Confronted with a nearly numb economy, costume jewelers and leather goods seem to go well together in the same point of sale. For some retailers, the two fashion sectors have even become inseparable. Why this combination and what are the keys to its success?
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< “Costume jewelry specialists are working in a very fragile environment where the offer has become saturated, the economic situation has deteriorated and competition is high.” The market study for costume jewelry conducted by Xerfi in 2014* sets the tone. The least we can say is that no one is ready to celebrate. At least not yet. The French are depressed** and their wallets are still pretty much closed. But the situation isn’t as bad as it looks. The French market for costume jewelry, which has worn a long face since 2012, could spring back with an increase of 0.5 points in volume for 2015 according to the same study. The market should reach 1.3 billion euros in value. Something to smile about after the slow business dynamics of 2013 and 2014 when sales volume dropped 2.7 and 2 points respectively. With reduced purchase power, a distribution of transformed expenses (in particular to the benefit of new embedded technologies), consumers are more careful about their budget and cut out the superfluous first. A notion which, unfortunately, does not spare costume jewelry. Retailers, who are caught between physical competition – including ready-to-wear chains that all have invested in accessories in order to offer complete outfits (Zara, New Look, Camaieu, Bonobo, etc.) – and that from the internet, are resisting. In addition to hanging onto that which makes them different with the notion of advice and proximity, some of them opt for diversification. Granted, for many years, costume jewelry retailers have expanded their offer with textile accessories, from stoles to hats, and for some, gloves and umbrellas, but now the time has come for an amazingly successful alliance between jewelry and leather goods in the same point of sale, and this even the area is quite small.
Diversification for existence?
You have to be creative or even “re” creative when faced with an overflowing, almost congested market. You need to rethink your point of sale. Ultra-specialization – a very Franco-French business structure – is giving way to more polyvalent, more multifaceted concept boutiques that less rigid than their “elders”. In fact, there are an increasing number of retail stores that build their identity on “mixed products”, like only the largest concept-stores in fashion capitals could do in previous decades. Thus, Véronique Plestant is “not strictly jewelry as she was before”, with her Lola shop in Albi. “In addition to jewelry labels such as Gas Bijoux, Gigi Clozeau and Ginette NY, I also offer leather goods by Vanessa Bruno and Jérôme Dreyfuss, as well as shoes and ready-to-wear. Half of my articles are fashion accessories. I started with jewelry, but I had to evolve because designers in the sector are very often copied and the competition from the low-end range was fierce. Also, players in costume jewelry have all opened e-stores.” Satellite, Les Néréides, etc.
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Nearly two-thirds of labels on the panel that were surveyed by Xerfi had e-shops. Again, according to Xerfi’s sampling of specialized pure players, ‘revenue from the e-stores outperformed costume jewelry sales between 2009 and 2013, even doubling during that period.” In order to maintain ground, or at least not to lose any, costume jewelry retailers are reacting, in particular with a renewed offer. “If we do nothing, we are just going to become a window on the internet and nothing else…Now, my offer is current, timeless, plural yet coherent,” emphasizes the owner of Lola. Coherence between jewelry and bags which seemed natural, even for those who, like Sandrine Martins said that they were reticent about all-out diversification. In her shop, Lady Di, she should love to add leather goods. But “I don’t have the shelf space for it. We can’t just tinker,” clarifies the owner based in the Parisian suburbs. “I will remain in jewelry. Bags and jewelry really do share the same universe, but we just don’t have enough room.”
A natural match
Retailers who have a dual offer are unanimous: the same customers buy these two types of accessories. Fabienne and Alain Schermesser, owners of Carrel in the city of Sète, bought a shop that was dedicated to jewelry and gadgets in 1986. They immediately replaced the gadgets with leather goods because, according to them, “it’s the same customer who buys jewelry and bags,” which can lead to doubled revenue. Today, the store allots as much space to Mac Douglas, Liu Jo and Lollipops as it does to Clio Blue or Gas Bijoux.
Chez Violette, based in Paris, makes the same observation: “I started introducing bags in my offer with the Nat&Nin label seven years ago. My revenue has been constantly growing ever since. Diversification is unquestionably one of the reasons. We ended 2014 with a 3% increase in revenue.”In Montpellier, Carlita has also been combining the two fashion universes “for five-six years, when we started selling less jewelry than before,” notes Patrick Rouquairol. The owner turned his choice to “models that were a bit like jewelry, with sequins for example,” that you don’t find in traditional leather good shops. The results? “Our offer is somewhat divided into two parts. At a glance, jewelry accounts for 70% of revenue and other fashion accessories 30%. Bags account for 80% of fashion accessory sales.”
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In addition to the target clientele, sales periods are in harmony as well. Leather goods are excellent products for the beginning of the season, which “enables us to balance revenue throughout the year because it sells well during the slow months for jewelry, which are the months of September and towards March and April. Retailers don’t follow a traditional calendar year,” adds Aurélie Desenclos (Chez Violette). At Carrel, the Schermessers agree: “when jewelry is slow, bags work. Sales are also better for leather goods which generally work like ready-to-wear; it is more of a seasonal product than jewelry. Jewelry has a steadier sales pace as a gift, no matter what time of year.”
