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In December 2010, Nordstrom Inc. announced that November 2010 revenue from its stores that had been open at least a year rose 5.1 percent, surpassing Wall Street’s expectations. Nordstrom indicated that its best-selling items included jewelry and women’s and men’s shoes.
Also in December of last year, JCPenney announced the launch of a Facebook e-commerce application, which gives the more than 1.3 million people who “like” the retailer the chance to purchase product directly from JCPenney’s Facebook page. According to the retailer, only selected product categories—including jewelry, shoes and handbags—are now sold on Facebook.
There’s even a television station dedicated exclusively to the sale of jewelry. Jewelry Television, which broadcasts programming 24 hours a day to more than 80 million households in the United States, is a leading retailer of jewelry and gemstones. Originally founded as America’s Collectibles Network in 1993, the network re-launched as Jewelry Television in 2004, dedicating itself exclusively to jewelry.
Although retailers seemingly appear to be catching on to the appeal of jewelry and accessories, this is a segment that the direct selling industry has been focused on for years.
“Jewelry and accessories are an essential part of every woman’s wardrobe,” says John Lin, CEO of Cookie Lee Inc. “Each season, as styles and trends change, there is always a demand for the perfect accessory.”
Perhaps the reason jewelry and accessories are enjoying popularity among today’s consumers is they don’t want to invest in a new wardrobe but do see the value in buying a few statement pieces that will renew last season’s clothes.
“Jewelry and accessories are appealing because they are an inexpensive way to breathe new life into your wardrobe,” says Bonnie Kelly, Co-Founder of Silpada Designs. “Jewelry is the finishing touch to any outfit and a staple in everyone’s closet.”
Gabrielle DeSantis-Cummings, CEO of Gigi Hill Bags, believes accessories can help women ensure their clothes are always stylish. “Any outfit can be made to look fresh and exciting by pairing it with some jewelry and a great-looking handbag or tote,” she says.
“The jewelry and accessories market is enormous and unlikely to go away,” says Elena Kiam, Owner and Senior Vice President of lia sophia. “For most women, jewelry is a fashion staple, and this trend is not likely to change.”
Doug Lane, Managing Director, Equity Research, for global securities and investment banking firm Jefferies & Company Inc., has a similarly optimistic outlook for the category. “I would characterize the jewelry and accessories segment as small but rapidly growing,” he says.
All That Glitters
A notable number of direct selling companies are dedicated exclusively to the sale of jewelry. Although jewelry appears to be “hot” right now, Cookie Lee’s Lin says fashion jewelry has always been popular with women.
“More retail stores are offering this type of product,” Lin says. “Styles, trends and accessories continue to grow with the exposure of 24/7 media and more TV shows on the subject. We are growing with the demand across the country.”
According to Lin, 50 percent of Cookie Lee’s domestic-only sales take place one-on-one and 50 percent occur via home shows. “We offer our products on a cash and carry basis,” Lin says. “At home shows, customers can purchase the items and wear them home. Consultants sell directly from their inventory, so customers do not need to place orders and wait for them to arrive.
“We have so many different styles to offer the consumer,” Lin continues. “In our two annual catalogs, almost 90 percent of the items are entirely new. Our price points make us unique, as most items range from $16 to $36.”
lia sophia’s Kiam believes fashion jewelry has four elements that make it a great product for direct sales. “It is portable, so it’s easy for advisors to carry versus many other products; it is displayable, so the advisor can wear the product and literally be a walking advertisement for her own business; it is somewhat ‘consumable,’ so it encourages repeat business; and it is profitable,” she says.
“Because of the margins in fashion jewelry in general, which are further enhanced by the operational efficiency of lia sophia, the payout to advisors is very high,” Kiam says. “Further, because the show average is almost $700, the absolute dollar amount the advisor can earn is high as well.”
“Let’s face it, women just love jewelry,” says Liz DiPaolo, Managing Director of Touchstone Crystal, a member of the Swarovski Group. “It has been admired for thousands of years as a wonderful expression of personal style, and it gives the wearer a unique opportunity to feel special and be creative just by deciding how to accessorize an outfit.”
