Building a CUSTOM BRAND

CUSTOM-MADE JEWELRY IS THE QUICKEST PATH TO DIFFERENTIATION, THOUGH NOT NECESSARILY THE EASIEST

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Building a CUSTOM BRAND #1
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It's two days after Christmas, and up on 47th Street, 40 miles northeast, the talk is all about the seasonal memo goods coming back, about what the new sightholder list will mean to the industry, and about how bad can Christmas get? Across town at Zale's, Roman Jewelers, and the dozen or so other jewelers here in Flemington, New Jersey, it's about the slow foot-traffic in the outlet centers this town is famous for, of how high diamond prices are, and how low can diamond margins get?
At The Gem Vault, Flemington's custom jeweler, these pressures are nowhere to be found. Entering its second half-century, now at Turntable Junction, the upscale, quaint boutique village across from the outlet center where the Gem Vault was initially located, the sales floor of the stand-alone door has that steady, happy aura of stores that specialize in custom work, precious stones, and crystals rather than designer jewelry, diamonds, and semi-mounts. Owner Bill Brewer has created an oasis of beauty that's made to order each day.
Upstairs, where the bulk of the Gem Vault's goods are created, the day's work carries on at its own steady pace. The talk is of blue-flash moonstones offsetting the red gold of a custom bracelet, and the challenges of setting a lovely little leaf carved from quartz-crystallized orange drusy agate. Of how sphene mined closer to the Afghani border tends toward yellower tones than the browner sphene from Pakistan. And should a customer, who loves everything about a tourmalated quartz pendant—except its pink tourmaline accents—be charged for those accents being removed? Another customer is looking for dendritic opal for a new bracelet—which may have to wait for Tucson—but she may also want to match the Madeira citrine in last year's bracelet, so remember to keep an eye out at Tucson.
At 1:45, a first inkling of the world outside enters the peace of the atelier—the sound of hydraulic brakes as FedEx pulls up—and Jason Baskin and Sharon Curtiss-Gal, two jeweler-designers, utter the daily: "Stuller's here." If there is a real world concern, it's of yesterday's assassination of Benazir Bhutto and the likely effect on gold price. Almost everything at the Gem Vault begins up here with a piece of gold. Whether custom-made for the steady client base or for the cases, changes in gold price don't affect margins, but will affect the cost and price of the piece, and must be factored on a forward-looking basis. That may affect the choice of stones. Ergo, all the talk of sphene, an affordable, highly dispersive and—most important—unusual alternative to yellow diamonds.
"A big part of our identity is the rarity and exoticness of our stones," says Baskin, who, with his father Joel, the store's founder, spends much of his leisure prospecting across the U.S. and locally. Along with the originality of the pieces in the cases downstairs and the painstaking work of the store's designer artists, it's what the Gem Vault is all about. There are no watches or brands (save for Novell wedding bands), very few semi-mounts, engagement products, solitaires, chains, or, indeed, any of the common hallmarks of the U.S. jeweler. The few pieces not made upstairs tend toward local artisans they admire, or incorporate their work. The drusy leaf Baskin is setting is the work of Greg Genovese, a Cape May artist who specializes in agate.
Equally absent is any talk of advertising. The store has put in the odd local ad, and tried once with bridal magazines, but clients come largely from word-of-mouth. That's key to Gem Vault's model. Even in this affluent, highly trafficked part of Jersey, walk-ins are not counted on. "Our base," says Baskin, "is wide. We're as likely to get folks from Staten Island, Long Island, or Pennsylvania as from around here." That base is also significantly older than the typical jeweler's, it being rare for first-timers to enter into the strategizing and forethought needed for an original piece.
With time-frames from sketch to delivery typically four to six weeks, that renders custom-intensive jewelers like the Gem Vault freer from that other constraint of the U.S. jeweler: the need for 50 percent-plus of the yearly business to turn over the holiday season. And it points to one of the great differences of a custom shop. Every jeweler has favorite customers, like the diamond diva going on her sixth multi-carat piece or the gentleman who wants a new bauble for his wife every other Christmas. Here, and at other custom houses, customer names are a constant in conversation, and it's as if they're speaking of family members, rather than as wallets attached to clients.
