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Winter 2004 Silver Appeal

Who’s wearing silver jewelry these days? Everyone. And not just earrings, bracelets, anklets, rings and pendants, although certainly all of that. Silver is now bigger than ever—even some jewelry designs are larger than before. And it’s cropping up as ornamental hardware on boots and shoes, belts and handbags, jackets and jeans and more.

But let’s define terms first. There’s a big difference between silver or silverplate, and sterling silver. Silverplate generally means a thin layer of silver that’s coated or “plated” onto some other, inexpensive metal or alloy. Sterling silver means the metal is at least 92.5 percent silver, and sterling is always stamped with a mark that includes the word “sterling” or the number “925.” Without the mark, the silver content is less than 92.5 percent, and while it can be called “silver,” it can’t be called “sterling” or “sterling silver.”

“We’re seeing a lot more silver on the runway, a lot more silver fashion-wise.” says Ashley Kennedy, accessories director for Lucky magazine. The silver rush began in February 2003, she says, when designers débuted their fall 2003 clothing lines complete with silver accessories and jewelry. Since fashion drives or at least influences jewelry and accessory sales, silver jewelry purchases are on the rise and should continue strong. In the first half of 2003, an estimated 26 million pieces of silver jewelry were purchased, at an average retail price of $104. That means a total market size of $2.7 billion, according to the National Jewelry Study—and that was just the first half of the year.

According to the study, 72 percent of all silver jewelry sold in the first half of 2003 was sterling, not silverplate. And the most popular items were earrings and necklaces. Not surprisingly, women under 35 were the primary buyers, accounting for 71 percent of all silver jewelry purchases.

Charming appeal

image“Silver and silver-looking jewelry is definitely more in style,” says Paul Cappola, CEO of Roma Italian Charms (Holiday, FL). “Silver is a cleaner, trendier look.” That may explain his company’s triple-digit growth. Roma has been supplying the US market with sterling silver charms for just 18 months, but their sales have increased 260 percent, with no sign of let-up. “The Italian charm market is growing by leaps and bounds each month,” says Cappola.

What makes Roma distinctive is that it’s the only company currently selling sterling charms from Italy. “Thirty or more manufacturers [are] supplying the US market with Italian charms, but Roma is the only company selling sterling silver,” says Cappola. “We cater to that segment of the jewelry market that prefers silver to gold.” And that market is expanding.

In addition to 24 carts (either co-owned or operated in partnership) across the US, Roma also has 45-50 carts as wholesale accounts, who pay from $4-9 wholesale for the charms, and retail them for $10-25. Selling fastest are silver and enamel patriotic symbols; silver and cubic zirconia letters (to spell out a name); and birthstones in a silver setting, says Cappola.

Although 90 percent of Roma’s retail customers are women, buyers range from kids as young as age 7 to grandmothers. To start a charm bracelet, the first purchase averages $100 for two to five charms. But “people who know the [Italian charm bracelet] concept may spend $350 on the first sale,” he says. With those kinds of sales possible, it’s not surprising that carts selling Roma charms average $30,000-$50,000 a month in a typical mall. During the holiday season, those monthly numbers can climb even higher—some carts do six figures, says Cappola, such as a cart in Nevada that sold $24,000 worth on the Saturday before last Christmas. Right: $24K in one day, making Roma Italian Charms “the highest-grossing carts in the mall today,” he says.

Fun again

While charm bracelets are one of the more popular categories of sterling silver jewelry, consumers are still buying plenty of necklaces, rings, earrings and anklets, says Georgianna Koulianos, owner of GK Designs in New York City. In addition to designing and wholesaling sterling silver charms, Koulianos also has a strong following for her other pieces. “Necklaces are by far the most popular, and may account for as much as 40 percent of [her] sales,” she says.

Koulianos got her start in 1990 with a simple line of beaded jewelry. She began adding silver pieces in 1996, when demand for silver was increasing, and as her involvement in spiritual work progressed. “The spiritual aspect of my work evolved from a series of my own experiences, involving healing and energy work and meditation,” she says. “I design based on my aesthetic and intuition, but also blend in current trends that appeal to me and that will complement my designs.” The spiritual component of her life expressed itself in sterling silver pieces with inspirational words, which have since become her trademark.

Koulianos’ charms wholesale for $9 and retail at 100 percent mark-up, as do her colored suede necklaces ($17 wholesale), rings (starting at $22 wholesale), and bracelets and anklets ($13-14 wholesale). GK Designs currently sells through catalogs, Marshall Fields stores, and carts on the west coast. She has an elegant problem, though: her business is growing at about 30 percent a year, and GK Designs is at production capacity. Naturally, she’s working on possible solutions to meet the tremendous demand for her designs.

In Koulianos’ view, sterling silver is all the rage because “it’s very easy to wear, and affordable. You can wear it daily and it goes with anything.” For that reason, she expects the market for sterling silver to continue to grow. “There are so many options with design and style in silver, which makes it that much more appealing” to designers. “Jewelry is becoming fun again.”

The stone’s the thing

imageAnother New York City company that’s been successful concentrating in sterling silver is Tradition Jewelry. Owner Gene Goldberg, who founded it about 10 years ago, bought jewelry in India and brought it back to the US for the first few years. Then about six years ago, he began creating his own designs but still has them produced in India, where he buys all of the semi-precious stones he uses in his designs. “I’m very stone-driven,” he says with respect to his jewelry.

