ColumnistsMay 24, 2022
The PR Adviser: 10 Questions to Contemplate ColumnistsMay 31, 2022
Squirrel Spotting: Growing Your Business When Unit Sales Peak
Discount less and sell more expensive products, Peter Smith writes.
Peter Smith is an industry consultant, speaker, sales trainer, and author. He can be reached via email at TheRetailSmiths@gmail.com.
Dan Ariely, the author of “Predictably Irrational,” one of the seminal books on psychology, wrote, “If we see a discounted item, we will instinctively assume its quality is less than that of a full-price item—and then, in fact, we will make it so.”
The psychology of pricing is no easy matter.
In many respects, we see what we want to see, and, absent the safety of company prohibitions, our actions are often the result of personal biases, effected with little consideration for the overall health of the business or the longer-term benefits to customers; pricing becomes nothing more than a baseline for discussion, even as that discussion is often a catalyst for customer anxiety.
Price ambiguity can, at its worst, be a descent into the abyss of unprofitability.
Accepting the profound impact that pricing has on profitability, and, consequently, the health of a business, one would expect a good deal more discussion on the subject, as a moral issue, as a practical matter, and from the perspective of consumer psychology.
With the amazing run we are seeing with jewelry and timepiece sales these past couple of years, it would be easy to ignore the impact of discounting and pricing decisions in general. However, there are signs now emerging that should signal a note of caution for the near future.
The biggest of those signs is a flattening of unit sales with independent retail jewelry stores.
Related stories will be right here …
The psychology of pricing is no easy matter.
In many respects, we see what we want to see, and, absent the safety of company prohibitions, our actions are often the result of personal biases, effected with little consideration for the overall health of the business or the longer-term benefits to customers; pricing becomes nothing more than a baseline for discussion, even as that discussion is often a catalyst for customer anxiety.
Price ambiguity can, at its worst, be a descent into the abyss of unprofitability.
Accepting the profound impact that pricing has on profitability, and, consequently, the health of a business, one would expect a good deal more discussion on the subject, as a moral issue, as a practical matter, and from the perspective of consumer psychology.
With the amazing run we are seeing with jewelry and timepiece sales these past couple of years, it would be easy to ignore the impact of discounting and pricing decisions in general. However, there are signs now emerging that should signal a note of caution for the near future.
The biggest of those signs is a flattening of unit sales with independent retail jewelry stores.
March’s decline of 1 percent and April’s decline of 2 percent might not yet trigger fire alarms, but they are import indicators as unit sales have long served as a proxy for foot traffic. Put simply, foot traffic has likely begun to recede from the heady days of late 2020 and 2021.
If you plan on growing your business in an environment with fewer people coming through your door, and fewer units of sales, you must explore strategies to increase your average ticket.
There are effectively two ways to do that.
The first is to stop discounting, or at least discount less, and the second is to sell more expensive products.
In a prominent case on price perception, researchers from Stanford and California’s Institute of Technology tested wines on students while measuring their brains on fMRI technology.
Without telling the students, the researchers presented the same wine twice. Once, telling the students that the wine was a reasonably priced variety. The second time, telling the students that the wine was a very expensive type.
The reaction of the students was to point to the most expensive wine (again, the exact same wine they had tasted earlier believing it to be a lower price) as the most enjoyable.
However, rather than arriving at their assessment of the “expensive wine” because they believed they ought to prefer the expensive wine (who among us wants to admit we can’t tell the difference between ordinary and extraordinary wine?), what the researchers discovered was something they had not expected.
“If you plan on growing your business in an environment with fewer people coming through your door, and fewer units of sales, you must explore strategies to increase your average ticket.”
When the expensive wine was presented and the students were told it was the expensive wine, there was a flurry of activity in their medial orbitofrontal cortices not witnessed when they believed they were drinking the lesser priced wine. That’s the area of the brain where we perceive pleasantness.
In short, telling the students that it was a higher-priced product actually changed their neurology and improved their enjoyment of the wine.
Roger Dooley wrote in his book “Brainfluence: 100 Ways to Persuade and Convince Consumers With Neuromarketing” that, “What the research shows is that what customers believe about a product can turn into reality; if they believe a product is better, it will be better.”
This is probably as good a time as any to remind ourselves that we can’t make a silk purse from a sow’s ear. I’ve never seen any research to support the idea that taking a poorly constructed piece of jewelry and marking it up to pretend it is something else is ever a good long-term strategy.
What customers want more than anything else is to come away from their shopping experience feeling good about what they purchased. They don’t want to harbor regrets about whether they bought the right thing or not and, provided the quality is good and as stated, they actually feel better when they pay more for a product. They assume that the premium priced product is a better quality.
You may believe your customers want the lowest price. Your salespeople may be primed to negotiate and make a deal with every diamond conversation. You may even believe that you are doing your customer a favor by discounting your products or by under-selling the customer.
But you would be far better articulating the real value proposition of your products. Understand what customers really want and inspire them to reach and extend themselves to acquire the best products they can. That, ultimately, is the best deliverable.
You might even include a nice bottle of wine.
