Many business participate in a race to the bottom
I’ve noticed over the years that the jewelry industry is getting a little more cutthroat. There are steeper discounts and more wheeling and dealing from both customers and suppliers. It is getting hard to compete with the jewelry discount stores. Companies like Kay Jewelers and Zales are discounting simple pieces so drastically that it is impossible to price match if you’re a small retailer.
Those of us, who work with small designers, recycle jewelry or make one of a kind pieces are still able to compete. The market is very saturated in our area with affordable jewelry at super affordable prices, but Macy’s went a little too far. A recent advertisement from Macy’s shows a huge discount on a diamond accented necklace. The retail price was $1500.00 but it was selling for $47.00. This was of course a typo and someone is probably out of a job today, but even at $479.00 this necklace is ridiculously low.
This is a big mistake
While in college I took a World Problems class. Part of the curriculum focused on “The Race to the Bottom.” We discussed how various industries would produce a product and sell it. It order to be competitive another manufacturer would have to produce the same product for less. This would precipitate a continued competition to the lowest price. The problem with this scenario is lower retail pricing resulted in lower wages for workers due to lower profits. It basically kept reducing price, wages and eventually quality of product.
This is a no win scenario and many large retailers fail to see the logic. Since they purchase at such large quantities they are able to negotiate substantial reductions in wholesale cost, but is this truly beneficial? Retailers have conditioned consumers to seek the best price not necessarily the best quality. Many consumers are internet savvy and look for the best price. As such Macy’s did sell some of these necklaces at the wrong price to internet shoppers, how many they aren’t saying. I personally look for quality in my jewelry. It doesn’t have to be fancy but I’m willing to pay a little more because I don’t want to run in the race to the bottom.
This is the only race I run every morning