Interview Italy-florida Mission - Italy-America Chamber of Commerce ...

BUSINESS
Jewelry
All that glitters is not gold
By Stefania Miselli
In the past few years, the United States have seen an
increasing number of Italian companies coming overseas
with the purpose to open a branch of their European headquarters,
with Miami that conquered a spot among the
highest ranked destinations.
The skyrocketing costs of raw materials together with a
penalizing euro exchange rate do not contribute obviously
to facilitate the European export in the US; nevertheless
the economic crises of the European markets is such that
entrepreneurs still find it convenient to try to create an
American outlet for their businesses.
The gold and jewelry markets are no exceptions to the rule.
In recent years Miami has witnessed the entrance in its
economic scenario of really popular companies.
Chimento, Calgaro, Mio Oro and Pianegonda are just a few
of the prestigious names that are setting the Miami jewelry
scene. The situation is not different in the rest of the US,
especially in the world capitals of fashion and showbiz like
New York and Los Angeles.
Still, new companies find themselves to face several problems,
among which the most immediate is the choice of
the product to introduce and the selection of the adequate
"channel of distribution" (supply network).
In Italy, as well as in Europe, there is a propensity towards
gold jewels, with 18 karat yellow gold. Instead, the
American consumer, who is passionate about jewelry still
favors, a diamond and white gold or platinum products,
mostly with a classic look.
For trendy pieces the average consumer chooses silver,
which limits the monetary investment.
The less sophisticated buyer that still wants to purchase a
gold jewel buys 14 karats gold pieces with no fashionable
design.
When we observe Italian companies that have an already
established popularity we notice that, once they adapt their
production to the market needs, they as well have to solve
the other big dilemma: the supply network.
The biggest brands that have a strong financial capacity,
point toward the only possible choice in order to preserve
their brands: the opening of an American branch with the
purpose to directly commercialize their products and
maintain full control over distribution, leaving all production
aspects to the Italian parent company.
By doing so they can "freely" choose if they want to sell
their merchandise to high end jewelry stores that already
feature the most prestigious brands, versus to high end
chain stores such as Saks, Neiman Marcus and Baily
Banks & Biddle just to name a few. Otherwise, if their supply
capacity will allow it, they can even sell their products
to both types of stores, according to the final consumer
they would like to target.
This choice involves a remarkable investment, not only on
the marketing and advertising sides, but as well as for
operating costs. This is the reason why many companies
choose to entrust a local distributor.
Even though this choice involves a lower economic investment
in the beginning, on the medium and long term it
does not necessarily ensures a lower percentage of risks.
The first step is to find a respectable distributor to represent
the line.
Unfortunately, it is rare to find a distributor in the US that
would be willing to exclusively sell one brand. Generally
speaking, they avail themselves of their knowledge of the
American market to be the agents for more than one company.
In some cases they even commercialize products
that are in direct competition with each other, with the
result that none of the brands will receive the emphases
that would deserve and consequently limiting the profits of
the manufacturing company. Furthermore, if the distributor
has no scruple, the product could be sold in non-selected
or low end stores that do not promote brands at all.
The damages for the image of the manufacturing company
that would derive through this channel of distribution,
could be of enormous proportion if not, in some cases,
even devastating. A wrong distribution has the power to
vanish years of hard work, as far as brand's positioning and
sometimes companies have a difficulty to reestablish their
share of the market. In order to avoid that the manufacturer
would be left aside as a passive spectator of his own lost
prestige, it becomes mandatory to enact a meticulous
screening of the potential distributor's credentials, instead
of entrusting any unheard-of interested to gain representation
of the brand.
The United States is certainly a country full of opportunities.
However, if a company is willing to do whatever it
takes to gain a share of the American market, it should
consider that risky choices could turn out to be very damaging
in the long run.
Unfortunately we can really say that all that glitters is not
gold. �
.13 .it italian trade