Nivoda co-founder and CEO David Sutton sits down with Rachael Taylor to share his forecast for the coming year, from seamless omnichannel and stockless stores to a contracting lab-grown sector, and gives his advice on how retailers should spend AI-driven operational savings
Nivoda co-founder and CEO David Sutton sits down with Rachael Taylor to share his forecast for the coming year, from seamless omnichannel and stockless stores to a contracting lab-grown sector, and gives his advice on how retailers should spend AI-driven operational savings
With a data-backed bird’s eye view of the global jewelry industry, there are few people better placed to evaluate where the business is headed than Nivoda co-founder and CEO David Sutton.
Seamless omnichannel retail
When asked what he feels is the biggest defining shift in the industry right now, Sutton has an immediate answer: “For me, one trend that has been clear for years – but I think everyone’s feeling the pressure of it now – is that bricks-and-mortar and online retail are no longer separate business models. They are becoming one.”
This does not just mean traditional high street retailers are suddenly waking up to online, he says. The trend is shifting both ways: purely digital brands are seeking out routes to physical retail, as much as offline stores are looking for ways to invest in digital strategies. “A website is more often than not a lead-generation tool,” says Sutton. “What we call touchless sales – where a customer comes on the website, looks around and buys – is often in single-digit percentages of sales for a retailer. Then there’s either email communication, phone calls, or the highest converting activity: when they come and visit a store – we sometimes see 85% conversion rates at that point.”
Online or offline, seamless connection is key, Sutton says. Successful retailers in this new age will not just offer both channels, but harmonise digital-data gathering with in-store experiences.
“We’re all skating towards this one vision of the industry as being this connected journey,” he says. “If you’re just relying on foot traffic, you’re dead. And if you’re just relying on paid marketing and touchless sales, your customer acquisition cost will give you a ceiling earlier.”
Sutton advises that store staff should be prepared: if a customer who has an online profile with the store walks through the door, their experience should be shaped by what the retailer knows of them digitally – the jewelry pieces they have favourited, recent searches, when their birthday is, whether they have an anniversary coming up. “If they have filled in a form online and then they walk into the store and the staff don’t know who they are, and they have to start from scratch, it’s a really jarring experience.”
Almost stockless stores
While walking into an empty store is never a fun customer experience, Sutton believes that stores of the future should not restrict themselves to the products they can physically hold in stock, and instead use digital tools that can allow them to access quick made-to-order manufacturing services or global gemstone searches. This can be backed up by holding samples in store, but allowing customers to customise through digital tools that tap into suppliers’ stock.
This strategy is not just about reducing risk and improving cash flow, but also giving customers the best possible choice. “If I had to buy something for a family member of mine, there’s no way I would limit my search to just what I was able to ship into my store,” he says. “I would look at a global selection and find the very best diamond that was available, at the best price and the best quality.”
Contraction of the lab-grown market
Sutton is someone who spends a lot of time tracking diamonds prices – both lab-grown and natural. Nivoda facilitates the sale of about 14,000 natural diamonds and 40,000 lab-grown diamonds every month. Prices of both categories have dropped in recent years, but Sutton believes the dramatic declines will slow. Despite this, he feels the wholesale market for loose lab-grown diamonds could be set to contract.
“There’s a lot of people leaving lab-grown manufacturing because the profit margin just isn’t there anymore,” says Sutton, who adds that the average lab-grown diamond sale on Nivoda is a 2-carat stone at a cost of $200. “I think we’re already at the bottom [price wise]; we’ve even seen a little bit of an increase in price.”
While the number of lab-grown diamond manufacturers might decrease, the retail market isn’t going anywhere. So which companies will be best placed to continue to make good business with lab-grown diamonds? “For the next couple of years, I think that almost all retailers can sell both as separate product categories,” says Sutton. “I think people who want natural diamonds still want natural diamonds. [Lab-grown diamonds have] given us the opportunity to create more entry-level product categories to capture customers that wouldn’t have been able to purchase natural diamonds. We’re expanding the market.”
With the value of the stones now much lower than a few years ago, Sutton points out that the “margin is made on the actual ring as a finished piece now, with a lot of the value being in the metal”.
Turning operational savings into marketing dollars
While much forward-looking retail strategy is concerned with finding ways around difficulties, Sutton believes that one of the biggest trends on the horizon is that some of the operational aspects of running a jewelry business are about to get easier.
“There’s going to be a lot of operational efficiency gains [due to advances in technology and AI],” he says. “I can see jewelry design, building out a catalogue, and rendering images becoming easier. Manufacturing, global sourcing and delivery is also going to become a lot easier.”
Because of this, he says, there is the opportunity to reduce operational overheads. Rather than add this to the profit pot, Sutton believes retailers should divert these savings into marketing. “Those who do are going to be the ones that win market share,” he says.
“The reality is the people who are going to push on the frontier of technology will outpace the ones who wait in their stores for customers to come around like they have for the last 40 years. I can already see it playing out. The retailers that are growing and have a queue down the street are the ones that are focusing on operational efficiency and being really keen on tracking their marketing dollar and their conversion rates all the way through their funnel.”
Authenticity wins over all
With all these market predictions in mind, how would Sutton go about setting up a jewelry retail business today if he had to start out from scratch? Without a single moment’s hesitation, he paints a hypothetical picture.
“I would work to integrate technology that allows me to automate work from day one,” he says. “I would use organic marketing channels as much as I could to keep customer acquisition costs down before spending on paid search. And the other thing is that I would make sure that the brand is authentic to me. I want me to shine through, not some idea of who I might be.”