More on Columnists
The Latest
MajorsJun 27, 2022
George Holmes, Longtime Head Editor of JCK Magazine, Dies at 93 He first took a job at then Philadelphia-based Jewelers’ Circular-Keystone in 1963 and retired in 1996.
MajorsJun 27, 2022
Mayors, Analog:Shift Team Up With GoopThe lifestyle platform will stock fine jewelry and watches from the retailers on its website and in store.
CrimeJun 27, 2022
JSA Warns of ‘Pandemic’ of Distraction Thefts Nationwide It cited two recent cases in California, plus incidents in Florida, Kansas, and Illinois.
Brought to you by
Preparing for Proposal Season with High-Quality, A.I.-Graded Natural Diamonds Rare & Forever is helping to create an enjoyable diamond buying experience for the millions of newly-engaged couples.
IndependentsJun 27, 2022
Lewis Jewelers Set to Open New Ann Arbor Store This SummerThe 10,000-square-foot location allows for expanded collections from design partners while continuing custom design and other services.
Weekly QuizJun 23, 2022
This Week’s QuizTest your knowledge of the latest jewelry news with this quick test.
CollectionsJun 27, 2022
This Designer Has Found a New Way to Bring Gemstones to LifeSvetlana Lazar’s “Wishing Well” collection utilizes an innovative component to mimic the movement of water beneath them.
Brought to you by
Discover The Extraordinary Italian Jewelry In Las Vegas!Experience all the Italian Jewelry market has to offer in Las Vegas.
Recorded WebinarsJun 24, 2022
Vegas Jewelry Recap: The Editors Weigh InWatch the webinar in which National Jeweler’s editors talk about jewelry market week trends and their predictions for the rest of 2022.
MajorsJun 24, 2022
Banter by Piercing Pagoda Celebrates Pride with ‘SayGay’ NecklaceAll proceeds up to $25,000 will benefit the It Gets Better Project, a nonprofit that supports LGBTQ+ youth.
CollectionsJun 24, 2022
Piece of the Week: Marie Lichtenberg’s Hidden Message LocketIt’s a reminder that life is best lived with discretion.
TechnologyJun 24, 2022
Cloud-Based POS Software Jewel360 Launches for Jewelry RetailersThe end-to-end software allows for real-time control over all sales, inventory, repairs, customer communications, and marketing.
EditorsJun 23, 2022
Antique Show Observations From a First-Time AttendeeAssociate Editor Lenore Fedow shares her impressions of the Las Vegas Antique Jewelry & Watch Show and a few of her favorite finds.
GradingJun 23, 2022
AIGS Launches Grading Report for ‘Santa Maria’ AquamarineThe Asian Institute of Gemological Sciences aims to set a color standard for the trade name.
SourcingJun 23, 2022
Rough Diamond Sales Rise Again for De Beers Sales were up 36 percent year-over-year in June and are pacing 24 percent ahead of last year at this point.
AuctionsJun 23, 2022
Auction House Freeman’s Appoints First Rep in Florida Kate Della Monica, a senior specialist in the Jewelry and Watches department, will relocate to the Sunshine State.
Lab-GrownJun 22, 2022
LVMH Luxury Ventures Sinks Money Into Lab-Grown Diamond Start-UpLVMH’s investment arm has taken a stake in Lusix, a lab-grown diamond company based in Israel.
AuctionsJun 22, 2022
Here’s How Two 100-Plus-Carat Diamonds Did at AuctionSotheby’s New York put a colorless diamond and a fancy deep orange-brown diamond up for sale last week, with mixed results.
CrimeJun 22, 2022
Leviev Diamonds Launches Bracelet to Help ‘Tinder Swindler’ Victims Profits will help them recoup financial losses.
MajorsJun 22, 2022
Swarovski Names First Non-Family CEORetail veteran Alexis Nasard will step in as CEO on July 4.
SourcingJun 22, 2022
Edward Asscher to Remain WDC President for Another YearThe organization also extended the terms of Vice President Feriel Zerouki and Treasurer Ronnie VanderLinden.
IndependentsJun 21, 2022
Jeweler Tommy Glatz, Known for Being Creative and Kind, Dies at 68Glatz owned and operated Glatz Jewelers in Aliquippa, Pennsylvania for more than 40 years.
Events & AwardsJun 21, 2022
24 Karat Club of Southern California Will Honor These Industry LeadersThe organization will present three awards at its annual dinner, dance, and gala in October.
MajorsJun 21, 2022
David Yurman Hires Chief of People, StrategyFormer McKinsey partner Emily Yueh marks new president Evan Yurman’s first hire.
TrendsJun 17, 2022
Britney Spears Wore Over $500K of Stephanie Gottlieb Diamonds at Her WeddingThe New York jeweler also made the pop star’s wedding bands.
AuctionsJun 17, 2022
5-Carat Paraiba Tourmaline Ring to Hit the Auction BlockIt’s predicted to sell for up to $484,000 during the Bonhams Hong Kong Jewels and Jadeite auction on June 22.
Events & AwardsJun 17, 2022
WJA Foundation to Offer Tech Scholarships for Women of ColorThe recipient will receive up to $17,500 toward a tech-focused certification or program of their choice.
