Thursday, January 10, 2008

Designing in Recession - Part I

When a product gets hard to sell, a design gets harder to create.

One of the aspects that needs to be considered is the behavioral changes in a consumer when it comes to shopping for jewelry. Recession causes consumers to scale back on their discretionary spending. Jewelry is one of the first things that one would willingly live without.

There will always be the ever lasting engagement rings and other staples that will continue to sell. After all, in the burning fire of love and romance, what's a recession to come in the way of a proposal. Usually the savings begin months and sometimes even years before the actual proposal and purchase.

Due to recession, however, the prices and the demand for new engagement rings can be affected by the surrounding inventory in the store. The stores will in order to churn their inventory and move or rotate the dead stock give heavy discounts on the products. And so an average consumer may find it easier to shop for the lower prices.

In such an environment, it is tough to stand out. Thus, stores and designers who focus on creative and variety of designs with alternates to price ranges for engagement rings and other staple jewelry can increase their margins and keep customers attracted. We believe that the behavior of the customer alters when a customer feels that he/she can bargain for price.

Again, to hold the line on prices, the customer needs to be enticed with variety of designs. Some may argue what's so special about recession since it is always a nobrainer to keep a variety of designs. Well, during recession there is only so much inventory you can keep so a company has to be very selective in their products and designs. We are suggesting that it will be a good idea to stick to the staples like the engagement rings.

Aspirational shoppers will drool over every piece of fine jewelry standing at the window of Tiffay's at 5th Avenue. But, a large mortgage bill or unpaid credit card bills compounded by threats of job loss will definitely prevent the consumer from buying their aspiration. We believe that another type of product that might outsell its peer could be the ones made of less expensive stone but supreme design. This is to increase the affordability and maintain the sizzle of aspiration as much as possible.

No comments: