As was reported earlier, American jewelry manufacturers and merchants declared May to be the “Gold Month” for the fifth time running.
Though the rising price of gold has made retailers skittish about sales, National Jeweler notes, “May is Gold Month,” a national promotion action, is aimed at increasing the sales turnover of gold jewelry throughout the month.
Duvall O’Steen, director of jewelry public relations and promotion at the World Gold Council, says May remains a great time to buy gold for special occasions such as Mother’s Day and graduations, or for self-purchase.
The growing gold bustle this May will be generated by the official participation of retailers who have collectively spent some $3 million so far to launch their new and fashionable gold wares in magazines such as Elle, Good Housekeeping, Harper’s Bazaar, InStyle, People and Redbook.
The campaign is also supported with point-of-sale signage, window displays and direct-mail catalogs. More broadcast retailers are jumping on board this year too, O’Steen says, which will heighten consumer awareness.
Although the WGC can’t release sales growth figures because of confidentiality reasons, O’Steen says that partner stores witness double-digit sales growth in May as a result of the promotions. O’Steen acknowledges this year could be different due to the faltering economy, but remains hopeful.
With the recession and increasing price of gold, O’Steen advises retailers to focus on the precious metal’s value in jewelry promoting. O’Steen notes that the consumer perception of gold’s intrinsic and lasting value has actually been strengthened by the higher prices.
The co-sponsors of the program, the WGC, Jewelry.com and the Richline Group (headed by Warren Buffett), are collaborating with retailers including Belks, Ben Bridge Jeweler, BJ’s, J.C. Penney, Jewelry Television, Macy’s, ShopNBC, Sterling Jewelers and QVC.
Independent retailers were also invited to participate in the program: they could download the advertising materials and the campaign’s logo from the WGC’s Web site.
High precious metal prices, combined with an economic slowdown, have made American retailers revert to gold buy-back programs to maintain revenue and store traffic.
The trend is gaining so much momentum that it is even visible on the streets of New York’s Diamond District, says diamond dealer and The Diamond Registry Bulletin publisher Joseph Schlussel, a 40-year industry veteran.
“We’ve noticed a drastic turn in the retail market,” he wrote in his March 31Bulletin. “The hawkers on the street no longer say 'Buy from us.' They now say 'We buy gold and diamonds.'" And it seems that consumers hit by stock and housing market problems are eagerly responding.
When asked in an online poll conducted by National Jeweler how higher gold prices are impacting sales, 43% of respondents said customers are bringing gold jewelry in to sell in response to the sky-high prices.
This response topped the other choices: gold jewelry sales dropping (32%), customers choosing lower-priced metals (13%) and gold jewelry sales holding steady (12%).
Retailers are using a variety of methods when it comes to getting the word out to customers about their gold buy-back programs.
William Minster (Minster Jewelers in Wilmington, Del.) decided not to post any signs on the store windows or run advertisements in the local press. Instead, he opted to send out a direct-mail piece to his customers, explaining the increase in the price of gold.
Minster also contacts local bankruptcy lawyers to see if any of their financially struggling clients might be interested in converting their jewelry to cash.
“In these times, you have to be creative but hold onto your ethics and keep your name in a good light, rather than just hanging out a shingle saying ‘We buy gold,’” Minster says.
According to Minster, he bases how much he gives customers on the price of gold that day. Most of his customers have brought in out-of-style items, like heavy gold necklaces.
Minster says the price of gold is at a level where he is able to give the customer a fair amount of cash in return, while still making a small profit, even after covering the costs associated with refining.
Other jewelers are using the Internet to advertise their gold buy-back programs. Meridian Diamond Co. in Roswell, Ga., and Michaels Jewelers in Pennsylvania both placed ads on popular consumer buy-and-sell site Craigslist.
Michael Kanoff of family-owned Michaels Jewelers says the program has generated a lot of foot traffic for his store.
Roger Harjani of Meridian Diamond Co. says he gives his customers about 20% less than the price of gold on the buying day. The store nets about a 10% profit after the cost of refining. But, if customers want to buy something in his store, Harjani gives them 100 percent of the value of what they are trading in, based upon the price of gold that day.
Harjani says some competition has been lately sprouting in this business.