But the Gem Vault is also free of the trappings of the typical custom jeweler, such as the brand-carrier with a Rap list below the register, a bench or two in back, and shelves of heads and shanks. More than half the findings used here are handcrafted, and gemstones, except diamonds, are often cut here, rather than finished. They also use no CAD software, beginning instead with pen and ink drawings, and rarely even incorporate color in the sketches.
"We draw at scale, then usually place a live stone in the setting in the drawing," says Curtiss-Gal. Customers will occasionally come in with ads out of Town & Country, but more often with ideas of their own or, that failing, with clear needs or desires. "Even then," she says, "the initial conversation can be tricky. Jewelry is hard to convey in words. They may say they like X—maybe something we've done before or perhaps a piece they've seen elsewhere—but can you do it more classic, modern, art deco? Occasionally, I'll ask if there are companies they like, just to clarify. That part of the conversation is as much about finding the right vocabulary as it is about their taste."
The blue-flash moonstone bracelet Curtiss-Gal is working on is the third red gold bracelet for the same customer (last year's was a spessartite garnet with yellow gold leaves, to evoke a pumpkin patch), but still required three hours of different sit-downs to arrive upon. "When you deliver the piece, you see why it's much better not to use CAD, or color in the sketches," she says. "It's not just that it's 3D now, and in full color. No matter how well you render, you can't capture sparkle, the heft, the solidity, the emotion that make you so different from other jewelers."
Also very different at the Gem Vault is the diamond category. There are hundreds of very good diamonds in the store, but few of a carat or even half carat, and most are upstairs, sitting in parcels with a dozen or so others of their weight and qualities until they're set as side stones, channels, or pavé. While jewelers elsewhere are ducking low margins, high replacement costs, and cold calls from brokers, the Gem Vault tends toward triple key on its own, wholly owned diamonds, even if most are one to five points. "Of course we work with diamonds," says Baskin. "They're beautiful, and we love them as much as other jewelers. But unless you want to spend your day dodging hairy eyeballs every time you cite a diamond price, and going through hoops to make $1,000 on a one carater, your focus tends toward imperial topaz, bi-colored tourmaline, sunstone, orange garnets."
While that tends toward price points a little lower than the typical upscale jeweler, prices—and margins—are strong here. Custom projects can go as low as $500, but four-, even five-figure pieces are the norm. When I ask how high prices can go, Curtiss-Gal and Baskin put their heads together and come up with a recent $30,000 alexandrite piece, then say simultaneously: "And her card went through on the first swipe!"
Rather than the big ticket, however, the secret for triple-key here is buying well and being able to guesstimate gold content, if not to the pennyweight then close enough. That's not easy when every piece is unique. You have to really know your skill sets and capacities, and the minutiae of handcrafting—the fact that today's red gold bracelet may require a slightly higher price, as red gold must be repolished with each soldering. Labor is a huge part of the custom pricing equation. But what a difference it makes, living not by Rap but by "quoting the drawing," which is a lovely phrase I'd never heard before coming up here, and certainly one not every jeweler gets to utter and live by.
THE BUSINESS OF CUSTOM JEWELRY
"There are difficulties involved with being a custom jeweler," says Craig Underwood of Underwood's Fine Jewelers, Fayetteville, Arkansas. "You're going to lose the built-in TV and radio spots, the premade ad slicks, and maybe even that built-in customer who must have David Yurman. Custom is labor intensive, with all the risks and costs that means. We have four full-time bench jewelers and a full-time designer artist. It also takes a lot of promotion and advertising. We had a competitor who tried recently, not quite local, but in the same general ballpark as us, and he couldn't make a go of it."
