Local Jewelers Successfully Vie for Place in Booming Internet World Marketplace

If bling’s your thing, you can do plenty of things to get that ring.

These days you can walk into a big concrete box, such as Wal-Mart, Costco or Fred Meyer, and buy carats with your carrots. You can hit the mega-mall for gems and jeans. You can find a diamond that wasn’t forever (the first time, at least) by buying used from a pawnshop or classified advertiser. You can shop for gemstones with keystrokes in a booming Internet world marketplace.

Or, you can do what your parents and grandparents did and tap into generations of experience at local jewelry stores.

Things certainly have changed in the business, and jewelers around the country who haven’t adapted often have died.

But the modern age hasn’t killed the hometown store.

Erik Runyan, whose family has been in the Clark County jewelry business for 90 years, broke his own sales records the past three years at his downtown Vancouver store, although rising gas and property prices recently have cooled things off in business that is like a thermometer tracking the economy’s temperature.

Rather than fearing additional competition, Joe Lanning, owner of My Jewelers in Vancouver, said he welcomes a new breed of well-educated shoppers to his downtown store.

Even Terry Shepherd, who runs red hot The Pearl Outlet online from his home near Woodland, said, “The brick-and-mortars aren’t ever going to go away.”

Forging relationships

The reason Runyan and Lanning have survived and even thrived in an era when Wal-Mart sells more diamonds than anyone and The Pearl Outlet’s sales are doubling by the year is that they can forge a long-term relationship and reputations with customers that are tougher to match on a computer screen or mega-retail warehouse. In other words, they are betting that customers still want their help in finding high-quality jewelry that is just right for each individual, at a neighborhood store and at a fair price.

“If I sit there and try to go toe to toe with Costco (solely on price), I probably won’t win,” said Erik Runyan, whose cousin runs a separate Runyan’s in Camas. “We have to excel in areas where they can’t, and that’s service and the relationship aspect of the business. Once we’ve got that established, the diamond aspect is relatively easy. It’s just show-and-tell.”

Cyber-shoppers

Following the emergences of major jewelry chain stores in every mall and the growth of jewelry sales at department stores and discounters, the Internet is the next great competitor in the jewelry business.

In a recent newsletter, Louis Mousseau, president of Polygon, a giant jewelry wholesaler, wrote: “While a growing portion of consumers are now completing their purchases online, e-tailer only jewelers will continue to face market penetration limitations due to various issues, such as lack of trust and experts’ advice, after-sale service, and moreover, the undeniable fact that the majority of shoppers will not buy jewelry without first seeing the physical product.”

Online sales

Nevertheless, Mousseau himself cited Forrester Research data that by 2005 online sales reached 7.5 percent (or $3.4 billion) of all jewelry purchases – a percentage of business the research group expects to nearly double by 2010.

Shepherd saw the Internet potential in the 1990s, a time when his job with Hewlett-Packard brought him to Asia. He noticed that on his travels he could pick up $35 strands of pearls that would retail here for $500, and he saw a business opportunity. He and wife Crystal started The Pearl Outlet on the side in 1998.

“It was profitable from the day we started it,” Shepherd said. By 2004, sales hit $1 million and he quit his day job. Sales were over $2 million last year and are on track to double again this year, as more shoppers trust a maturing online marketplace, he said. And The Pearl Outlet is small compared to online diamond giant Blue Nile, which posted more than $90 million in net sales in the fourth quarter (includes the Christmas peak) of last year alone.

Shepherd still travels the world for the best pearls at affordable prices. He recently saw a strand of high-end Akoya pearls offered at a wholesale price of $5,000, which retailers might then list for up to $15,000. He sells the same piece for $3,800 on his site. Not only that, but he also has a $600 strand of freshwater pearls that most buyers couldn’t differentiate from the pricier strand.

“That’s why we do such a huge amount of business,” said Shepherd, whose site typically gets 1,800 separate visitors a day. Of course, many aren’t buyers, but it’s certainly the kind of foot traffic he and his handful of employees couldn’t match if they ran a local store. “The number of people online looking for pearls is just huge.”

Store advantage

Shepherd recognizes that stores still hold an advantage in being able to show jewelry in person, so The Pearl Outlet can arrange to show customers pearls at a gallery in, appropriately enough, Portland’s Pearl District. But most customers, including some re-sellers, come from larger states and even international locations and buy on faith and the company’s satisfaction guarantee.

Erik Runyan forayed into “e-tailing” in the late ‘90s, when it seemed like everyone was doing it, but the high number of suspicious inquiries made him nervous, so he shut down his electronic store. He still keeps a Web site, but like the billboards and bus signs in his marketing campaign, the site is designed strictly to build image and name recognition to bring people through his doors.