Touchstone Crystal, which does business only in the United States, is owned by Swarovski. “As a member of the Swarovski Group, Touchstone Crystal has access to Swarovski’s latest, cutting-edge stones, reflecting their unparalleled technological expertise,” DiPaolo says. “Swarovski shares with us their forecasts for color and fashion trends gathered from keeping a keen eye on style throughout the world.”
According to DiPaolo, the vast majority of Touchstone’s sales are made at home parties, although a smaller percentage of sales are made one-on-one. “We are very accommodating to women’s busy lifestyles and will service them in both scenarios,” she says. “When you combine the two, you have a winning combination.”
Traci Lynn Fashion Jewelry, which currently does business only in the United States, also uses this winning combination: About 65 percent of the company’s sales are made via the party plan model versus one-on-one.
“As a jewelry company, our core appeal is style and fashion,” says Dr. Traci Lynn, President and Owner of Traci Lynn Fashion Jewelry. “We are responsible for making women feel confident and love every minute of it.
“Our jewelry is eye catching and sales are often done right off the consultants’ necks before they can get to the show,” Lynn continues. “Our product is 100 percent nickel- and lead-free, and we appeal to every kind of woman—corporate, classic, contemporary, conservative, jet-setter, young and old. The jewelry is not only fashionable; it’s made of the finest quality material.”
Style in the Bag
But jewelry is not the only aspect of the accessories segment on which direct selling companies are focusing. Like jewelry, handbags can spruce up last season’s clothes quickly and without the fuss and expense of purchasing a new wardrobe.
Of course, with so many high-priced designer bags—and their counterpart counterfeits—on the market, women may hesitate before purchasing a handbag. But several companies in the direct selling industry are taking a unique approach to designing handbags.
“Gigi Hill’s designs are the antithesis of the ‘it’ bags, those high-priced accessories that have dominated the handbag market for the past decade,” DeSantis-Cummings says. “Unlike bags designed for the fashion runway, Gigi Hill bags and totes are designed for the runways of life—the office, the gym, the airport, suburban playgrounds and city sidewalks.
“Gigi Hill’s bags are for women who expect style but aren’t willing to sacrifice function or pay crazy prices,” DeSantis-Cummings continues. “These are high-quality, versatile bags they can take to the beach or the boardroom, with standout fabrics and a practical pocket design that ensures a place for everything from sun block to sales reports.”
Based in the United States only, Gigi Hill sells 90 percent of its bags via the party plan model and 10 percent one-on-one.
Another unique direct selling concept in the handbag category is offered by Miche Bag, which also reports that 90 percent of its sales are made via home parties, while the remaining 10 percent are made one-on-one.
“Miche Bags are a unique, patented line of handbags with interchangeable shells,” says Corbin Church, CEO of Miche Bag. “You start with a base bag, and then, depending on your outfit or your mood, you can change the outer shell in about three seconds. There’s no need to empty out contents from one bag to another. One bag provides endless possibilities. Women now have the flexibility to step out of their comfort zone with a bright yellow bag and right back to a sophisticated neutral bag in the blink of an eye.”
Miche Bag launches new shell styles each month. “Recent launches include the new Mini Miche line—a smaller version of the Miche Bag—as well as wallets and trendy limited-time charms that can be used to adorn your Miche Bag,” Church adds.
Avon and Silpada
Perhaps the biggest news to affect the jewelry and accessories segment of the direct selling industry was Avon’s acquisition of Silpada Designs Inc. in July 2010. As the world’s largest direct selling company, Avon markets in more than 100 countries through approximately 6.2 million independent sales representatives.
“Avon is no stranger to acquisitions, having invested in several companies over the years,” says Sally Haigh-Alex, Vice President of Global Jewelry for Avon Products Inc.
“I think this acquisition will give Silpada a chance to broaden its reach beyond the handful of markets where it’s currently offered,” Lane continues. “What Avon offers is an opportunity to expand rapidly, to go global and expand geographically at a much more accelerated pace than if they tried to do it themselves.”