Custom is the name of the game at Underwood's, winner of five major design competitions. That's saying a lot for a door with its own AGS-accredited lab, a watch and gift selection, and a brand-name presence in the diamond world. "While not necessarily the majority of what we stock," says Underwood, "custom is the majority of what we sell, certainly from a price point perspective. We're fighting the same diamond pressures everyone else is, but we have had double-digit increases, most from custom work. The customer is seeing more of it and asking for it more. A very positive development, for us but also, I believe, for the industry."
Equally positive is the cost and savings of working with precious stones. "It's one thing to replace a $200,000 diamond. If you bought it in August, sold in December, and now have to replace, you're looking at a $40,000 replacement premium. Compare that to pink sapphire or a 2 carat ruby, what color that stone had! No comparison, pricewise, and equally important for us is the individuation of that kind of ruby in a custom Underwood's piece. It'll be noticed, time and again, and far more likely to become an heirloom piece than a 2 carat flawless diamond. That's branding no advertising can buy."
But isn't replacing a ruby color like that, at size, extremely hard? "Maybe impossible. Which is why Tucson is one of our bigger trips. Our diamond buy at Vegas 2007 was on the mild side, but you don't feel that same caution in Tucson, and the relationships are different. The guy you sourced your 5 carat G VS2 from might well be the one you turn to for the next, but not with tsavorite or aquamarine. And it's not just bigger stones. One of our design specialties is our Razorback jewelry—Arkansas doesn't have a professional sports team, and the razorback symbol is so big in the state. We'll use ruby melee for the razorback's eyes, in the lapel pins, studs, pendants, and the ability to source well makes Tucson even more important."
While the razorbacks are lower price point custom items, they are a big part of the Underwood's brand. "They also highlight that we do so much custom work. The average customer might not think of exploring the idea on an original piece all on their own, and believe me, it's a far easier sale if they're the ones who first mention it."
"A client's first custom piece," agrees John Okleshen, master jeweler at Sorg Jewelers of Goshen and Elkhart, Indiana, "can be quite tricky. My advice is to listen closely to their initial sentences. Ideas will be flying, and you don't want to reach that point where you're at the end of the book of wallpaper samples. It's like they say about only one chance at a first impression. A custom piece has a certain spirit, a soul, and that comes from inspiration. For the sale to really work, you have to find that spirit—not always easy, because this might well be a stranger across the case, with no jewelry vocabulary, and who might just be wondering, 'What does a mill have to do with grain, in a jewelry store?' You try to keep that initial focus, no matter how much you'll later play with the idea, because when it's there when the piece is presented a week or two later, the sale has its closure."
To John Sorg, and his son Darin, respectively the third and fourth generations of the 108-year-old Sorg Jewelers, Okleshen has opened business beyond all expectations. "It's changed our identity, and our exposure, helped us become a destination," says John Sorg. "We recently moved our second store out of downtown to a standalone location on Route 17, with 24,000 cars passing every day. We broke ground and built from scratch, and we made sure to place Okleshen's shop practically right out by the sales floor."
"In the four years he's been with us," says Darin Sorg, "the custom business has grown 20 percent every year, and what's been particularly satisfying is that it happened within our business model, which is our good name and longevity in the area. We carry Gregg Ruth, Coast, Cordova, Rego, Jabel, and a few others, but the truth is we were never that strong with designer lines, and never really wanted to be. You won't see their names in our store—except on price tags or if we need to show a catalog—any more than you'll see Waterford, Lladro, or our watches."
For Okleshen, it's all about inspiration. That can come from anywhere: a sunset over a bluff deep in the six wooded acres he lives on, animals, abstractions, mechanical devices, or from reading history, which he does a lot. "The client might not see it in the finished piece, but it wouldn't have wound up as it did without that inspiration." Over the decades, he's devised his own tools, generally beginning with dental devices, and feels that's equally important to what a piece looks like. "I don't use CAD and doubt I ever will. It complicates the process, and I love nothing so much as when the client takes the pen from me during the sketch-making, even if she can't draw a line. And the fact that my engraving is done with the same tools, basically, that Albrecht Durer used, will be in the finished piece, even if, again, the client has no idea about that."
