In the Loupe
In the Loupe
Physical Retail, The Beginning or the End? ft. Peter Smith
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What if brick‑and‑mortar isn’t dying, but splitting into winners and roadkill? We sit down with Peter Smith, former Hearts On Fire president, columnist for National Jeweler, and sales behavior coach, to unpack why independent jewelers just had their strongest five‑year stretch while the total number of stores keeps falling. Peter makes a compelling case that physical retail is both a beginning and an end: a beginning for operators who evolve with data, people, and design, and an end for those who stay stuck in habits from another era.
Read the full National Jeweler Article: https://nationaljeweler.com/articles/14583-peter-smith-physical-retail-the-beginning-or-the-end
Send feedback or learn more about the podcast: punchmark.com/loupe
Learn about Punchmark's website platform: punchmark.com
Inquire about sponsoring In the Loupe and showcase your business on our next episode: podcast@punchmark.com
Welcome back everybody to In the Loop. What is up everybody? My name is Michael Burpo. Thanks again for listening to In the Loop. This week I'm joined by Peter Smith. And Peter Smith is a real force in the jewelry industry. He writes a lot of really interesting articles, especially for National Jeweler. And one of his most recent articles really caught my eye. It was titled Physical Retail, The Beginning or the End. That was pretty incendiary to title it like that. I really wanted to ask him a bunch of questions about it. He's the former president of Hearts on Fire, and he has a really long career in the jewelry industry, and he offers a lot of uh really unique insight to the jewelry industry. So I thought I'd uh get a chance to sit down, talk to him about trends and data, and learn more. So, enjoy.
SPEAKER_00:This episode is brought to you by PunchMark, the jewelry industry's favorite website platform and digital growth agency. Our mission reaches way beyond technology. With decades of experience and long-lasting industry relationships, PunchMark enables jewelry businesses to flourish in any marketplace. We consider our clients our friends, as many of them have been friends way before becoming clients. Punchmark's own success comes from the fact that we have a much deeper need and obligation to help our friends succeed. Whether you're looking for better e-commerce performance, business growth, or campaigns that drive traffic and sales, PunchMart's website and marketing services were made just for you. It's never too late to transform your business and stitch together your digital and physical world in a way that achieves tremendous growth and results. Schedule a guided demo today at punchmark.com slash go. And now back to the show.
SPEAKER_01:All right, everybody. Welcome everybody to In the Loop. I am Michael Burpo. I'm joined by Peter Smith. How are you doing today, Peter?
SPEAKER_03:Great, Michael. Thank you. And thanks for inviting me to be on here with you.
SPEAKER_01:Absolutely. Well, you have uh quite the career and um background in the jewelry industry, former president of Hearts on Fire. You're now running the Retail Smith, which um sounds very exciting as you're consulting and coaching. Um, but you also created this new episode, uh, this uh article for National Jewelry that I want to get into later on in the show that's that was titled Um Very Incendiary, uh like um physical retail, the beginning or the end. Uh, I loved it. I thought it was really interesting. I read it um, you know, once and then I got back into it and I read it thoroughly again, uh preparing for this episode. And uh it's really exciting, very interesting statistics in it. Could you maybe just set up for me your background in the jewelry industry and how you kind of came to be here?
SPEAKER_03:Sure. Thank you for your your your comments on the article. Um uh I I supposed, like most people, fell into this business, uh, in my case, it a long, long, long, long time ago. And for the first, I don't know, 15 years-ish, I worked on the re mostly on the retail side of things, uh, four years or so with a company called Whitehall, who used to have about a hundred plus stores, off-price, typical mall retailer. And then for about eight years with Tiffany, when they had far fewer stores. Uh, and then I come on to the branded side, as you mentioned, Hearts and Fire, Memoir, et cetera. Um, and so that's sort of been my world. And of course, I'm a, as you mentioned, a columnist for National Jewelry and also the jewelry book, uh, the the the the very uh wonderful print uh vehicle out of California. Uh and then I write books on this topic. So sales, hiring. Um, I've got a new book coming out in the coming weeks called Essentially Human on Sales and Sales People. Um, so this so this whole topic of business and retail and people, and in particular influencing human behavior. Um that that's that's that's sort of both my profession and my and my passion. So, but the answer, the simple answer is like most, I fell into it.
SPEAKER_01:Fell into it. I really love that. It's what an incredible uh background. All those brands are um definitely ones I'm very inspired by. Tiffany in in particular. Um I had a Tiffany designer on uh about three years ago, and it's still one of my most interested uh episodes as they uh spoke about the the couture design process. It's uh very fascinating to me.
SPEAKER_03:Right, right. Different world, of course, now that it's LVMH, taking it in a in a whole different direction. So it'll be interesting to see, you know, what what they look like in the next sort of five, 10 years, I would think.
SPEAKER_01:On that same topic, it's kind of interesting. Uh I've only seen the Julia industry for the past 10 years. And what still kind of strikes me as very fascinating is I've watched e-commerce go from being uh essentially nothing to being uh a pretty substantial kind of player in the industry. But then with yourself being in it um substantially longer than I have, what are some of like the main noticeable changes that you've seen in in your time in the jewelry industry? Uh anything jump out at you?
SPEAKER_03:You're very politically correct there with the you you're you're yourself being in it a substantial amount of time. So you've been in here a lot longer than I have, Peter. I appreciate it. Well, the major things I've seen is the invention of the wheel. That's how that's how long I've been in it. You know, yeah, I I there there have been uh huge, huge changes over the years that have been in it. And in some respects, the a year, a year, a year now looks like five years previously or 10 years previously. So the pace of change is accelerating all the while. But I think the the the main things that I would say I've seen, and for each thing I bring up, somebody else could add another 10 to that. But for me, it's the influence of data and technology is huge. That that simply wasn't a thing, you know, back in the day when I came into this business or for decades after that. And I think today anybody who has their head screwed on has to recognize it and and and and and uh and sort of pay attention to what data shows us and how and how that influences so many of the decisions that that we make. I think you've you've mentioned digital commerce is huge. That didn't exist. And you know, I'll go back to just 2004 at a diamond conference in New York when the big issue of the day, now this is 20 years ago, right? 22 years ago, less than 22 years ago, the big issue of the day was e-commerce. And and if and if and we're not gonna do business with vendors who sell to people who sell online and so on and so forth, and now it's just become, you know, a thing. It's not even a conversation anymore. I think, and we'll you'll probably get into this a little bit on the on the column, the contraction of the retailer base has been very significant. And so if I go back to when I arrived in this country in the 1980s, we had 40,000 points of sale for jewelry in this country, and I think we have today probably somewhere around 15,000. So you're you're talking about a very, very significant contraction. Um, and then of late, and I don't think this is a recency bias thing, because by any reasonable standard, it's become a huge, huge and defining issue is the emergence of lab grome, really, in in in recent years and the impact that that's having. So I I think those are some of the things I would say that are fundamentally different than, you know, not just when I came into the business, but for from for decades after that, even.
SPEAKER_01:It's really quite uh interesting to hear what stands out as this um, you know, impactful kind of moment. And I I think I'd agree with you on all of them. Uh you you're mentioning statistics and data and and the you know value in them. It's something that Punchmark uh is you know trying to do more of is I believe that there's incredible insight available to those who are willing to look when it comes to, you know, the the as they say, the ball don't lie. And if you if you look close enough, then you either have to um argue versus the collection methods of the data, or you just got to believe them. And what I find is so fascinating is that what we're seeing, we just whether we like it or not, is kind of the that's going to be the truth because that's what the ball says. Uh, I guess I wanted to ask about you also offer masterclasses on um, you know, salespeople, but also leaders. Is a lot of the does a lot of it come down to, hey, trust the data, trust the analytics? Or I do feel like there's something to be said about trusting your instincts too. Um I feel like real leaders have great instincts.
SPEAKER_03:Yeah, I look, I I I don't think, Michael, um anybody who is uh if I can use the term slave to data, is being told to suppress your instinct because there are places where um that matters. For instance, and and and I will say this, I will put a qualifier on what passes for data in our industry typically. Not always, there's some awfully good people who who provide data, but opinion repeated is not data, right? If somebody tells you something, I saw a pretty good example this morning on LinkedIn, where there was a piece of data that was put out there that has no bearing in reality whatsoever. And when I appropriately asked what's the source, um, I got no answer. Not like they ignored it. They uh it was obfuscation, it wasn't, it wasn't uh any sort of real order. So if somebody says something, and I think this is true of focus groups, this this is true of picking up the phone and calling a half dozen retailers. That's not data, that's opinion. Data is actually data where it comes in the kind of thing we're talking about, comes from the POS. It is actual sell-through data. Now, where the instinct comes in and where the opinion can come in is what does it mean? Because you can look at two different pieces of data, and I think this year is a great example of it. I think uh Edge Retail Academy uh just indicated that we finished the year, the independence finished the year up six percent. Maybe it was in the high fives. And you might say, well, that's fantastic. Except they also said the unit count was down, I think it was six or seven or eight percent. Okay, why? That's interesting, right? So if you if you bring your instinct and you bring your intel intellect into that data conversation, you can say, okay, we finished up. Why might that be? Did runaway gold prices help that? Did tariffs help that? But if the units are down, what does that indicate to us? And what should we be aware of? So I I I think anybody who makes an argument for one over the other is sort of missing the point. Yes, instinct and opinion, absent data is just that. It's just instinct and opinion. But when you have a conversation where fundamentally you're you're you're looking at real data, that's an entirely different conversation.
SPEAKER_01:What a wonderful kind of uh way to put it is that I sometimes feel like the data is like the yeah, the meat and potatoes where it's like that is what is the actual substance. But the the I don't want to say spin because that always has a negative um connotation to it, but like the the interpretation of that data is I think like the you know, that's the the chef's twist on it. And increasingly I I'm definitely very uh very guilty of it on this on this podcast is I'm so excited and I I sometimes wonder if I'm like staring so far into the pool that I fall in when it comes to you know everything that I have access to, you know, whether it's about e-commerce, because that's what I'm most invested in, or it's about um even like things like you know, men's jewelry, uh men's jewelry, it just doubled in percentage and it's like you know, goes up from like 6% to like 9%. You're like, oh my gosh, it's a second coming. And then you talk to a jeweler and they're like, no, it's still not really that big for us. And it's like, oh, okay. So I have I found it very interesting in your natural jewelry article, just to jump into this thing. You talk about, you frame it as the beginning or the end. And you, I what I really appreciated was it seemed like most everything that you were writing about came from uh a really solid grounding in in data and analytics. Um, could you maybe just present for the people listening if they haven't got a chance to read your article yet, um, what data trends is is showing that it might be the beginning for uh the future of physical retail?
SPEAKER_03:It's like anything else, Michael, in that there's kind of two sides to every coin. And you know, as you pointed out, the there was a re titling it the way I did was was sort of purposeful agitation. I wanted people to uh to be able to sort of say, well, wow, what what is this perspective? This is this would be an interesting perspective, but the reality is in a in an ironic sort of way that it's both, right? So if so a couple of things can be true. We can come off, which we did. So this would be an argument for it's the beginning, or at least it's the beginning of the next period, the next evolution. We can make an argument and and back it up statistically that independent retailers. I won't get into the mall operation because that's exacerbated in a whole different way for a whole different set of circumstances. But specific to the independent retailers, we have just finished in 2025 the best five years in the history of our business. That's crazy. So that's that's that's indisputable. If you look at those numbers, uh what they ultimately end up being, you know close to a hundred billion, I suspect. We've never had a run of five years in our history. The irony of it of it, of course, is that you know, five years ago from from now, we were we were, I think we were mired in the middle of COVID or six years ago. So so that's that in and of itself is absolutely phenomenal. What's also true is that again, the independent retailers finished up six percent this year. That's a superb year by by baseline metrics. But what is also true is in that period, and I think I touch on it in in the in the column, is we lost a lot of jewelers. So in in some respect, and by the way, including you know last year. So here you have on the one hand many, many retailers having superb years. I mean, the averages are, you know, you put a seven-foot-tall guy and a five-foot guy next to each other, and they're six foot on average, but the five doesn't give a foot to the five-foot guy. So averages are a little bit dangerous. So if we say, well, look, retailers' independents were up five to six percent. I personally know of independents who are up 30 to 40 percent. Yes, but I also know of independents who were not up at all, who were down. And as we saw last year, we we have a continuation of the contraction of independent retailers, such that the effect is, which I actually think aligns really well broadly with what's going on in retail, not just in the in jewelry retail, that we're seeing fewer people do more business. And so the question becomes is it the beginning for me or is it the end for me? The answer is it depends on which direction you go. If you're continuing to do business the way you've done it for 20 or 30 or 40 years, it's you're probably nearing the end. If you're evolving your business such that you're embracing not just bumper stickers, oh, you got to embrace technology or you've got to do a better job analyzing this or analyzing that. But if you're legitimately evolving your business, um, then for you, this year is the beginning of the rest of your career. You know, so I think the answer is um it is both, and that just depends on where you sit. You know, for those retailers who went out of business last year, and and and reasonable people can debate, you know, why that happened, any given situation may be different. Um, for them it was the end. For them, it's the end of physical retail because they're business, and in many cases, multi-generational businesses are now gone. For those folks who had superb years, and while they were having that superb year or this period of you know four to five years of really strong performance, if they're evolving their business as they've gone along, such that if they were to take another if they go into a little time warp and and project themselves back five years, they'd be shocked at how much they've evolved in a good way over that five-year period. For them, it's the beginning, it's the beginning of the rest. Um, so it is it was purposely agitative to get people to sort of think about it and obviously read it when you take the time to write columns you enjoy when people read them. Yeah. Um, but it was also in an ironic way, both of them were true. It is also, it is the beginning and it is the end.
SPEAKER_01:You know, one of the things that I do for Punchmark is I am on our retention committee. This is where we look at the nearly 500 clients that we have, and we uh dissect every single time a client deactivates with us. And fortunately, it's not not that many, many, not that many, but I look at every single one. And a lot of times I do exit interviews. And what's our number one churn reason, uh, and has been true for the last I think three years, is uh GOBs and just closing and like you said, the retraction, um losing a third of retail stores that operated in the 1980s, um, that is uh concerning to me. And I've asked, uh I've been very fortunate. I've interviewed all of the presidents of the major um jewelry organizations uh just in the past um year. And I always ask them, is that a is that a responsibility for jewelry organizations? Like whose responsibility is it to stop the slide? And it seems like it's the natural progression, unfortunately, is that there are going to be fewer stores, hopefully doing more sales. And if you're a store that's going to stick around, maybe that's a good thing. Maybe your stores are going to be up, like you were mentioning. You know, some people that are doing way more than five, six percent. I also know some stores that are that are not that I really wish we're doing better. Is that uh whose responsibility is it to you know ensure that the industry stays healthy? Because we can't all be looking out for just ourselves. I feel like that just essentially leaves everybody to fend for themselves and exacerbates it.