Silpada is the largest and fastest-growing direct seller of sterling silver jewelry, with operations in the United States, Canada and the United Kingdom. The company has more than 32,000 independent representatives and recorded $230 million in sales during 2009. Silpada’s $950 per-party sales average is one of the highest in the industry.
Many direct selling companies that sell jewelry and accessories use the party plan model, which allows distributors to make sales commissions and recruit members to their organizations through a group dynamic rather than a one-on-one scenario.
One of the benefits of this type of model is it creates a softer, more indirect path to discussing the opportunity to become a distributor. Another advantage is that women are more likely to buy when encouraged to do so by family and friends.
“Direct selling is a perfect avenue to help women in a comfortable and intimate environment,” says Cookie Lee’s Lin. The company sells about 50 percent of its jewelry via home shows. “Our consultants can teach women about trends and provide jewelry tips and tricks as well as help them put together accessories for any look in a comfortable environment.”
Miche Bag reports that 90 percent of its sales are achieved via home parties. CEO Church believes home parties provide an ideal environment for buying. “A woman wants to take the time to select just the right items that reflect her individuality,” he says. “She wants to be in a comfortable, unrushed environment, ideally getting opinions and input from other women she trusts. Being in a home party environment, shopping with other women you like and whose opinions you respect, is an ideal setting for these types of purchases.”
Teresa Walsh, Co-Founder of Silpada Designs, believes the party plan model is a great way to sell jewelry because shopping and friendship are a natural fit. “It’s always fun to shop with your girlfriends, and a Silpada home party brings the boutique to your home for a fun girls’ night out,” she says.
According to DiPaolo, the vast majority of Touchstone’s sales are made at home parties. “Women get to try on pieces with each other and even create their own at-home fashion shows where friends model the styles together,” she says. “We know from experience that women support each other and are greatly influenced by relationships.”
The Glamour of Global Growth
The future looks promising for the jewelry and accessories segment, both in the United States and across the globe. Some companies, like Traci Lynn Fashion Jewelry, currently only sell in the United States but plan to expand. “Our main goal is to saturate the United States and, in the near future, branch out into international markets,” Lynn says.
Both lia sophia and Miche Bag are enjoying international success. “In Canada, we are currently experiencing even larger sales increases than we did during our big growth years in the United States,” lia sophia’s Kiam says. “lia sophia will enter the German market in 2011. We plan to grow our jewelry business geographically in the United States and around the world. We believe we have enormous untapped potential to accomplish this.”
“English speaking countries—including the United Kingdom, Australia and Canada—have been the markets to experience the fastest growth outside of the United States,” Miche Bag’s Church says. “New relationships in Brazil, Europe and Southeast Asia will continue to propel this growth, with many new opportunities awaiting the company elsewhere. With very strong intellectual properties and a brand that strengthens tremendously every day, Miche Bag has a very bright future.”
According to Jerry Kelly, Silpada has enjoyed tremendous growth and success in the United States and Canada, and has just launched operations in the United Kingdom. “Over time, Silpada will become a global brand in jewelry,” he says.
Meanwhile, Sally Haigh-Alex, Vice President of Global Jewelry for Avon Products Inc., says many of Avon’s markets are seeing growth in the jewelry and accessories segment. “Our fastest-growing regions are those in Central and Eastern Europe, Latin America, Asia Pacific, Western Europe, Middle East and Africa,” she says. “Specific markets are Russia, Venezuela, Colombia, the Philippines, Turkey and South Africa. Many markets are experiencing double-digit and even triple-digit increases versus the prior year.”
“The outlook for the jewelry segment is robust due to the price points and value that jewelry offers, and the expected demand we see from women in the United States and around the world,” lia sophia’s Kiam says. “Women want to have the looks they see in the media and are willing to pay affordable prices for fashion jewelry to get them.”
“The future is bright for accessories,” says Gigi Hill’s DeSantis-Cummings. “Unlike clothes, accessories always fit.”