Innovate or Die: Why the Industry Is Lagging

RAPAPORT... In the heyday of "A Diamond Is Forever," consumers responded strongly to slogans and instructive advertising. As social media has influenced a more interactive dialogue between businesses and their customers, that is no longer the case. Today, consumers respond to innovation.In an age of unprecedented creativity and development, the jewelry industry has been lagging behind. While sales in the US have grown in the past few years, the sector needs to innovate more to sustain - and improve - its share of consumer spending, according to Gina Drosos, CEO of Signet Jewelers (pictured).That's as true for Signet, the largest jewelry company in the US, as it is for the rest of the industry, Drosos admitted in a talk she gave during the recent JCK Las Vegas show. It's therefore up to every firm to play its part.Drosos took the helm of Signet in July 2017, having worked at Procter & Gamble, where she helped rebrand the Olay skincare line and Old Spice products for men. That work demonstrated how reinventing one brand can lift the overall market, Drosos explained. Innovation, she said, doesn't just drive specific brands and product suites, it stimulates industry growth.Although Signet has "not truly led the market for several years," the CEO acknowledged, the company is hoping to play that role moving forward.Drosos outlined three areas that require an innovative response: the diamond and jewelry trade's reliance on the holidays and one-off moments; changing demographics and spending; and the out-of-touch jewelry-buying experience.The other 46 weeks The industry must expand its customer base by winning more moments, Drosos stressed, addressing the first of those challenges. For most of the year, the trade depends on bridal - a once-in-a lifetime event for most consumers, translating to a low-frequency market for retailers. About one-quarter of sales come from engagement rings and wedding bands.In addition, she urged the sector to stop investing all its energy in winning the holidays. "If we're laser-focused only on six weeks of the year, it means we're not focused on the other 46," she noted.Instead, companies need to work together to make jewelry the top gifting item. The category currently lags behind trips, dining out and clothing in terms of what people most like to receive, she reported.To do that, jewelers must demonstrate that clients can trust them to give expert advice tailored to consumers' personal needs and experiences. And part of that trust comes from understanding the industry's changing customer base, Drosos stressed.Wider experiences Discussing the demographic trends driving growth in the US, Drosos argued that the industry was not doing enough to cater to the Hispanic community. "They buy more fine-jewelry items than the average customer and are more likely to buy a piece of jewelry without a special occasion in mind," she said. "This is clearly a massive opportunity for our industry."In addition, what constitutes a traditional family is changing, with 40% of couples getting engaged with children already in the picture, and more same-sex couples tying the knot. "This is incredibly important, as we realize our customers come into our stores carrying an ever-widening range of life experiences," she explained.Meanwhile, millennials are more likely than baby boomers or Generation X-ers to buy a ring when they get married, she claimed. As such, she said, the industry cannot be complacent and must create powerful experiences to entice millennial consumers.Tech-drivenWhile 90% of customers still visit a physical store during their jewelry-purchasing journey, people are spending more time doing online research, with social-media becoming increasingly important."Customers want to see you and engage with you on their social media platforms," Drosos said. "I envision a future in which we will be able to predict who is going to get engaged based on their social media activity."The use of technology should also enhance the in-store experience, she added. Signet, for example, is creating a "digital vault" of its diamond inventory, so that customers can see over 100,000 high-quality images of the company's stock in addition to the goods it has on display in the store. Meanwhile, through its R2Net subsidiary, Signet is looking into bringing augmented and virtual reality to the jewelry-buying experience, Drosos reported.Drawing on these few examples, she declared that it was up to companies to adapt to these trends if they wanted to survive and grow in the current dynamic retail environment."If disruption is going to define the next chapter of the jewelry industry, then the ability to create and sustain innovative, meaningful and powerful connections with our customers will determine who succeeds and who does not," Drosos said. "Business as usual is insufficient. We must lead disruptive innovation now." The following article first appeared in the May edition of the Rapaport Research Report. To download a copy of the report, click here and login with your username and password, or learn more and subscribe today.