Are You Covered?

Jewelry insurance coverage can be extremely important to our customers, simply ask someone who has had a recent loss.  What is amazing to me, however, is how few people actually purchase that important protection for their valuables.  Many people believe that they are covered by their homeowner’s policy, but in most cases that is simply not true.  Even if you would rather not read the fine print in your policy, please at least take the time to ask your agent.  Don’t wait until you are missing the center diamond in your wedding set before you get the facts.

            Most homeowner policies will cover jewelry only if it is stolen, and only up to a certain amount.  My own policy covers up to a maximum of $1,500, sadly not very much protection at today’s prices.  In addition, the vast majority of losses that I see are a direct result of the lack of the basic maintenance needs of your jewelry rather than by theft.  All metal wears over time, and if you ignore a set of prongs long enough your diamond will likely be lost.  “So what should I do?” you ask.  This is what I suggest to all my customers:

• Talk to your agent, and ask about any coverage you currently may have.  Ask him or her what type of documents you would need in order to file a claim.  If you are comfortable with the answers you received, then stop right here.  If you feel you want more coverage than you have right now, then proceed to the next item.
• Gather your jewelry together, maybe at the kitchen table, and separate all the items into two groups; the first being the items you could “afford” to lose, and the second being the items you want protected in case of a loss.  It will be tempting to insure everything, however lower-priced items are not cost-effective to insure and most people would not file a claim for a $50 earring if one comes up missing.  Remember that your rates are based on the frequency of your claims, and a $50 claim and another for $10,000 may be considered in exactly the same manor.
• Take the jewelry you selected to a knowledgeable jeweler and request an Insurance Replacement Document.  You will receive a detailed description of each item, including the materials and components that are used in manufacturing your pieces, usually including photos of each piece, that is necessary to insure accurate replacement should a loss occur.  The process is lengthy and somewhat expensive depending on the number of items you wish to insure, however please keep one fact in mind during this process.  You, and only you, will benefit from a good appraisal if a loss does occur!  I should also add that an Insurance Replacement Document is just one part of the after-purchase services you should expect to receive from where you spent your hard-earned dollars.  I never charge for any item purchased at Jon Michael’s.
• Finally, take the completed document to your insurance agent and request a multi-peril rider that covers your jewelry completely.  Included in every Replacement Document I produce is a list of twenty-three questions you should ask your agent.  Most people do not like surprises, so it is best that you know beforehand what to expect in case a loss occurs.  If you had your appraisal work done elsewhere and would like a copy of my questions, simply give me a call of an email with your address and I will mail you a copy.

One final area I want to cover briefly before I close this column is one of the problems you will likely face when having a jewelry item replaced by the insurance company, and that is you will probably be pressured into using a “jewelry replacement service”.  Most of my customers agree that purchasing jewelry is based on trust, and likewise any replacement of a lost item should be handled by a jeweler that you trust, regardless of who that happens to be.  Because the insurance adjusters spend much of their time replacing jewelry items, they develop a relationship with these replacement services, which in reality is nothing more than a diamond salesman working out of the trunk of his car.  He has little or no overhead, and therefore can usually offer replacement prices below that of a storeowner.  Once he delivers the new ring, you will likely never see him again.  No follow-up service, no warranties, just a cloud of dust as he leaves your driveway.  Your insurance company pays less, but you receive absolutely no break on your premiums, and you certainly received less all the way around.  Always remember that you are the one that pays those premiums, you are the customer, and if you are not happy after resolving the loss, your insurance business can be moved to another company.  Never let an adjuster bully you and you won’t be unhappy later.

            My next column will be on gold buying so be sure and visit this website in August.

Jewelry Pricing-Pay Me Now or Pay Me Later

The marketing of jewelry at the retail level has long been viewed by the public as having excessive markups, and many retailers plan their advertising programs in an effort to convince the public that their pricing is lower than their competitors.  Hopefully most of you realize that both statements in the first sentence are “hogwash”, but I will try and explain as best as I can in this limited space.