But custom-work, Okleshen stresses, is the art of making business out of art, and there has to be turnover and margin. "That means keeping that initial conversation, key as it may be, to less than three hours. And for a piece to take more than a week or two is also rare. We send our models out for casting, and unless it's complicated, two-tone or perhaps a piece composed from more than one model, that's generally the longest chunk of time spent. Everything else, from carving the model out of green wax to engraving to stone-setting, is done here, which means that outside of your markups for materials, margins for custom are in the expertness and speed of your work."
THE ART OF CUSTOM JEWELRY
Earth Resources Jewelry, Appleton, Wisconsin, is the ultimate custom destination location and perhaps the ultimate destination for any jeweler hoping to individuate with handmade originals. It's a model, however, that borders on the inimitable. Alice Barlow, who founded the store 27 years ago, is the daughter of John Barlow, who assembled one of the world's largest mineral collections. She holds an array of degrees—a masters in fine arts, and an FGA (Fellow of the Gemological Association of Great Britain) as well as her G.G. She also owns the real estate, not only of her 4,500 square foot door but of the other businesses in the red-brick lifestyle center she opened 11 years ago. Among the 2,000 or so items in the store, of which north of 70 percent are custom, there isn't a watch, semi-mount, loose diamond or precious stone, or designer name.
There's also no shop, no engraving tools, rouge, mandrels, wheels, wax, torches, and no library of molds. That seems strange at first. Craig Slavens, who joined Barlow three years ago, is one of the finer designers out there, with a pedigree earned at top designers and jewelry houses of Los Angeles, as well as six years at GIA.
"I might make the tiniest adjustment, here and there," says Slavens. "But we send everything out, generally to one-man, two-man shops across the country, a lot of them in California, people who spent decades at Van Cleef, then went out on their own. The work these people do is like the difference between a general practitioner and a brain surgeon. One polishes gold, the other platinum. Another does channel settings, and another does only pavé. At various times, we'll use any of 10 different stone setters, and sometimes two or even three for one piece, and the pieces will come back to us, several times, between the various stages."
Clearly, that doesn't add up to quick delivery times. "We're six to eight weeks on average," says Barlow. "If you add in the time Craig and I can spend with an important stone, you're looking at months." The two of them agonized over a design for a 1 carat fancy pink, sourced last summer, for three months before its fashioning into a ring.
Did you own that stone the whole time? I ask. "We own pretty much all our stones," says Barlow. How was that affordable? "It sold in less than two weeks for $75,000." And did you have the client in mind when you sourced the pink? "The customer had bought a few dozen pieces before, so yes, she was very much in mind, both when we sourced and designed, but she wasn't the only possibility."
"Back when I was at a designer, that decision and design would've been made in a day or two," says Slavens. "That difference is a big indicator of our model. Alice knows her customers so well. When she sees an alexandrite in Tucson, she'll think of so-and-so. Or a suite of princesses, she'll think of an eternity band for another client." It also points to a particularly radical difference in Earth Resource's custom model. Most of what's made is not "custom"—to order, that is. It's for what others would call stock, except that it's all one-of-a-kind.
"Our catalog, if you can call it that," says Barlow, "is very much based on the feedback we get, whether from a custom-made piece or not. 'I love that the stones on this piece are lower than the ones on that.' But everything in the cases here was built around a stone or a set of stones, with the inspiration drawn from their merits, rarity, or the play of colors and shapes. Because of our love for great gems, we're a first call for many of the top cutters and dealers for the perfectly matched princesses, or perhaps rarer colors of tourmaline and garnet, as well as the better rubies, emeralds, and sapphires."
And how about diamonds? "We love diamonds," the two say in unison. "And we'll have 4 carat total weight pieces in the store 12 months a year," says Barlow. "I've never bought a diamond, or any stone for that matter, off a paper, and you'll never see us buying 100 one caraters at a time."
