatively, start up their own brands. Within the next five years, 30% of jewellery will be branded, he says.

He also predicts jewellery retailers will need to offer a new service to keep the customers coming. In a culture of temporary ownership, jewellery lovers will need opportunities to trade in and trade up to something new. At Tourneau, America's largest watch store, customers can already trade in their watch for a better one, while Tourneau channels that returned item into the open market – via, the resale facilitator, Portero.

Today, jewellers lose money by paying customers for gold which they turn into scrap metal. Similarly, the value of a retailer offering that service is not profit to themselves but rather a loyal customer.

It's about creating a situation where a customer knows that when they are ready to sell a piece of jewellery, someone will pick it up, sell it and give them credit towards their next piece.