SPEAKER_03:So I I'll answer it a couple of ways. And one of them wouldn't, I suspect, be very popular uh in our space, but I'm I'm going to do it anyway. Um and and that would be we have not as an industry handled change very well. We have never in all of the years I've been in the business. When you look at broad changes, again, whether that would be the internet or an e-commerce or whether that would be lab grown, etc., we do not handle change. Our we circle the wagons pretty quickly in in defense of the things that we believe sort of brung us to the dance, things that we we don't want to change things. So I think that there's a collective ownership in that we have tended as a you know, broadly as an industry, uh, to be uh unreceptive to change. And so I think that's that that's collective responsibility. I wouldn't point the finger at any one person, as I would say every organization, uh, every retailer in our space ought to be taking a hard look there and saying, look, how have we handled change over the course of the decades? And have we always served ourselves well in doing that? So that's the part I I think that that is very, very difficult uh to escape. Best examples of of those would be, I suspect, again, e-commerce. We were we handle that terribly, and and lab drunk. I think we're handling it terribly, where in some respects we're eating ourselves from the inside rather than being very thoughtful about what the developments are, we're we're we're we're actually we're taking moral high grounds, you know, and and that doesn't serve any purpose. The second thing I would say, and it's not specific to independent retail jewelers or to jewelers, period. And that is retail broadly is very Darwinian. You you you nobody has, you know, if you go back to, and I think I mentioned it in the column, I'm not sure. You know, the 1970s Sears was the biggest retailer in the world, right? And and and the first e commerce was called catalogs. Back in the 18 whatever, Sears was servicing you know rural America, which at that point was over 50 percent, through these catalogs. That was the first internet, like that was the first where something came in the mail, and that's how you did the shelter. Yeah, and I you know, I don't know how soon after Montgomery Ward came along, but I think also in the 18 somethings. And so between Sears and Montgomery Ward, they were handling all of that. Um, so they're gone now, right? Those stores are gone now. And when I talk about the 80s and the 40,000 points of sale, that included all of the department stores that are now gone, who had jewelry uh setups in their in their stores. That included service merchandise, that included Spiegel, that included, you know, Whitehall jewelers who had, you know, I over 100 for sure. All of these folks who've gone away uh contribute, you know, to that uh sort of regression and you know, in in the retail base. And in many respects, if we were sitting here in liquor, talking about liquor stores, we're talking about hardware stores, or talking about some other category, I would suggest we probably see the same thing, Michael, where we we would see that there's an ongoing evolution, that there is a real Darwinism to retail. Nobody's entitled to stay in business just because you're second or third or fourth generation. You actually have to earn it and you have to earn it every year. And so those that do, which gets back to that notion of are you evolving as a business, um, will will be just fine and won't notice what's going on around them. And those that do not evolve, who are sitting in some respects on a moral high ground, talking about everything they've done for the community through the generations, honestly, nobody cares. It's what are you doing for me today? We have shorter attention spans. I can jump online right now and and and narrow my my my my choices, which I think is one of the reasons that the traditional malls have come under uh under such threat. Obviously, they were massively overbuilt. So that we should mention that because it'd be you know uh ridiculous not to. But you know, I got four adult kids, Michael. You know, they're not going in walking around the mall ad hoc looking to see where they want to shop. They've already done some, they've already done some work online. And if they do happen to go to a traditional mall, I'd say that they're doing it not very often. They tend to go to these lifestyle centers uh to do their shopping. Uh, but if they do, they go where they intend to go and then they leave it. They're not strolling around, you know, shopping or aimlessly killing time the way we might have done in the 70s and 80s and 90s. So two things. One, we don't handle change well, and two, that retail by definition is Darwinian and it's going to eat its weakest players.
SPEAKER_01:And you know, I think that that Darwinian kind of um approach or lens for the industry is very uh very interesting. And something I've found to be true in just you know, nine years of of being here is uh when the pandemic hit, there was like a real moment. The reason why this podcast even existed, uh became to exist is because people were looking around and they're like, oh my gosh, my brick and mortar store is closed. How am I going to make any money? And then we had to have a moment. Someone needed to say, like, you know, you could make it online, you could start trying to sell some online and then some adapted to it. And you talk about evolving, and I guess naturally for again through a technology lens, I sometimes think that evolving has a real technological um flavor to it or twist. And people assume when you say your business needs to evolve, you're most likely meaning you need to have a point of sale system and a website and some type of clientele process. Is that what you are meaning when you say evolve? Or is there is there more beyond that? Because I could talk to them blue in the face about websites, punch mark, we're the best. We talked about point of sale system and clientele, but is there more to it beyond that that retailers need to be taking advantage of, in your opinion?