Selling bags, a different tactic
However, there is the issue with size: a point of sale is not expandable and leather goods take up more room than jewelry. If orders are not managed well, there is a risk of creating too much stock which is a problem because it is bulky. “We had to reduce to bring leather goods into the shop: less bulky furniture, more shelves and hanger displays,” explains Aurélie Desenclos. You also have to be careful because leather bags from the supplier, rates can be higher and margins less. Margins are usually close to the coefficient 2.25, while jewelry usually generates 2.5 to 3. Yet, players in the sector seem to be mobilizing. As for labels, Lollipops, among others, is one that guarantees its retailers “a margin of 2.5, even on leather,” ensures the General Manager. Retailers are becoming strategists because, although they don’t turn their backs on designer jewelry labels – essential to attract and reassure the clientele – some get their supplies from wholesalers, in particular for their leather goods offer.”
“We look for leather goods at the lowest cost and since you have to carry the latest fashion in leather goods, we place micro-orders,” explains Anne Grima from Sucre Bleu in Paris, whose leather bags sell for 70-80 €. “Customers can’t take bags at 300 € any longer. They want to be unique but not at any cost,” she adds. Questioned retailers often mentioned that despite the necessity to remain in the affordable price category, diversification offers a larger price range to their point of sale than if they only sold jewelry. At Carlita in Montpellier that offers Estellon and La Piste aux Etoiles, the owners note that:”our fashion leather goods offer a wider price range for my complete offer (…) and generates a higher average shopping basket than jewelry.”
Choice yes, dispersion no!
However, not all attempts work. Independent multi-labels must make a weighted decision. Chez Violette can testify. “We tried masculine jewelry three years ago but it didn’t work. My customers didn’t like having to push their way around tall, husky men!” In preparation for diversification, the Parisian shop found – in addition to leather goods – an unexpected channel by commercializing its furniture: “Beyond the fact that is offered for sale, it enables you to change decoration, because in a shop, you are always displaying. When items bought at the Maison&Objet trade show are delivered, I am sometimes horrified to see all of the palettes! But that only lasts for a brief moment…It generates renewal.” Because the issue at hand is to enable the point of sale and the dual offer to thrive on a daily basis in order to last. For many specialists, that means involves the notion of choice. “Today, we can enter into ones life like in a role-play game. A woman who loves leather one day may put on a lace top with cameo jewelry the next day.
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So we have to keep them from falling into a rut. We wake up every morning with different moods, just like our customers. So our door has to remain open to all styles, all desires,” adds Anne Grima who appreciates the chromatic colors that her bag add to the shop. At the head of Lollipos, Yann Ducarouge shares this opinion: “the market is segmented because labels segment it, but the final buyer is quite versatile. The consumer does not segment like that.” Retailers’ but especially the clientele’s appetite for renewal, differentiation and diversity has and can lead labels to expand their ranges. Thus, Jean-Louis Fourès presented leather bracelets for men and women at Who’s Next Paris in January 2013. On the other hand, Gas Bijoux ventured into the bag universe in winter 2012-2013 by launching a mini collection of small leather goods accessories in python.
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The label continues diversifying today with bags and pouches decorated with jewelry and colorful leathers. It seems that the craze for evening pouches and clutches that fusion the jewelry and bag universes, has definitively united both fashion universes, especially since the early 2000s with the immense success of the luxury label, Fendi and its Baguette bag, followed by the phenomenon of the mass market reclaiming it. However, “for a creator or a manufacturer, it is very difficult to anything else but their core business: a jeweler cannot become a leather goods maker overnight, in the same way a pastry chef cannot become a cook,” adds Chez Violette. It’s different for retailers: we only pick and choose.”
*Xerfi study called “Prévisions 2015 et perspectives à moyen terme, paysage concurrentiel et mutations de l’offre” and conducted by Anne Césard (February 2014).
**according to a study carried out by the American Institute, Pew Research Center last spring sampling 48,643 people in 44 countries, nearly half of the French people questioned (48%) think that the economic situation will deteriorate in 2015.
General Manager of Lollipops,
How do you assess your entry in costume jewelry retail shops with leather goods products?
I’m not really surprised since we think of accessories as a fashion complement. It seemed natural for us to distribute in shoe shops. When we started in 1999-2000, costume jewelry retailers who offered a few other accessories (stoles, hats, etc) naturally come to buy from us. Today, 20% of our multi-label distributers are costume jewelry retailers. Even thought 50% are specialists in ready-to-wear and the remaining 30% are leather goods shops, the proportion in the 1st category tends to increase.
How do you meet their demands?
We have set a minimum order of 1, 5000 €, which is not a deterrent. In fact, some labels, in particular stores whose core business is leather goods, have set much higher minimum order levels that become prohibitive for retailers who work mainly in jewelry.
Have you developed products or collections specifically for this network?
It does influence us in a good way. If we were solely distributed in leather goods stores, we would create much more sensible models. We can still allow ourselves to make products with the Lollipops’ DNA for jewelry retailers: sparkling, fantasy bags with bright colors and materials. For example, these bags combine metal parts that add a jewelry touch without becoming a ‘jewelry bag’. We also launched a new range of bags in June 2014 called Lollipos Atelier. Granted, it is in leather, but the line does not have a traditional leather goods stereotype. It was designed mainly for our flagship stores and costume jewelry retailers. The latter were very receptive. We develop collections that are sufficiently large to be able to work with everyone.
What are the benefits and inconveniences of their purchase habits?
Jewelry specialists order less than leather goods shops. However, the customers are often much more loyal. Without it being a real inconvenience, they also order a bit later – several weeks after leather goods stores- and we don’t see very many of them at trade shows.