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Expanding your business model isn’t a simple decision. So when Ritani decided to do just that, they turned to Brian Watkins, a retail executive with more than a decade of experience under his belt.
Before he took over the reins at Ritani, Watkins had already played a role in establishing Nordstrom as a model retailer. That business is often cited as an illustrative example of a retailer that has successfully calibrated its brick and mortar and e-commerce divisions to complement one another.
Nordstrom realized, Watkins says, that by positioning the two segments to work together the company could boost overall sales. “What’s really interesting is that during the time I was at Nordstrom there was a lot of research going on,” he says.
“They found out that people who shopped both online and in-store spent significantly more than if they just solely interacted with one retail channel. They’re also younger, more affluent, and more loyal, so if you’re looking for a perfect customer for a large department store, these are those people. It became a very easy investment, coming from that work. They invested about $500 million to upgrade their systems and take advantage of that market.”
Watkins carried his unique experience at Nordstrom with him to Ritani, where he’s been chief executive since 2012. He also brought with him his near decade of work at Bain & Company and Blue Nile, a Seattle-based online diamond retailer.
When the Julius Klein Group asked him to help steer Ritani back toward growth, Watkins leveraged his insight from working at places like Nordstrom and Blue Nile, applying it to his latest venture. “I got a call back from the Julius Klein Group, and we started talking about their brand Ritani, which was an existing retail brand that had been in local stores,” he says.
“What’s happened is that over the past 10 to 15 years, we’ve gone from around 30,000 independent retailers in jewelry down to 20,000—one-third of them have gone out of business. This entire company had been built on serving local, independent retailers, so the question was, ‘Why is that happening?’ We started digging around and asked if there was a different way to do business.”
Born of this brainstorm was Ritani’s “clicks and bricks” business model, in which the company’s e-commerce platform also acts as a lead generation tool for the hundreds of brick and mortar stores who have thus far partnered with it. This kind of genre-shifting paradigm, Watkins says, essentially represents the next stage in the web’s development.
“We did a survey of 3,000 people and asked them, ‘How do you shop for engagement rings?’ And what we found out was that over 90% of them started online,” Watkins says. “But what was super interesting was that less than 10% actually bought online. So they’re using online to get educated, but they weren’t willing to actually make the purchase. So we asked them, ‘Why not?’ And over one-third said they had wanted to make the purchase online but they couldn’t pull the trigger because they wanted to touch and feel it. We knew right there that there was a breakdown.”
Overcoming that breakdown, it turns out, involved reaching out to the same storeowners who had worked with Ritani in the past. This time around, however, the company had to pitch its new value proposition, one that hundreds of local jewelry storeowners have quickly warmed to.
That’s because Ritani lets users build their own engagement rings online and then see them firsthand and make the purchase at any number of nearby, local jewelers. They also have the option, Watkins explains, to make the purchase directly through the site, choosing which type of wrapping and box—with either the Ritani label or a local jeweler’s—they’d like the engagement ring they’ve designed to be wrapped in.
For Dean Leonard, whose grandparents founded Sarah Leonard Jewelers in the Westwood neighborhood of Los Angeles in 1946, Ritani has helped drive customers to his store. In his industry, Leonard explains, storeowners aren’t simply interested in making a one-time sale. They’d rather establish a lifelong relationship with a customer from his or her very first purchase. “We were actually a Ritani partner prior to their change of business model, so we already carried their engagement rings and wedding band collection before they started the online diamond selling,” Leonard says.
“We were very familiar with the brand and the quality and, of course, because they were the company that put the halo-style ring on the map. We were already working with them and they came to us and said they wanted to talk about the amazing new thing they were doing and they easily got us onboard to join them in the experiment. And it’s been a big success: It’s brought us lots of new clients that we may not have ever had an opportunity to meet otherwise.”
Indeed, Ritani helps address one of the most significant issues facing local jewelers, Leonard explains. “The most challenging thing is remaining competitive in an ever-changing, ever-more competitive landscape,” he says. “And that’s actually where a company like Ritani comes into play.”
For its part, Ritani has about 500,000 users visiting its site every month, says Watkins, who adds that any transaction is a win-win for the jewelry manufacturer. “When you get your package for your engagement ring we talk about those local retailers, too—we’re really broadcasting that,” he says.
“And at the same time we have customers who aren’t buying on the website and are instead going to stores and making the purchase there. We’re happy either way. The retailer who sees this as a lead generation tool and a healthy way to position themselves differently in the marketplace: they’re seeing the transactions happen, and they love it.”
Leonard is among the many storeowners who fall into that category. “Of course, a problem with buying a diamond online is you’re giving somebody a huge chunk of money without ever seeing a diamond, and Ritani has taken the risk out of that equation,” he says.
“Not to the mention that when somebody comes into a store they have an expert to educate them, walk them through the process, and help them make a really great decision. For people who are buying online—which is probably our biggest competition right now—this is a way for them to get the best of both worlds. And we look at it as a success, because we’re building a new relationship.”
Ritani is continuing to bring on on additional jewelry storeowners, Watkins says, and it’s also looking toward the future as it leads the second wave of the e-commerce revolution.
“Think about taking a brand and saying, ‘We’re going to take lead generation to 200 brands on top of that,’ “ Watkins says. “And there’s no one that’s doing that, but that’s where the next evolution is going to happen. “Once we have that network that’s built out, you can then bring on other things and really have a system that can be quite powerful. That’s what we’re most excited about—the future.”