That drive is obviously working: Goldberg has more than 1,500 retailers as clients, more than 100 of which are cart and kiosk retailers who, he says, are “some of our best customers.” And kiosks in particular “have very nice turnover” on Tradition Jewelry goods, he says.

The combination of reasonable prices and stunning designs has helped Tradition Jewelry grow 15-fold since start-up. Even with high-end finishing touches and overall quality, wholesale pricing starts at $3 and goes to $200. Retailers can expect a 300-400 percent mark-up on lower-priced products, and 250 percent on higher-end items. And while customers often start buying at the lower end, they shift toward higher-priced pieces as they buy more and as their trust in the quality grows, says Goldberg. As a result, “our middle- and upper-range items are selling well.”

Tradition Jewelry also sells sterling silver rings, necklaces, pendants, bracelets and earrings. Right now earrings are the best-selling item. “They’re always strong,” says Goldberg.

Functional fashion

“We’re always trying to bridge traditional with new,” says Jim Rolnik about his company’s sterling silver jewelry. Instead of beauty for beauty’s sake, San Francisco-based REO Company “tries to make… functional pieces,” says Rolnik, REO’s president. Examples are Victorian-inspired vase pins that can actually hold fresh flowers, and photo pins. “Traditional jewelry that’s updated for today” is how Rolnik describes REO’s wares.

But traditional doesn’t mean behind the times. REO is known for its three-dimensional sterling silver charms, and will introduce an innovative slide bracelet in early 2004 that adds a new level of flexibility. The slide bracelet allows charms to easily slide on and off a plastic band, without requiring a tool to change charms, as current bracelets do.

REO charms ($1.50 to $26 wholesale) retail at 200-500 percent mark-up, depending on the local market. And while these charms are different from others that are currently available, Rolnik emphasizes that the service the retailers provide is the key to their success. “Our customers have had the best luck by providing service to their customers,” bringing them back in again and again. For example, Rolnik says that most charms have a lower-quality jump ring attached, which allows them to fall apart when worn on a necklace. A better ring is the slip ring, which keeps a charm securely on the necklace. Slip rings are a little more expensive and require a special tool. But Rolnik encourages his retailers to invest in that tool, so they can provide their customers an added service at no charge, and set the REO retailer apart from others.

Another product that fits the company’s image of updated traditional jewelry is the locket, which has done particularly well for REO. Their lockets are big sellers for Valentine’s Day, Mother’s Day and Christmas. In the foreseeable future, Rolnik believes the current popularity of bracelets will yield to a shift toward necklaces; that pins are on the decline (mainly due to today’s clothing fabrics that don’t hold up well to pin holes); and that dangle earrings will continue to be hot for a while.

The economy’s impact

imageThe economy is showing signs of recovery, but how did silver jewelry sell during the slump? Better than you might think. “As the economy has gone down, my business has gone up,” says Goldberg. The popularity of sterling silver today may be due in part to the economy and to consumers being less willing to spend on costlier accessories.

The fact that silver seems to be everywhere “has to do with price,” says Lucky magazine’s Kennedy. She attributes that to the fact that sterling is far less expensive than yellow or even white gold, and is “affordable to the masses.” Cappola estimates that his sterling silver charms cost 70 percent less than the same charms in gold.

The trick is to have attractive jewelry that appears expensive, but without the big price tag. And that’s what sterling silver offers, say jewelry wholesalers: affordability, popularity, and beauty. Cappola says “the cost of silver makes it more affordable for designers to make larger pieces in silver and still have an attractive price point.” Ultimately, consumers can pay less for a significant piece of sterling silver jewelry without looking like a cheapskate. Which may explain why larger pieces like sterling silver cuff bracelets will be big this winter, as Kennedy forecasts. Another benefit of sterling silver: it’s difficult to distinguish white gold or platinum from sterling silver just by looking at it, says Rolnik.

But as Rolnik points out, “silver also has cachet of its own as a semi-precious metal.” And Cappola predicts that it will become even more affordable, thanks to changes in technology: 40 percent of all silver in the world is consumed for photographic reproduction. But because the world is going digital, the demand for silver for that purpose is on the decline, which in turn may drive down the cost.

Polishing your act

Based on his experience at the wholesale and retail levels, Cappola strongly suggests that cart operators doing promotion up front—even before opening day—to build demand. He found that handing out “Coming Soon” flyers with information about Italian charms and the location of the cart work well; so do local ads announcing “Italian charms available at XYZ Mall!” Since building a loyal clientele of charm buyers is a “building process,” anything you can do to educate and entice consumers will work in your favor.

Once customers stop by, be sure to demonstrate how charm bracelets are a “modular concept,” for example by putting together a sample bracelet on the spot. And make sure you explain the concept to customers, he says, because educated customers are likely to buy more, and buy more often.

Rolnik advises investing in enough variety of product so that customers have plenty to choose from. “Most retailers are overly cautious, buying as few designs as possible, and they end up sabotaging themselves,” he says. Especially with charms, where there are so many possible combinations, “more is better.”

Whatever form it takes as jewelry or embellishment, silver is the white-hot metal right now among fashionistas, the classically fashionable, and everyone in between—and for the specialty retailers who sell it.

Marcia Layton Turner -- Turner writes frequently for business publications. Her work has appeared in Business Week, Business 2.0, MyBusiness and numerous trade magazines. She is also the author of Emeril! (John Wiley & Sons, 2004).

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