SPEAKER_03:Yeah. So the answer is definitively yes, and definitively no. And so what I mean by that is you're you're correct in sort of saying, look, you you have to embrace technology to the extent that it can help you with so many aspects of your business, managing your inventory, communicating your marketing ideas, clarifying your message for people, having you know all of your sort of digital and traditional, because let's face it, people still do billboards and and and and some you know, radio or television, whatever it might be. But everything has to be, you have to be telling the same story, right? There has to be consistency. But I think it goes beyond that. I think that one, if you look at interesting retail stores today, and again, different people are going to pick different things, but you know, Aritzia, a store that that my daughter loves, which is I think is a fantastic store out of Canada. I think their goal is to ultimately have over a hundred uh stores. It's it's just a great retail experience, right? With the century experience from the the the contrast lighting in the space and the scent when you walk into it and the music. This music, this musical system is fantastic. We could have this conversation at this level, and yet we could tell you what lyrics you know are being sung. So I think that that that's part of it, hiring the right people. And I think we as an industry, which is very different, I suspect, than other luxury retail, we've had a tendency to align pedigree and experience, and that includes, you know, sort of technical knowledge, if you will. I can, I can, I can dissect the the the minutiae for you on on on diamonds or or color stones or whatever it might be. But we've tended to look at that as the best fuel for sales performance. And in fact, it isn't. Not only is it not, but I could point out and show you data that's it, it's a it's a it's a complete uh contradiction, right? That the best salespeople tend not to be people who are drawn to spend lots and lots and lots of time, you know, dissecting, uh dissecting uh gemology. It's a little bit like when somebody walks into a store and asks us what time it is, we tell them how to build a clock. And I think as long as we're doing that, you know, we're we're we're going to struggle. So hiring the right people, which is to say, you mentioned the sales master classes. I mean, I consider myself to be a sales behavior coach. And that, you know, that that that handles things from let's first of all look at the top the the key behaviors and traits of a salesperson. Let's look of successful salespeople, not not ideals, but actual people. Let's look at the traits and behaviors and influences, psychological influences of customers. What what do they respond to? Why are the reasons somebody would buy, let's say, a luxury product versus not? And then the engagement between both. What are those psychological influences and principles that can help nudge a customer towards feeling really good about buying? So I think hiring the right people, making the investment and making sure those people actually understand what their job is, that this is not a museum. We actually do want to sell some things. And the more things we sell profitably, the more money we all make, and the happier our customers are. Then stuff like, you know, you can hire the right people, but if you have the wrong compensation plan, you don't get what you need. So having a compensation plan that aligns with your aspiration as a business, coming to the product side, understanding that less is more, and we are an industry that has been dreadful, absolutely dreadful, maybe amongst the worst across all product categories, we're just opening the case and shoving as much as we can into that case, believing necessarily that the more the customer sees, the more they'll buy. And in fact, the opposite is true.
SPEAKER_02:Yeah.
SPEAKER_03:The less they will see, the more they buy. And so what we ought to be doing is we ought to be selling less stuff, but more of it. And that's where, again, technology comes in, because we should be setting it up where we understand and respect the products that are driving our business and uh and by default, the products that are dragging our business down. And we should never be in a situation where we're out of stock of those. And then we can take a budget, whatever that happens to be, and we can go off to you know Vegas and we can, you know, we can try some things and we can have some fun and we can get people excited. So I think that yes, technology matters, hiring the right people matters, having a much more thoughtful way with our product development process and our merchandising, and then psychology, psychology of price. I mean, understanding, first of all, which I think many don't get, that price and value have nothing to do with each other. Nothing. Right? I worked, I mentioned earlier and they're long gone, but I worked for Whitehall jewelers who are very off-price, low quality. You know, if somebody spent a thousand dollars and then two weeks later started to have regrets about that, which by the way, they might have gotten 50% off. Yeah, was that a was that a good value? If if if if the same person walked into Tiffany and spent$5,000 when they wanted to spend a thousand, but four years, five years later they forget what they spent, but they love what they did. Is that a bad value? So I think that we, you know, I think there's a lot of ways we need to think about uh evolving. And I think that includes the physical space, which some have done better than others. It includes the merchandising, it includes technology, it includes hiring, it includes compensation, all of those things. And in in many respects, we've kind of come full circle because when we started off talking about technology, and you sort of said, Well, look, I sometimes feel like I'm a, you know, you're you're you're the guy constantly talking about technology, technology, technology. What we ought to be able to do, or at least get help doing, you know, is the technology says this. If that's the case, then what does it mean? I touched on that a little earlier. And that could be on your people, on the performance, on your pay, on your product, on any aspect of your business. What do what does the data show? And if the data shows that, then what does it mean? And so I like to think I'm sort of a CEO of connecting dots. I will look at stuff and say, you know, I'm a I'm a I'm a raging whiteboarder. I love to get on whiteboards and throw the data up there and then say, what does it mean? Let's invite folks then to look at it and say, what does that mean? And so so I think it's it's in some respects, it's the whole evolution itself is quite uh it can be can be appear to be quite complex, but it's not sitting in the same place doing the same things, even if, which was the case, Michael, for three to four years, uh, you know, coming out of COVID, even if the rising tide raised your boat. The rising tide may well have raised your boat, but if you're still doing things the way you were doing it previously, nobody owes you continued success. And the likelihood is you're probably not going to have it for too much longer.