The desire to emphasize beauty over science carries over to custom-made pieces. "We have CAD software," says Barlow, "but I think you need someone almost with an engineering eye and background to work with it. While it might help to communicate the basic look of a piece, it won't convey finish and scale, and certainly not the wearability, which is so key to any jewelry piece and particularly to a custom-made one. What it misses—and what custom jewelry must be all about—is the passion. Everything we do is passion-fueled, and while I'm sure you've heard that, even from generic producers, it's far truer when you know the painstaking steps that went into its creation. There's a fulfillment to custom work that cannot be found anywhere else on the planet."
I see that clearly with Slavens. "Wholesalers work in a vacuum," he says. "They bring their stuff to Vegas, and it sells, or it doesn't. Designers, no matter how original, follow the market. Retailers will get terms, co-op advertising, sales tools, but prices are going way up, and for pieces made in Hong Kong. All are pursuing basically the same thing: a brand name and they're right to look for it, just maybe not in the right place. If you polled the public at large, how many really know the name David Yurman? When I go to a party, meet someone, and tell them I work at Earth Resources, there's a gleam in their eye, every time. And if I'm not having a particularly good day at work, or I'm tired or lacking inspiration, or if there's a problem with a design that's just eluding me, no matter how many times I go back, someone will be coming in the store at some point in the day, looking at a piece and saying: 'My God, I've never seen anything like that.'"
PRICING Custom Design
Putting a dollar figure on custom jewelry is entirely different than pricing designer goods. "A basic rule I follow," a custom jeweler says off-record, "is that I own a piece for the same price a designer owns his comparable work. If my cost is $5,000, so will his be, give or take. So if he has to make key, because of the advertising and promotion built into his piece, my cost, were I to carry it, would be $10,000. Since I own it at $5,000, I can be freer with markup, and freer to vary it to the customer's budget, or with our relationship."
"Jewelers can be embarrassed about getting bigger than keystone for jewelry," says another jeweler. "For custom, I think it should be like comps for real estate. If a comparable designer piece costs $1,000 and I want key, price is $2,000. But if my cost is $500, then triple-key can represent a 25 percent savings for the customer."
If there is an industry standard, and there may well not be—given the range of skill-sets, design intensiveness, and regional market variances—it would be the simple formula: (gold x 3x) + (findings x 3x) + labor + markup for the stones. While the addendum to that formula—the bigger the stone, the lower its markup—follows pricing of loose goods or generic mountings, it's interesting to note there can be wiggle-room to as much as keystone for a one carat diamond—if the design can carry the overage and if the customer isn't overly sensitive to price.
Labor is the great variable, though prices on diamonds and gold are fast becoming a close second. "When I was on my own," says Sorg Jeweler's John Okleshen, "I'd often just use materials x 5, and in retrospect, it worked out close to what it would've been if materials had been less and I'd priced in labor."
"With literally thousands of pieces under his belt to draw on," says Darin Sorg, "it's much more of a gut thing. Certainly no formula, and John has this great little angel on his shoulder, saying 'Too much.'" It's common to quote a range. "We try to keep it as tight as possible," says Darin, "but it can be as much as 30 percent. One time, we called a client to say that a $2,500 piece, beautiful as it already was, could use the extra time and labor that would make its price $3,500. It was a client who'd already worked on a piece with John, and there was no problem."
Quickly escalating prices will at times lead custom jewelers who prefer to quote a single price to move toward a price range. "If a client likes a mounting," says one, "but wants us to set an inherited diamond in it. Or if a client remembers a piece we carried a year ago that incorporated half a carat of pink melee. Given the surges in gold prices, or that I only have 1/4 carat of pink melee and have to source, at a much higher price than with the pinks in the earlier piece, clearly there will have to be some tolerances in quoting price."
In the end, price is all about perceived value. "We have a large Amish population," says Darin Sorg. "You can look at their tables, armoires, hutches, and think that's $200 of wood and a $1,500 price tag. Or you can look at the craftsmanship, the detailing, the fact that it's all hand-done. Your mind loses that weigh-the-wood practicality and it becomes, 'I want that.' You've entered the world of custom design and craftsmanship." — Ivan Solotaroff
author: BY IVAN SOLOTAROFF, SENIOR EDITOR - Modern Jeweler




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