            First, retailing anything today is an expensive process.  You must either buy or rent space in an area zoned (and priced) for commercial activity, invest tens or hundreds of thousands of dollars in inventory, equipment, displays, make the location attractive to the public, supply parking, lighting, security, insurance coverage, pay employees to be there, maybe educate them about what they are selling,, and after all of that the first person in the door asks for a donation for some worthwhile cause you know nothing about and could care less.  Hopefully you begin to get the general idea.  You have invested every dime you had, every dollar you could beg or borrow, and the only method you have to get any return on that risk is to sell your goods and make a profit.  Profit is not what you stick in your pocket when a customer leaves, but the money left after you purchase another item that you sold, and use it to pay your employees, the Consumers bill, the telephone bill, make the payment to the bank, etc., etc.  You will be lucky to have any left to pay yourself for the pleasure of working 80 hours this week, let alone to hope for any return on your investment. 

            Getting back to the markup needed to sell your jewelry, pay the bills and keep the doors open the rest of the year?  Only as much as absolutely necessary!  You must remember that your competition will see to it you don’t charge too much markup.  Set your prices too high and your customers will go elsewhere.  Set them too low and you won’t be here long enough to worry about it.  All jewelry stores must average about the same markup to stay in business, which goes back to the very first sentence being hogwash.  I have always told my customers that there are no bargains when it comes to buying jewelry.  I also tell them they probably paid a fair price when they ask me “did I get a good deal?”, and I do mean that sincerely.

            What truly does concern me is that the Mall and big-box stores are continuously downgrading their merchandise in an effort to convince the customer that they can sell jewelry for less.  The reality is that you are simply buying less; less material, less labor, less quality, and less durability.  Many new rings are so thin they cannot be sized.  Many stones are set so poorly they fall out during normal wear, and will likely continue to fall out due to poor design and workmanship.  You may remember the old saying “You can’t make a silk purse from a sow’s ear”, and that is so true with jewelry.  A good design must start at the beginning, not be added in at the repair bench.  All we can do during repair is to stick a band aid on the problem and warn you that it will likely happen again, and again.

            If you have stuck with me this long, you probably realize I finally arrived back full-circle to the title of this column, “Pay Me Now or Pay Me Later”.  Most of you know we repair a lot of jewelry, and that is a very good part of this business.  We size rings, repair chains, rebuild prongs, almost anything the customer needs.  I guess you might think that I am happy when people buy poorly-made jewelry, but that is not really the case.  You see, I would prefer to sell you a ring that we make, and then stand behind that sale with a Lifetime Maintenance Warranty.  I promise that you will pay a fair price….once….and never have to pay me later.

            My next column will be about jewelry insurance, and I will try and cover a few of the pitfalls you might encounter, as well as some questions you may want to ask your agent.  Do you have any questions?  Send me an email and let me know what you would like to hear about.  Mike@JonMichaelsJewelers.com

Jewelry Manufacturing, Past, Present and Future

I began a close association with my father’s cousin, Fred Kuczajda, back in 1977.  Uncle Fred lived in Windsor, Ontario and owned jewelry manufacturing companies in both Windsor and Detroit.  I went to him as a struggling hobbyist trying to make crude silver jewelry, and soon found myself learning from a true, old-world master craftsman and jewelry designer. 

Uncle Fred suffered polio at a young age and the government had programs back then to educate these individuals in jewelry, one of the few trades that allow a person in a wheelchair to earn a good living.  He was one of the original founding owners of Motif Manufacturing, and left that company in 1959 to form his own smaller company, Fayrick Mfg. Inc.  Throughout the 60’s and 70’s, Fred designed and manufactured items for companies like Keepsake, Orange Blossom, and chains such as J.B. Robinson Jewelers and Fox Jewelers.    

My wife, sister and I opened our retail store in 1979, along about the same time that Uncle Fred reached the sad conclusion to get out of the jewelry manufacturing business.  Until that time, Fayrick only sold its products to wholesale companies and jewelry chains with multiple locations.  My cousin Faye (yes she had a brother named Rick) would travel across the country three or four times each year on selling trips, and their customers would order styles by the dozen.  Basic staples like solitaires were often ordered by the gross, and even in 1980 when I purchased Fayrick, we kept three bench people busy year around in a feverish pace.