SPEAKER_01:Yeah, you got to keep uh paddling or or staying on top of the water because uh keep moving. I I I do appreciate that kind of um viewpoint as that you need to consider how to sell better because I think when you talk about these uh excellent commerce experiences. Um last time I went to JCK in in Las Vegas um this past year, and one on the last day we finished, we packed up the booth. I was able to walk around with one of my coworkers and we went into pretty nearly every luxury shop imaginable. And I unfortunately love luxury goods. Um I just especially like looking at them. And what I think was so fun was that was the experience. And like you're talking about, they all they all smell really nice and they all have not a lot of product out, but the products that they do have are just like oh, just so.
SPEAKER_03:And and the and the thing is, if you so sorry to interrupt, if you surrounded any of those, and I feel I felt the same way. I I I I went to um uh Costa Mesa a few years ago and had the same experience. And I thought if somebody was to drop out of, you know, uh a Martian was to come visit and wanted to know what retail was like, that's where I would have taken them because it would have shown, in many respects, the best of it, right? You walk in and there is a certain scent, you you you do have that contrast lighting which dilates your pupil, you do have the music is is is is is of the right place, and there's less, not more, on the product. Now you take that, Michael, and you pile a whole bunch of skews around it. You don't see it anymore. You just don't see it anymore. And you know, years ago I was doing some talks on future retail, and I went into a like Tiffany Coach, Michael Kors, and one other, and counted Apple, it was Apple, counted the number of SKUs and contrasted that with the number of SKUs in a typical 1 million, 3 million, and$5 million retail jewelry store. And you were looking at anywhere from sort of in the 300-ish range of total skews in those stores compared to, on average, 3,000 in jewelry. Not counting at that point, I didn't count Pandora or Alex Manani, but that's we have to get away from that. That's not the way to deliver a beautiful experience where people can actually see it. It's like eating at the Cheesecake Factory. I can't do it because the menu's got 9,000 things.
SPEAKER_01:The menu's selling a booklet, yeah.
SPEAKER_03:Right. And then if you go to the restaurant down the street and it's got five items, how many meals are you having? And and think about which is more difficult, you know, to plus it plays into our the psychology of geez, did I pick the right thing? And then you're watching the food go by. Maybe I should have got this, maybe I should have got that. So now all of a sudden you have regret avoidance, you know, coming into it. So yeah, I I think all of these things are really, really important. Any one in and of itself is important enough, but the more of these that can be addressed, the more little nudges. You said something really interesting early on, and we've time I want to just pick up on it just a little bit. And I think you mentioned um uh uh men's men's goods, right? And there could have been any number of other categories. But if if if somebody says, and again, I hear it all the time, Michael, uh, I think the future is this, or I think the future is that, or I'm gonna spend my money here or invest my time there, and I'm gonna really take that business to another level. And then very, very often they're talking about a category that's three or four or five percent of the business. And so if you double that category because you execute brilliantly without even realizing you could lose the equivalent amount in a different category because you got obsessed.
SPEAKER_01:Yeah.
SPEAKER_03:With opportunity costs. Yeah. Yeah. I mean, I had somebody recently who did it, and the category they were talking about is a gen is generally about 6% of the business. And I'm like, okay, you should pay attention to that. There are things you can probably do, but here's a couple of categories that are 20% of the business or 25% of the business. Let's get let's handle that. That's the big rocks, right? Focus on the big rocks.
SPEAKER_01:Now, I do want to discuss like on this topic of in-store experience and and and selling better. Um, so you talk about these more physical like practices. So you touch on uh human contact and eye contact and smiling and things like that. And something I've been trying to think about more as I especially as I volunteer more, but I also understand something involved and what things I'm trying to do. It's trying to be tacked less than people can be uncomfortable with the more normal and practically the EU adapting. It needs needing to a debt as people uh start to get into selling to, for example, Gen Z and Gen Alpha, as they start to you know how spendable money in the luxury industry. Uh I can't help but think that if we keep these standard approaches like eye contact and smiling and greeting someone as they come to the door, uh I feel like that can also be a it can be a myth pretty darn soon, whether it's now or in uh two years. I think it's coming, the changes are already underway.
