Diversify, Diversify, Diversify – Chapter 2

by Abe Sherman – CEO, BIG – Buyers Intelligence Group

January 30, 2025

Don’t Be A Frog

When you’re feeling safe and secure in that warm pot of water, is when you are most susceptible to getting thoroughly cooked. Scrambling after you get the letter from BrandX or BrandY or BrandZ is far more challenging than planning in advance.

There are seven categories to concentrate on. Think of these as “positions” for your company to have in your marketplace:

Bridal
Diamond Fashion
Watches
Brands
Color
Custom
Estate

Each of these categories represent growth opportunities, yet each come with their own challenges. Expanding your Bridal department, for example, requires significant investment in both space and money, although ironically, not nearly as much as the costs associated with building out the required “brand environments”.

When you do a showcase analysis, you’re likely to find that your bridal department is producing far more than the space that’s being allocated to it. Bridal would be my number one choice for growth. More showcase space, a wider range of price-points, better story-telling, more marketing, sales training, product knowledge, etc. Growing the bridal department has been the #1 reason for success for most of the stores we work with.

Your Bridal Department might be a 100 linear feet multi-brand experience, usually anchored by two or three well-known brands. But just as often, we see ‘bridal departments’ as a few showcases of unbranded merchandise, resulting in a completely different shopping experience for your customers. The difference in these overall presentations are the decisions that each of you has to make for your own stores. But the decisions that jewelers make are not made in a vacuum, your potential brand-partners also have a vote. Are you the right partner for them or are there other retailers in your marketplace that will give them the sell-in and sell-through that they need to meet their company’s goals? And if you happen to be the jeweler looking to expand your bridal department, how many bridal brands you might be interested in are not available to you in the first place? Expect these decisions and relationships take time to develop and implement.

Thinking about each of these positions strategically, it may take several years to move from where you are to where you need to get to. Should BrandX or BrandY (those who are generating the lion’s share of sales volume) go away, you will need time to replace that revenue and it’s far better to begin building your business without them while you still have them. Even if having them is forever and you never lose your top brands, your business will still benefit by diversifying.

Diamond Fashion is the next area that usually needs quite a bit of attention and has great opportunities for growth. Every category needs to be planned by price point and assortments need to be created to, once again, tell compelling stories. Should you be adding new lines or expanding with your existing suppliers? It’s a good starting point to review your existing suppliers to see if there are opportunities to grow with them first.

Introducing additional fashion brands to your store can also be challenging, depending on your marketplace, competition, customer base, showcase space and cash flow. Analyzing your current space and assortments and then implementing a growth strategy takes patience, since you shouldn’t just add tons of new inventory willy-nilly. Having great brand-partners should help you build these assortments.

Redeploying Capital

When refocusing away from one or two key brands gains momentum, capital must be redistributed to the rest of the business. Capital, not just in the form of additional merchandise, but also marketing capital, showcase space, sales training and trunk shows. Concentrating on other areas of the business requires an “all-hands-on-deck” in order to succeed in these other areas. Just buying new lines doesn’t let the marketplace know that you are a player in these different categories. New areas of concentration doesn’t mean that one has to abandon the aforementioned key brands, but to diversify the business and encourage growth in other areas. After a year or two, the power of and concentration on the big brands will decrease and your business will benefit from this expansion. In our experience, these moves always results in increased sales and profits and overall healthier businesses.

Those Who Have Come Before You

Replacing the loss of BrandX isn’t a new challenge. We have had these same conversations with jewelers for many years and the results are promising. In almost every single case, not only have the stores who lost their top performing brand(s) replaced the missing revenue and profit, but they have far exceeded their previous numbers. This is due to the jewelers understanding of the importance of pivoting to a new model, one not reliant on only one or two brands. Once their eyes were opened to the enormous opportunity their marketplace provided, they dove into these new categories, usually beginning with Bridal. In just one or two years, their businesses were made whole by their commitment and they continued this growth since the old BrandX had no long-term impact. They are all healthier because of these changes. This is not to say that you’d want to lose your top performing brands, just prepare your business in case this should occur in the future.

Parting Advice from Ray Dalio