Short Term Coronavirus Survival Guide
The full economic implications of the Coronavirus Pandemic are unclear at this early stage, but certain effects can plausibly be predicted. These include an overall reduction in sales and traffic in retail establishments, and a negative inflection in affluent consumers’ appetite for Luxury Goods. Both of these changes will undoubtedly impact Independent Jewelry stores negatively, so it’s good that most observers predict that the duration of the adverse impact should be short, almost certainly less than five months. Still, five months is an eternity when you’ve got overhead and limited cash flow, so you are probably currently considering strategic options to get your company through this period of turbulence. With this in mind, we suggest that you now consider an aggressive advertising plan aimed at attracting consumers who will be selling their gold.
Recognize that during the economic turbulence associated with the Great Recession of 2008, it took months for the full economic impact of the stock market collapse and liquidity crisis to be felt by most consumers. Yes, Independent Jewelry store revenues fell by 35 percent that December as traffic dried up and price points collapsed, but it wasn’t until several months later that gold buying surged. This time around, we expect many consumers to experience economic dislocation far more rapidly, with the lowest wage earners impacted most.
Certain categories of workers like restaurant employees may suddenly (if only temporarily) lose their source of income, and with rent to pay, and historically limited savings, this social stratum will be forced to liquidate their only store of economic value: their jewelry. Furthermore, the coming economic dislocation may actually affect a significant majority of workers in your local market. Note that a recent study found that “78 percent of American workers live paycheck to paycheck”. And for Independent jewelry stores that may be experiencing a decline in sales, gold buying may once again provide not only a life preserver for a difficult period; it may actually represent a golden opportunity to generate profits in excess of normal retail jewelry sales that would have occurred during the same period.
Consumers under economic stress will choose to sell their gold regardless of whether you choose to participate in what may become a robust secondary market, but as an honest, ethical broker, you can help them achieve their objective while simultaneously protecting them from unscrupulous players who may dramatically undervalue their jewelry. The extent to which your company benefits from this opportunity will be dependent on the effectiveness of your marketing. To this end, we have created a set of advertising tools that may help. You can access these by clicking on this link:
We are focusing the full power of RLA Creative on production of these materials this week, so you will see the content expand daily.
In the meantime, consider the following helpful tips:
The consumers who may be most interested in selling their jewelry may not be part of your existing customer base, but hopefully your advertising over the years has at least occasionally reached them and created some brand equity. Recognize that they would probably prefer to sell their gold to you as opposed to a pawn shop, but also remember that there may be some threshold resistance associated with your store if you have created an exclusive image. Make sure both your advertising and the in-store experience is supremely welcoming, as they likely have friends with similar motivations.
For many consumers, precious metals are actually not the only store of value that can be converted into cash. Gift cards may also be an option, and a study from mid-February showed that 50 percent of consumers possess unredeemed gift cards at that time. Commerce in gift cards can be a bit tricky, as issues regarding fraudulent cards as well as remaining balances can open retailers to potential losses, but the potential for profit during an economic crisis could be significant, making it a worthwhile short-term strategic initiative for your company. For more information, go to www.cardpool.com for a tutorial about the secondary gift card market. There is an entire ecosystem built around the secondary gift card market, and safe, reliable websites for economic transactions in this arena include cardpool.com, cardcash.com, clipkard.com, and giftcardgranny.com.
The motivation to sell gold may occur as a spur-of-the-moment impulse, so it’s important for you to have effective exterior signage. Again, click on the link above to find files for outdoor signage and billboards.
You now need to incorporate a gold buying message into weekly eblasts and social media posts. Think of the consumers who might see these messages as being on a journey on a slow-moving portion of a river that suddenly leads to a dangerous waterfall, where a select group encounter some type of crisis each week and suddenly have an acute need for help. You need your message to be in front of them at precisely the time they need cash to pay for something critical.
It is entirely possible that as you broadcast your message of buying gold, you may also pick up consumers who are actually not experiencing economic distress, but for whom an offer to “re-purpose” existing jewelry that’s no longer worn into beautiful, new items represents an opportunity to make a retail purchase. Encourage this in your advertising. You may even want to run a “Custom Re-purposing” Event to attract consumers who are attracted to the idea, while simultaneously buying gold from consumers who need cash.
As you ramp up your advertising message, make sure you’ve got proper standing and are in compliance with municipality, county, and state regulations regarding buying gold. If you’ve been flying under the radar doing sporadic buying, it’s now time to acquire official status as a registered gold buyer. Unfortunately, there’s no set standard for compliance, so you’ll need to research the requirements based on your locality.
Many of you have seen a recent reduction in the effectiveness of cable and broadcast TV advertising to promote retail sales, but advertising the fact that you buy gold during the hours from midnight to 5 AM may be an extremely inexpensive, cost-effective way to communicate to shift workers and anxious insomniacs who represent a high-probability target audience for your message. You may also find that you can deliver a more aggressive message during late night hours without impacting your brand equity with your regular target audience.
These are just some of the potential options that are available for you in maximizing the opportunity that now exists in this important strategic initiative. We believe it’s time for you to get aggressive, and direct consumers who need your help to your store. We can’t control the retail downside of this dreadful scenario, but we think you should be prepared to maximize profit and cash flow if there’s a potential upside. We hope that we can facilitate your success in this regard by providing the advertising tools needed to accomplish your objective.
Please don’t hesitate to contact us with suggestions on additional advertising materials, as we have the capacity through RLA Creative to provide the content you need. We’re here to help you, in any way possible, and we are happy to use our capacity to assist as you exercise strategies to get through this period of economic turbulence.
As always, best wishes and best of health from your friends at Gems One.