SPEAKER_03:So I had a column in I know it was National Jeweler, probably in April of 2020. And in April, it might have been May, but very early into the pandemic in 2020. And I had been hearing from so-called experts that retail would never be the same again, that this pandemic was going to rot, you know, these massive long-term changes and so on and so forth. And in some respects, I wrote a column that just said basically, as I as I didn't put it in the column, but I read it in the book yesterday, bullshit multiplied by bullshit is bullshit squared. It's just not a little bit extra bullshit, it's bullshit squared. We, as human beings, for thousands of years, have needed to be around other human beings. The whole notion of tribalism, the whole notion of being safe in the cave, is not going away because of the internet. It's not going away because we have a digital device affixed to our hand where we're constantly looking down. So, you know, people can debate the merits of, you know, how important is eye contact? I would say it's hugely important. I think that, in fact, not only is it hugely important, uh, you know, the the the distracted, which is something that that that certainly, you know, I hate talking about generations because it assumes they're all the same, which is like ridiculous in and of itself. Let me tell you about Gen Z. Let me tell you about Gen A. I got four people in their 20s in my home, and they're all different people. So anybody who says, you know, they they know that. But um eye contact is important. Distracted listening, which is to say, when you're talking to somebody, if they look away, that still evolutionarily sends a signal to our brain that is the equivalent of being punched in the head. Okay, think about that. If you're talking to somebody and test it, Michael, test it today, tomorrow. For any of the listeners, test it. When you're talking to somebody, and in the middle of your point or your conversation, they look away, it sends a hugely detrimental uh uh uh signal to your to your brain, which which it handles similarly to to when you've been physically accosted. That's not changing because we have uh because we have devices in our hands. Having open body language, which is to say, you know, I'm here, you're safe because I have no weapons in my hand, you know, you're welcome. That's not going to change because if I walk in and see somebody standing sideways with their head in their own, you know, device and they don't look up, I will still be offended. So I think what has changed is the speed with which folks want to be processed, if you will. And it's it's ironic because we waste so much time now looking at your handheld devices throughout the course of a day that you might make an argument, geez, we're wasting hours and hours and hours. Yes, but there are hours to waste. And so if I go into a retail store, I really don't want you to, you know, give me the, as I see people doing, especially in our industry, let me give you a tour of the store. I don't want a tour of the store. I want you to find out why I'm here.
SPEAKER_02:Yeah.
SPEAKER_03:And I and I'm and I'm and and I want to to know whether this is someplace I want to do business with. And I want to be handled efficiently. I would I don't want your friction. And so I think if you look at all of the things, I mean Moravian, right? Going back to the late 60s at UCLA, his notion of communication, which was seven. Percent words and 55 38 percent tone of voice and 55 percent nonverbals. I still believe that's mostly true. That people still want to have those important nonverbal signals. They still matter a great deal. I think your tone of voice matters a great deal. Somebody can say yes to you in any number of different ways, or say no to you in any number of different ways. Somebody can ask you if they can help you, and their tone of voice could be night and day in how it's said, two different ways. So I think all of that stuff matters. I think what Moravian missed, and with the greatest of respect, the guy's a flipping genius. I'd written to him, he hasn't responded to me yet. This little guy in Boston asking him stupid questions. But I said, look, to the extent that that our sensory or you can't deny sensory influences like sound, smell, etc., where does that fit into your model? And and and you know, I I can only guess as to what his response might be on that. So all of that stuff continues to matter. The behavioral psychology, paradox of choice. We're seeing examples of that again and again and again, which is to say, if I show you less, I increase the likelihood that you're going to respond positively. If I show you more, I increase the likelihood that your brain is going to freeze and go, I need to get out of here because you're taxing me. You know, my brain is it wants to know where the next food is coming, who my next girlfriend is going to be, and how do I get across the road safely. It's not listening to you waxing poetic about everything in your store. So fundamentally, you know, what's changed? Yes, what's changed now is that people have probably, they've probably got a little bit of a clue as to what they're thinking about before they walk into your store. What's changed is that maybe you're on a little different time frame than they might have been previously, where they would have been happy to spend a half an hour or 40 minutes with you in the store. But the evolutionary concepts and tribalism and safety and welcome, that's not change one iota. And so I think all of those things still really do matter.
SPEAKER_01:What a great way to put it. That's not that is something that's an emerging topic for me is um what are these differences and like how is the retail and just shopping experience going to have to adapt around these people as they change? Um, I have friends that are teachers, and I I've learned a lot about the differences in these different generations as they come up. And I agree with what you're saying. Saying different generations can make it sound like they are just like iterations of the same word. And I'm like, I don't know, I feel like you're missing a lot of the story there. But again, I just to kind of I want to be cognate of your time. I I love this concept this concept you had that I thought was very impactful in your article, which was three lanes merging to two. And correct me if I'm wrong, I I have those lanes labeled as great experience, great prices, and great quality. Is that how you would kind of split them up? And what do you mean when it's about merging to two and about how people who get stuck in the middle are going to be roadkill, as you say?
