Vol 3.1 "What Do You Mean By That?" January 22, 2004

Its December 14, 2004, 10:25 AM. Last night, my wife and I were
watching a new TV show from the comfort of our bed, under the blankets (the temperature was
plunging to the upper 30’s which, by the way, is cold for Houston, Texas). It was so chilly in the
house (I had failed to switch the A/C to heat) that neither one of us wanted to move from the warm
spot we had carved out. At one point my left leg ventured under the covers to try and make toe-to-toe
contact, but the frozen terrain of the frost-chilled bed sheet was too much to endure. My foot reversed
course and came back to join my right foot that had been smart enough to stay put.

Anyway, my wife and I were watching a show called “The Life of Luxury.”
George Hamilton interviews people of great wealth who have surrounded themselves with supposedly
the best things money can buy. For 45 minutes (notice I didn’t say an hour—key point to
remember, the show is an hour long), my wife and I saw people in big yachts, planes, fancy cars and 40
million dollar homes exclaim how grand their life is. After 45 minutes of viewing private islands where
people over indulged on caviar, champagne, lobster and anything else that wasn’t nailed down,
my wife braved the cold (you see the remote was on top of the covers) and turned off the show!
“That’s it! I can’t watch another minute!” she shouted. I said,
“We’ve got to watch this show because many of our clients live this life and we have to be able to
relate.” “I know, I know,” my wife said “but it’s just not fair. You work as hard or harder
than all these guys so you should have all that stuff, too!” “Well, thank you,” I said “but nowhere
is it written that the one who works the hardest gets all the rewards. All in all, we’re
extremely blessed!”

The conversation dwindled down from there and we eventually called it a
night. This morning when my wife and I woke up to work out (me on the treadmill; she doing Pilates), it
dawned on me how sad it must be to chase after happiness by searching for the next biggest
possession. I wonder how many people saw the same show last night and honestly believe that
happiness waits at the end of a shopping spree. One of the greatest insights I’ve ever had in my
life is the concept of “enough!” You can have enough money, enough beds, enough houses, and enough
cars. This holiday season, it is my wish that when you look around at the things and especially the
people you surround yourself with that you will be filled with a sense of gratitude instead of a sense of
loss for something you don’t have. I know my wife loves me and she just wants me to have
anything and everything my little heart desires for all my hard work. What she doesn’t
realize is I got everything I ever wanted the day I met her.

Happy Holidays Everyone,


P.S. Here’s a sneak peek at next month’s article of the

Who’s Your Jeweler? & How They Categorize You

There are three categories of jewelers. A jeweler is either Brick & Mortar
(B&M–has a physical store front); Virtual (internet based– no physical store front) or combo B&M &
Virtual. I am not including TV vendors for this article because they only deal in commercial quality and
costume jewelry.

Within all three categories of jewelers there are four distinct approaches used
in selling based on four customer types: the Discounter, the Bargain Shopper, the Brander, and the
Better Thans.

A. The Discounter:

The discount shopper isn’t particularly interested that an item is top of the line as long as their
particular need gets satisfied. They focus on “category needs” not “detailed needs.” A discounter buys a
car to get from point A to B, not because of how sexy they will look in it or what their neighbors will
think. A discounter buys toilet paper, cars, bikes, trucks, & TVs. The rest of us buy Charmin, Lexus,
Harley, Ford, and Sony. The Discounters’ motto is “Get the job done at the lowest possible price.” These
are the people that will be in line at 2:00a.m. outside Best Buy in the frigid cold on Black Friday (day
after Thanksgiving) in order to get something for as close to nothing as possible.

B. Bargain Shopper:

Wal-Mart has proven that most of us are bargain shoppers; quality merchandise at a low price.
Unlike the discounter mentality, the bargainer isn’t willing to waste the time and effort that it takes to
buy at the absolutely, positively, guaranteed lowest price. They want quality merchandise (generally
name brand) but at a savings. Bargainers love to compare notes with other bargainers about what a
great deal they got on their new Sony DVD or flat screen. Bargainers will make the effort to visit a few
stores until they are reasonably sure they’ve done well and quit shopping. Whereas the Discounters will
only tend to stop shopping when they’ve been to every store in their area. Of course with the internet
it’s taking longer & longer to “shop around.”

C. The Brander:

Like the Bargain shopper, the Brander wants quality but he’s also looking for an emotional
connection with the brand. Something that represents him or her. Something that tells the world who
they are. Price is less important to Branders than actually having the item that other people have so
they can connect with them. That’s why celebrity endorsements work so successfully. If an
individual sees a celebrity endorse a product, or better yet actually use the product, they form a bond
with the product. “Let’s see, Robert DiNiro uses the American Express card. If I have an American
Express card, then Robert and I have something in common! We’re connected in some cool cosmic
way!” Branders want to buy products that other groups tend to buy. These groups are not limited to but
include women, men, the wealthy, the affluent, the sexy, the smart, etc. A Brander may not even “need”
a product but purchases it anyway because others in their identity group have the same item.