Lanning, owner of My Jewelers, doesn’t have a Web site at all. “I just don’t have the manpower that would be necessary to do that,” he said. He relies mostly on referrals and repeat customers for his business, which also includes repairing jewelry for other retailers.

Nevertheless, Lanning credits the Internet with helping – rather than hurting – sales at his business. Electronic browsers walk in knowing what they want and what it should cost. In particular, cyber-shoppers are learning more about colored gemstones, a My Jewelers specialty. “We end up with a lot of people who have pre-shopped on the Internet making purchases here.”

A few jewelry trends

Pearls are hot. Nancy Pelosi’s wearing them so much you can buy “Pelosi-style pearls” online to capture the Speaker of the House’s fashion trends. Hillary Clinton wears them, too. These are strands with various shades of pearls matched together, not the conservative white strands Barbara Bush wore. In recent years emerging aquaculture techniques, especially involving freshwater pearls from mussels in China, have vastly improved the quality and selection of pearls available at affordable prices.

Not just birthstones. It’s more fashionable these days to buy gemstone jewelry to match outfits, rather than just matching someone’s birthstone. It’s also more common to mix multiple colors of stones in one setting. Jewelers are stocking more stones in a wider array of settings.

Women are buying more jewelry. In the old days, men made more of the jewelry purchases to give to women. Now, women are coming in more to make the purchases. Local jewelers believe this trend is driven by the fact that more women are in professional jobs, are financially independent and have disposable income.

Metal prices are up. The prices of platinum and gold have roughly doubled in recent years. You may not notice the markup in a $10,000 wedding set, because diamond prices have been steadier, but if you go in to buy a simple platinum ring that cost $300 a few years back, be prepared to spend $500 to $600.

Price isn’t everything. Some customers are asking for socially conscious jewelry. For example, “Blood Diamond,” a motion picture starring Leonardo DiCaprio that came out last year, made more consumers aware of the violent history associated with diamond mining in some African nations. Certified “conflict-free” diamonds are an alternative.

Buying a diamond in three steps: 1) Find a qualified jeweler. Choose your jeweler as you would a doctor, lawyer or other professional. Look for professional training such as Gemolocal Institute of America (GIA) Graduate Gemologist or GIA Accredited Jewelry Professional credentials, as well as affiliations with jewelry industry groups and associations. A good jeweler will be able to explain diamond quality and help you compare diamonds in your price range. 2) Learn the “4Cs” of diamond quality. No two diamonds are alike. Rarity is determined by characteristics often measured by the 4Cs: carat (weight), clarity, color and cut. An exceptional small diamond will likely be more valuable than a larger diamond of lower quality. 3) Ask for an independent grading report. GIA Gem Trade Laboratory and other graders can provide piece of mind that the diamond you are buying is the quality you expect. A professional jeweler can arrange the grading and also have a personal message or unique grading number laser-inscribed on the diamond. Source: Gemological Institute of America Caring for jewelry Diamonds ● Diamond is the hardest natural substance on Earth, and therefore nearly indestructible. Yet, oil deposited from the mere touch of a human finger can cause dirt to collect and make this gemstone quickly lose its sparkling appeal. Try these tricks to maintain your diamond’s luster. ● Handle diamonds sparingly. This avoids the natural oils that are like a magnet for grime. ● Clean diamonds regularly. Soak the diamond in an ammonia-based household cleaner, such as some types of window cleaner, overnight once or twice a week. In the morning, remove the diamond from the cleaner and brush it with a soft, clean toothbrush (one only used for the diamond). Use a soft touch on fragile settings. Rinse the diamond with water and wipe with a soft, lint-free cloth. ● Don’t use harmful solutions. Chlorine (such as household bleach) or abrasive cleaners or toothpastes, should never be used on diamond jewelry because they may erode or dissolve the metals or loosen prongs. ● An ultrasonic cleaner may be necessary to remove encrusted dirt. This uses high-frequency sound waves through a detergent solution to remove grime and is usually best left to a professional jeweler. The cleaners can shake stones loose from mountings, so it shouldn’t be used on fragile settings or estate jewelry. Other jewelry ● Colored stones. Most types should be cleaned with warm water, mild soap (no detergents) and a soft brush. A pulsed-water dental cleaning appliance and a soft, lint-free cloth may also be used. Excess light and heat can harm some gemstones, so take care in storing them. Common chemicals such as household bleach and other cleaners can harm some gemstones. ● Pearls. These also are sensitive to light, heat and chemicals. They are quite soft, so clean them with an unused makeup brush and warm, soapy water. Lay pearls on a towel to dry and don’t touch while wet to avoid stretching and dirt. Pearls worn every few days should be restrung yearly. ● Metals. Remove before exposing to household cleaners and even chlorinated pools. Most precious metals are soft and should be cleaned with great care. ● Many jewelers offer free checkups. Some also offer regularly scheduled cleanings. Source: Gemological Institute of America