SPEAKER_03:Again, similar to the generations, it's it's always dangerous to say it's all this and it's all that, because you you you can get very you can get variants. Um, but largely speaking, if you look, sometimes it's a little bit easier, you know, who was it that said, you know, it's very hard to see the label when you're inside the jar. So if we're talking about our uh being talking about just our experience, sometimes we're we're we're not able to have a great perspective on it because we're knee deep in it. So if you look at retail more broadly and you look at who's suffering, it's not Walmart, right? Walmart's not suffering. Walmart's growing in leaps and bounds, both physically and digitally. You know, it with the exception of Tiffany, and that's a whole different conversation. It's not LVMH and it's not the swatch group, you know, though those stores, the Bulgaries, the Cartier's, they're they're doing just fine. Um the the the folks who are suffering are Kohl's and Sears went away, and Kmart went away, and Target is is suffering, although there remains to be seen, you know, what's going to happen there. But it's the middle, in other words, it's those folks who are not really about the experience, and they're not really about the cheapest price, you know, because if you go again to the Walmart side, there's you know the TJX Corp, and there's just lots and lots of people who we can put into that area. Uh, and on the on the and on the better quality, if you will, with the assumption of a better experience, that's not always true, they tend to be doing well. It's the guys in the middle who would argue that they're both. We give you the great product and great price. No, you don't. You may say you do, but you really don't. And unfortunately, I think a lot of folks in our space, in the jewelry space, are resonant in the middle. They are in the middle lane. And they're in some respects trying to be all things to all people. And as a as a as a microcosm of that, we could use the the the the Rolex uh uh uh mention in in the column, where you know you've got retailers who, on the one hand, do a fantastic job with Rolex, but they're not very good on the non-Rolex side of the house.
SPEAKER_01:Just to interrupt and read your your snippet uh back to you, you wrote, and this is from your article, the paradox of selling Rolex, for instance, while discounting your diamond inventory has always struck me as an odd strategy. It's almost as if we were apologizing for the non-Rolex inventory and then choosing to discount it, admitting that we don't believe they're worth the suggested retail price we put on them in the first place, which I thought was very uh uh thought-provoking about like the psychology of discounting.
SPEAKER_03:Have that in stone. And I think that and say I think I hate when people say, but if you look at all of the folks who when I had a Life After Rolex column a couple of years ago at in National Jeweler, and so sort of mentioned it here. First of all, Rolex, phenomenal brand, iconic brand. If you can get it and you can execute with it, fantastic. But for far too many people, it's been sort of the the the the the the the the the safety blanket. You know, they they hold on to Rolex and don't pay near as much attention to their non-Rolex business. And so, in effect, and I'm not saying that happened with the specific retailers that went out of business, but I think there's a strong correlation if we go back far enough with those who did, when they lost it, all of a sudden they wondered who they were. They wondered, you know, do I stay in business? And in some cases, people could say, well, it was time to retire, but why did nobody buy it? Well, nobody bought it, presumably, because once you lost Rolex, you cease to be that interesting to them. Now, there's lots of really great retailers in our space who don't and never had Rolex. And and and many of them are just great operators and they execute really, really well. So I do think that that's an interesting microcosm there, where many of those folks who carry it now uh may have to ask themselves, who do I want to be when I grow up? Because they almost I I believe, true or otherwise, they ought to be looking at their business in parallel. I want to be really great on Rolex, but I not only want to be, I need to be a really great retail jeweler as well. And if they can complement each other, that's great. But I think there are too many examples of folks who on the jewelry side are not executing particularly well.
SPEAKER_01:I've seen it way too many times. You do a great job outlining a couple of the examples. Um I am very neutral on the whole process, and I don't have any uh any thoughts related to whether that is uh fair or not, but I think um something I'm definitely paying attention to is uh what are the impacts of tying yourself to a brand such as that. Um now in wrapping up, Peter, I think that this has been a fantastic talk and I really appreciate your columns. Um I'll definitely have a link to your uh latest one in our show notes. Uh, is there anything in summation that you want to add? Um, and where can people find more of your work online?
SPEAKER_03:Yeah, so they can get me at the retailsmiths at gmail.com. They can find, I'm very active on LinkedIn. I know Smith isn't maybe not the easiest guy in the world to find, but if you go into National Jewelry, they can find my columns and get get me through there. The retailsmiths.com is my website. And then I've got a, as I mentioned, a new book coming out in the coming weeks uh called Essentially Human on Sales and Salespeople. Um, but probably LinkedIn is a is is a uh a very active platform for me. And I think anybody who wants to engage or reach out to me, that's probably the as good a place as any to do it. And of course, we'll be at Centaurion in a couple of weeks. So we're all looking forward to that. I'm not sure when this will actually run, but maybe before Centaurion.
SPEAKER_01:Yeah, in about three weeks. But uh I appreciate it, Peter. Thank you so much for your time. It was really uh this is a very um thought-provoking conversation on getting a chance to have someone that has uh seen the industry change uh significantly over the years has been really um eye-opening for me. It's something that I am trying to pay attention to more. I care you know deeply about this industry, not just for financial reasons, but also for just um it's a lot of people's livelihood and hearing that someone is paying attention like yourself is uh is really cool to hear. Thank you so much.
SPEAKER_03:Thanks, Michael. You've been a great host.
SPEAKER_01:I appreciate it. Thanks, everybody. We'll be back next week, Tuesday, with another episode. Cheers. Bye. All right, everybody. That's the end of the show. Thanks so much for listening. My guest this week was Peter Smith. This episode was brought to you by Punchmark and produced and hosted by me, Michael Burpo. This episode was edited by Paul Suarez with music by Rod Cockroach. Don't forget to rate the podcast on Spotify and Apple Podcasts, and leave us feedback at punchmark.com slash at L O U B E. Thanks, and we'll be back next week Tuesday with another episode. Cheers, bye.