D. The Better Thans:

As the title insinuates, the Better Thans honestly believe that on some social, economic,
intellectual level they are “better than” others. There’s the right religion, the right political party, the
right everything. Naturally, for them to be right, many have to be wrong or “less than.” Better Than
shoppers only want products that the masses can’t have and if the masses get it, then they don’t want
it. Yesterday, I was shopping with my wife and we wandered into Cartier. They had a pink diamond,
yellow diamond, & white diamond, tight knit pave, rolling ring that I could produce for about 5K. They
were selling it for $52,000! And you know what? They are selling them!? And the reason
they are selling them is that they are so expensive. It isn’t enough to just own jewelry any more. The
consolidators like Costco, Sam’s, Wal-Mart, J.C. Penny’s, & Blue Nile burst that bubble. People are hung
up on where they bought it; when they bought it (the right season); and what they spent. Louis Vuitton
has made a fortune as a mega successful brand name because of recognition of their line. When people
see someone with one of their hand-bags, every one immediately knows, “Wow! That hand-bag cost
major $$$! They must be somebody!” (P.S. Last time I checked, we were all somebodies.) Louis Vuitton
even has a new spring & winter line that is only available to their top clients (clients that have spent
over 100K with them) that nobody else can buy during that season! In some cases they will only
release ten of a type of hand-bag and let the socialites and celebrities duke it out for the power
purse. I’ve been accused many times of being a “better than” because of some choices I made.
My Patek Phillipe or Rolex watch is a popular “Better Than” selection. My problem is that in most cases
there seems to be a direct correlation between quality (which is important to me) & the “Better Than”
brands. But I’m also the same guy who was at Target this weekend to stock up on toilet paper. Grocery
store prices are too high. To Better Thans, the importance price plays in the buying decision is that it
has to be priced high enough that most people can’t afford it.

The Pitch

Now that I’ve described the four customer mind sets, let me outline how the
jewelry industry attacks each to get your hard-earned dollar. They know there are many different
avenues you can take to buy a piece of jewelry. You can visit a jewelry store that specializes in selling
jewelry. This of course could be a mom & pop store or a national jewelry chain. You can visit a
department store that has a jewelry department or even a “superstore” like Wal-Mart where you can buy
a new pair of jeans, a gallon of milk, and a new engagement ring at the same time! There are high end
jewelry stores like Tiffany, Cartier, Harry Winston (also referred to as guild jewelers); and of course you
can surf the web. If we set aside Wal-Mart, the top three companies that sell jewelry in the United States
are Zales, Sterling, & Finlay. Together they are responsible for almost 5 billion dollars worth of sales
annually out of their 4,375 stores nationwide. In a survey of young, upwardly mobile, professional
couples, 93.7% told me they would never consider purchasing a major piece of jewelry from a mall
jeweler. When I pointed out that there were some pretty high end stores like Tiffany & Cartier that
happened to be in malls they commented by a ratio of 4 to 1 that they would not shop at Tiffany’s or
Cartier either, because you were just paying for a name. When I asked about companies like Bailey,
Banks & Biddle; Mappins; Friedlanders; Marks & Morgan; Osterman; Jared the Galleria of Fine Jewelry,
the usual response was “Well, yeah sure; someone in-between the high enders & the discounters like
Kay’s; J.B. Robinson; Zales; Gordon’s, and such.” When I asked what was wrong with Kay’s or Zales, the
general response from these college educated affluent young men & ladies was they were for people
who need to buy in installments; the salespeople weren’t perceived as knowledgeable; and the
décor was, well, in a word, “déclassé.”

So it seems people tend to shop where they believe they fit in. Kinda like
Goldielocks, the choice has to be just right. However, though people believe they are being given a
choice of where to shop, in reality, the deck has been stacked. What the big jewelry retailers did
decades ago was buy up most of the mom & pop jewelers. These are the same jewelers that spent
decades building a loyal clientele and then were bought up by the big corporations, leaving, of course,
the original owners name on the awning so you, the loyal clientele, wouldn’t be the wiser. For the first
time I’m listing for all to see the true owners of the jewelry stores you frequent; so you know exactly
who is getting your money.

Zales Corp. Store names
901 W. Walnut Hill Lane Bailey Banks & Biddle Zales Jewelers
Irving, TX 75038 Gordon’s Jewelers Zales Outlet
972-580-4000 Mappins Jewelers Piercing Pagoda
fax: 972-580-5336 Peoples Jewelers
Sterling Jewelers Store names
375 Ghent Road Belden Jewelers J.B. Robinson
Akron, OH 44333 Friedlander’s Jewelers LeRoy’s Jewelers
330-668-5000 Goodman Jewelers Osterman Jewelers
fax: 330-668-5191 Roger’s Jewelers Shaw’s Jewelers
US subsidiary of Signet Group (U.K.) Weisfield Jewelers Kay Jewelers

Marks & Morgan Jewelers

Jared the Galleria of Jewelry
Finlay Fine Jewelry Corp. Department store locations strong>
(largest leased store operator) P.A. Bergner Burdines
521 Fifth Ave. Bloomingdales Dillard’s
New York, NY 10175 The Bon Marche Elder-Beerman
212-551-8300 Bon Ton Famous Barr
fax: 212-867-3326 Boston Store Filene’s
Subsidiary of Finlay Enterprises Inc. Carson, Pirie, Scott Foley’s
Goldsmith’s Gorrschalks
Lord & Taylor Hecht’s
Herbergers Jones Store
Kaufmann’s Lazarus
Marshall Field’s L.S. Ayres
Meier & Frank Parisian
Robinson/May Rich’s
Strawbridge’s Younkers

The founder and president of Diamond Cutters International, is one of the world’s top diamond experts, as well as a three-time Guinness Book record holder in jewelry design.
Fred The Diamond Guy
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