Consumers Prefer Retail Jewelry Stores over Online Diamond Sales

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Brick-and-mortar retailer Ganem Jewelers proves personal service prevails over lower online diamond prices.

Those persons who live remote, by sending their orders and money to said B. Franklin may depend on the same justice as if present.

According to Kenneth Gassman with the Jewelry Industry Research Institute, online jewelers capture only 5% of U.S. jewelry sales, with an estimated extended cap of 10%. Since the beginning of consumerism, product cost and service have defined the success of a business in the eyes of the purchasing public. However, when cost and service conflict, buyers find themselves in a dilemma, especially when it comes to buying a diamond—do they prefer buying it online to save on overhead, or over the counter in a brick-and-mortar store? According to Jason Ganem, co-owner of Ganem Jewelers in Scottsdale and Ahwatukee, Arizona, when statistics are added to public opinion, over-the-counter purchases win the prize.

“The secret to our success is building lasting customer relationships,” states Ganem. “We focus on customer product education, service and satisfaction; and the relationships fall into place. Our customers are our extended family. That kind of relationship just isn’t possible with online sales, nor is the immediate tactile and visual shopping experience that a store like ours provides. Every one of our customers is considered a gift and we’re going to do everything we can to take good care of them. Trust is everything in our business, so we would never want to do anything to jeopardize that trust.” Jason and his brother, Curtis, opened their Scottsdale store in September 2008 amidst the current recession and boast strong sales in both stores.

“There will always be consumers looking for deals on the Internet and there will always be consumers who will insist on the hands-on approach of seeing, feeling, touching and ultimately purchasing their jewelry at a local jewelry store,” states Judah Gutwein, a retail jeweler operating from an e-commerce platform.

Two thousand years ago, shoppers searched the “agora” for their treasures—the established marketplace at the foot of the Acropolis in ancient Greece. Today, more than 95% of all retail purchases occur in a store, often in a mall reminiscent of the agora of yesteryear. In 1744, Ben Franklin offered non-store competition by publishing and distributing a catalogue of scientific and academic books, “Those persons who live remote, by sending their orders and money to said B. Franklin may depend on the same justice as if present.” He even offered a guarantee. 1872 saw the A. Montgomery Ward catalog shipped to farmers throughout the Midwest, and Sears and Roebuck soon followed with their famous catalogue in 1886. By the 1980’s, catalogue sales had garnished 3% of the total retail dollars spent in the U.S. Today, it’s the Internet that provides retail stores their prime competition.

Online jewelers, for instance, generate 80% of their sales from diamonds and diamond jewelry, with a higher average ticket than retail jewelers. Diamond and diamond jewelry sales for retail jewelry stores average 48% of their overall sales, according to Gassman. Online prices can vary greatly depending on the website and documentation used to identify a diamond’s quality. Most experts consider graded evaluations and certification from the Gemological Institute of America (GIA) and the American Gem Society (AGS) to be the most consistent and reliable throughout the industry.

The main criticism of store-based jewelers is their lack of substantial diamond inventories compared with online vendor inventories. The truth is, however, that a majority of online diamond merchants list and display inventories that remain in the physical possession of their wholesalers. They post them to their site via an electronic download, excluding them from personally viewing or quality controlling the stones. As a result, the same diamonds can often be seen on a variety of competing sites. This makes it possible for a single diamond to be “purchased” from two or more websites at the same time.

Many storefront jewelers, however, do carry substantial inventories that customers can see, touch and compare. In a recent interview with Jason Ganem, he stated, “We always have an extensive selection of loose diamonds and diamond jewelry on hand. Currently we have approximately 600 loose diamonds. So, whatever a customer wants, we have something to show them. We have 10 to 12 diamonds of a similar grade, weight, cut and clarity to show customers to most jewelers’ one or two. Customers enjoy seeing the diamonds under our microscope, which enables them to see the color and quality differences for themselves.” Storefront jewelers also offer “after sale” services, such as sizing, cleaning, tightening and upgrading that aren’t available with online sales.

A recent online survey asked if respondents would buy a diamond engagement ring on or offline. Ten out of 17 gave unequivocal support to an offline, brick-and-mortar store for their diamond purchase. The responses included the following: they are safer; you can personally examine the size and quality of the diamonds; when spending that much money, you want to see it before you buy it; how do you know you’re getting what you paid for; it’s hard to know the trustworthiness of online vendors; and how do you know if online vendors will honor their guarantee, if they have one. If there is dissatisfaction or problems with a diamond purchased online, returning it could be an additional hassle.

“We tested and rated all of the top 24 online diamond dealers and only found 6 companies that earned a perfect score,” states Robert Hensley, President of Diamond Helpers. “Then we eliminated the ones that received any poor consumer feedback, and now we are left with two companies that have truly proven over the years that they have the customer in mind. All the others don’t seem to hold to their word about refunds or service after the sale if you have a problem.”

“For many reasons, we believe that (diamond) shoppers worldwide will continue to do most of their shopping in bricks-and-mortar stores,” concludes Gassman. “Online commerce isn’t going to put store-based jewelers out of business, other than the weakest merchants who are already on Death Road.”

“There is just no substitute for seeing a diamond up close and personal,” says Ganem. “The best jewelers will show customers a variety of options in their price range and educate them on the 4C’s: cut, color, clarity and carat weight. Buying a diamond, loose or in a setting, is a substantial purchase and consumers deserve to feel comfortable and trusting of the person selling it to them.” As far as customers are concerned, their greatest joy could be as simple as walking out of the store with their diamond purchase in hand.

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