Uncle Fred, however, had been in this business many years, and could read the signs of what was to come.  The chain stores began to buy their product from overseas manufacturers where labor was cheap.  The wholesalers were going broke trying to keep salesmen on the road, and the independent jewelers stopped buying inventory in volume, instead choosing to purchase one piece at a time, either when it was sold or when their customer placed an order.  By 1983 it was no longer cost effective to travel in search of Fayrick orders.

The bottom line to the story above is that by the late 1980’s, most of the small and medium sized jewelry manufacturing companies were no longer in business here in the states.  By 1990 almost all of the wholesale companies were gone as well.  Only the largest and the smallest seemed to have survived, and only then by reducing overhead cost to an absolute minimum.

From 1990 through today, the major retail chains purchase from companies located in China, Taiwan and India, and to the trained eye most merchandise in these stores all started to look alike.  Craftsmanship has been completely lost, and low pricing is all that seems to matter.  New technology was developed to allow manufacturers to install stones directly into wax patterns of rings prior to casting, and costly stone setting procedures have nearly become a lost art. 

Go for a walk in any large mall and visit four or five of these retailers and you will likely see what I am talking about.  Look at the jewelry in the cases with a critical eye and it will all start to look alike.  Each style is available in red, blue or green and the ceilings are lined with spotlights to dazzle you with all the sparkle.  Most people in our trade call these rings “five year” pieces, and I honestly wonder how they even last that long.  The low-end, big box stores (think Wally-World, etc. etc.) are even worse, selling rings with diamonds that look like frozen spit and held in place with a technique called “nick-set”.  My staff will not clean this type of merchandise, even when brand new, as the stones will shake out under ultrasonic vibration.

One last story before I leave this subject.  One large, U.S. based diamond jewelry manufacturer named Leo Schachter Diamonds, a major supplier to Kay Jewelers, opened a new factory in 2007.  The new plant was located in China, and was designed and built to accommodate 800 workers.  The buildings also include dormitories and cafeterias, with the intention that their workers will live and work in one location, and be cared for from cradle to grave.  It certainly is a different concept, and I leave it up to the readers as to how you see it.

My next column will be Jewelry Pricing-Pay Me Now or Pay Me Later.  I hope you are finding this information entertaining as well as informative.  Got questions?  Send them my way at mike@JonMichaelsJewelers.com

Let Me Introduce…

Hello, and welcome to our redesigned and expanded web site; JonMichaelsJewelers.com. This column is the first of many (hopefully) I plan to write, every other week or so, in an effort to share just a few of my experiences in the jewelry business. This coming fall of 2010 will complete our 31st year in business, and never a day goes by without my learning something, sometimes in a good way and sometimes not so good. I usually divide my time each day with designing and manufacturing, selling both wholesale and retail, and repairing jewelry, and my hope is that by sharing a few of these experiences with my customers will make them better informed and more knowledgeable when making their jewelry buying decisions.

I promise you that I will keep my writing both informal as well as informative, as if I were sitting across a showcase from you and trying to help you decide what your next purchase may be. I also hope you will send me your questions and concerns so that I can better select subjects for future columns. Most of what I write will be my opinion, based on my experience, but please remember that I do make mistakes on occasion. My wife reminds me of that quite often.

My background in this industry dates back to the mid-1970’s when I worked for General Motors and made silver jewelry as a hobby. I began spending any spare time I could find with my Uncle Fred Kuczajda, a jewelry manufacturer with businesses in both Detroit and Windsor, Ontario, learning all I could from a true master craftsman. In 1979 I felt I was ready to try my hand, so my sister, my wife and I opened our store in a small plaza on the edge of Durand, Michigan. A year later Uncle Fred decided to sell his Detroit company so I then purchased Fayrick Mfg. Inc. and moved the equipment to Durand, where it continues to operate under his original name.

The industry, as well as Jon Michael’s Jewelers, have undergone many changes over the past thirty plus years. Having worked in both the automotive field as well as the jewelry business, I can tell you that there are many parallels to be drawn between those two, some of which I will go into in my next column. Someone much more wise than I once said “when we forget the mistakes of our past we are doomed to repeat them”. One thing will never change here at Jon Michael’s: We continue to make the best possible jewelry at the best possible price-guaranteed!
My next column will be about the jewelry manufacturing industry; past-present-and future. Please bookmark this sight and join me then.

Mike