The evidence is indisputable. A major upheaval is underway in the retail markers, changing supply, sales and marketing concepts that have held sway for many decades. The online arena is the critical game-changer, but does its growing authority spell the end of traditional brick and mortar shopping?
Almost certainly not. But it does mean that the way in which business is being done is changing substantially, and, if brick and mortar retailers are complacent and fail to recognize that, they could pay a heavy price.
The fact is that, in developed markets, while the jewelry business itself is growing, the number of companies trading is falling. According to the Jewelers Board of Trade, a U.S. professional association that keeps track of registered businesses in the gemstone and jewelry business, 1,669 jewelry outlets stopped operating in 2016, which was 50 percent higher than the number reported in 2015. Some 275 new outlets were created during the course of the year, about average for a 12-month period.
This not a phenomenon that is limited to the jewelry industry. A Credit Suisse Group analyst recently noted that year-to-date retail store closings in 2017 are outpacing those the rate that existed during the height of the world global recession in 2008. In coming years, more than 10 percent of current U.S. retail space may need to be closed, reassigned or renegotiated for lower rent, reported the Bloomberg news agency.
But is the falling number of brick and mortar retailers indicative of a failing business model, or is it rather the result of the departure from the business of individual retailers who are unable or unwilling to make to the transition to an economy where the Internet is an ever-present player?
According to Kiplinger, a business forecasting agency, in the United States e-commerce sales will grow 15 percent in 2017, compared with 13 percent in 2016. But that does not come at the complete expense of in-store sales, which also are expected to grow, albeit at a much more modest rate of 2 percent. It is worth noting that brick and mortar stores still account for more than 90 percent of all retail sales.
The online market phenomenon is not killing the traditional brick and mortar store, but it is forcing it to rethink the way it does business. In Italy, for example, which is home to Europe’s third largest economy, some 57 percent of consumers research the Internet before making an online purchase. That’s unsurprising, but what is more interesting is that an even higher percentage, 67 percent to be exact, conduct online research before purchasing an item in-store.
“When I speak to a retail client, I essentially have two pieces of advice,” said Dotan Meirov, a principal at MID House of Diamonds. “The first is, regardless of the type of business you run, it is essential that you have an online presence. The second is to consider carefully an API model, which enables you to offer a wide range of inventory to your clients through your own websites and mobile applications.”
“In the new business environment, the decision to establish an online presence does not necessarily mean you are relinquishing or disregarding your in-store operation,” Meirov continued. “On the contrary, the Internet today is possibly the most important tool that you have for getting the client into your store. And then, once he or she has made that move, you can then do face to face what is considerably more difficult to do online, and that is to sell up.”
MID House of Diamonds regards the enabling of its clients’ online sale presence as an integral component of its own marketing strategy. It employs a team of computer programmers on a full-time basis in its own offices, whose primary goal is to deliver, via an application programming interface (API), in real-time, up-to-date listings of the thousands of polished diamonds that it is holding in its inventory at any given point in time.
What the API allows is for retailers to list diamonds, pricing them with their own markups, enabling their customers to search and locate specific items. In the meantime, the goods remain in the possession of the supplier, meaning that retailer has made no financial obligation until his or her own customer has expressed interest in a specific stone. When a transaction comes to fruition that same diamond can be delivered in a matter of hours or days.
Effectively, a traditional retailer that, in days gone by, may have held handful of polished diamonds in the store’s safe, today can offer, via the API, as many goods as its suppliers have on offer, which are relevant to its own customer base.
“The Internet should not be competing with brick and mortar retailers,” says Dotan. “It should be turbo-charging their business. It is not a question if, but rather one of how. And we are here to help.”
PART 2: API – A myriad of options