Kira Bella

All that Glistens…

In 2007, the US market appeared to present a golden opportunity to UK gold designer jewellery company, Kira Bella. The world gold price was rising, helping to boost demand. US consumers were spending more than ever on luxury items, as disposable income continued to rise.

Having established a successful business in the UK, designing jewellery for major retail chains such as Paul Smith, Nicole Farhi and Jaeger, as well as marketing its own ranges, Kira Bella was eager to turn its attention to this potentially profitable new marketplace.

The company approached the Export Marketing Research Scheme for advice and support on how to go about researching the marketplace and, ultimately, developing a market entry strategy. The Export Marketing Research Scheme is run by the British Chambers of Commerce on behalf of UK Trade & Investment. It provides grants for eligible companies to visit their proposed market to carry out field research, along with expert advice and contacts in major business centres across the world.

Lisa Weaver, Managing Director of Kira Bella, explains: “We are novice exporters so all of the support we received from our Export Marketing Research Adviser, Richard Gilbert, was invaluable. It helped us to structure our research plan and to understand the right sort of questions to ask. Without it, I am certain that we would not have gone ahead with the research trip.”

The findings were not entirely as expected and, consequently, the outcome for Kira Bella has also been somewhat different. While the market had performed strongly up until that point, the early effects of the credit crunch were already beginning to bite. Lisa discovered a good fit for the company’s gold designer jewellery with large department stores, such as Barneys and Neiman Marcus, however, difficult economic conditions were holding retailers back from trying out new designers. Customers were more cautious, too, and, while high end jewellery was continuing to perform well, the increase in discount products was putting a squeeze on middle market jewellers.

The company also discovered that it would need to invest heavily in marketing and PR, in particular celebrity endorsements, if it was to make a real impact on the market. The estimated cost of this was likely to be around $3,000 to $5,000 a month, depending on the agency. Kira Bella concluded that the best route to market would be to exhibit at key trade fairs and to make personal appointments, rather than to rely on the use of agents or distributors.

“The agents and distributors we spoke to told us that they were already struggling to sell gold jewellery due to the economic conditions and high gold price,” explains Lisa. “While our pricing is fairly competitive, the agents/distributor margin of around 15%-20% would make the final wholesale price far less attractive. They would also require a far larger product line than we currently produce.”

In fact, it became apparent that, whereas traditionally the US has had only two buying seasons, Fall/Winter and Spring/Summer, increasingly the more leading edge fashion stores are changing their merchandise more often. In some cases, stores like to receive new merchandise every six to eight weeks.

All of this led Kira Bella to do some hard thinking. “Based on our research findings, and the continuing decline in the world economy, we decided to shelve our plans to enter the US market for the time being,” says Lisa. “It is disappointing, but the market research proved a really useful exercise as it gave us a clear and unblinkered view of the US market as it is right now. When conditions improve, it is likely that we will look at it again, but for the moment we are happy to concentrate on the UK, confident in the knowledge that we are not missing out on a golden opportunity and, in fact, we have probably saved ourselves from making some expensive mistakes. We are grateful to the Export Marketing Research Scheme for helping us to gain this knowledge.”