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Loss Prevention

Counting Carets

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As any retail jeweler knows, loss and diamonds don’t go together very well.

“Nobody wants to lose a $100,000 diamond ring because they weren’t paying attention when a customer was standing there and pocketed it,” says Scott Miller, president of family-owned Anglo International in Clive, Iowa, which was founded more than 20 years ago as a diamond importer, cutter and wholesaler before subsequently adding a retail component.

In Miller’s industry, losing a diamond, gemstone or fine jewelry piece will have far greater implications for the business than someone “boosting a $9 CD,” he says. “Shrinkage is something that everybody deals with and you have to try to keep it to a minimum.”

But at a time when businesses have more and newer tools to fight losses, Anglo is embracing a more-established technology — RFID.

For most of the 30 years it’s been used in retail, RFID wasn’t a solution for jewelry. The metallic qualities of jewelry caused interference when reading RFID tags, making counts unreliable.

But now, the launch of new RFID technologies targeted to the diamond and jewelry industry is resolving some of the technical challenges, and companies like Anglo International are coming aboard.

“Only recently has this technology … made sense for our industry,” Miller says. “Because of the value of jewelry, people probably have been much more anxious to see RFID come in.”

Smaller, faster, more powerful
Adrian Prezioso, chief technology officer for TJS, a Boston-based developer of efficient inventory financing structures for the gold jewelry industry, explains that advances in integrated circuitry used in tags are driving opportunities for jewelers to adopt robust RFID strategies.

In addition to interference with metals, other challenges jewelers faced with RFID included the size and aesthetics of tags on jewelry, the high density of jewelry displays and harsh cleaning environments associated with polishing items, Prezioso says.

“With jewelry it is much more challenging because jewelers have many specific needs,” he says. “It’s challenging to find the right design that balances all of these competing factors.”
Now the computer chips inside the RFID tags are smaller, faster and more powerful, a development the diamond and jewelry industry has awaited for several years, Prezioso says.

TJS supplies Anglo International and other jewelers with its ZeroShrink RFID software platform, delivered through an inventory-tracking appliance that integrates with POS applications through wired and wireless RFID scanners. The tool allows jewelers to scan hundreds of items instantaneously by coupling with the jeweler’s inventory management software. Key reporting features include show-to-sale ratios and on-demand reconciliation.

Jewelers worldwide are using the platform to track more than 2.5 million jewelry items valued at more than $800 million, according to TJS.

“In the past a lot of jewelers would be lucky to do inventory every month or once every couple of months,” Miller says. “What it really does is give you a level of confidence that you don’t have to add additional staff or take three, four or five hours of three or four people’s time to actually take the inventory.”

Flexible integration

Judy Padis is vice president of family-owned Steve Padis Jewelry Plus Enterprises. The company, which operates two diamond showrooms in San Francisco and maintains a centralized online inventory for sales via the Internet, adopted the ZeroShrink RFID platform in 2010.

The size of the Padis operation means reconciling inventory is an everyday occurrence — a task that has become more efficient with RFID tagging, Padis says. The company uses RFID tags to account for its stock of loose diamonds and fine jewelry. “We’ve been in business over 30 years and this is the best technology I’ve seen,” she says.

In the past, the company relied on manual procedures for inventory management. Rings were virtually impossible to count, Padis says, because of handling issues.

“When you touch jewelry it can make the diamonds dirty,” she says. “Now we don’t have to touch the rings to take inventory anymore.”

Jewelry retailers also rave about the options for using RFID technology. Anglo, for instance, has the TJS ZeroShrink RFID platform tied into POS, but Steve Padis Jewelry Plus Enterprises does not.

Prezioso says his company’s software design builds flexibility into the integration with retailers’ existing software platforms, whether for POS or inventory management. The tie-in to POS, for instance, eliminates the need to import data from one software package to another.

So far, Padis is continuing to run dual RFID and POS packages as a check and balance, a precaution not unusual in the diamond trade because of the high valuations involved.

That approach doesn’t surprise Prezioso, though he believes that as RFID offerings continue to improve for jewelry retailers, more will come to rely on single platforms. “Retailers in the jewelry segment rely very heavily on their point of sale. That’s the center of their business,” Prezioso says. “All of their customer interactions and sales transactions are recorded there.”

The Nielsen Expositions Jewelry Group reported in a May survey that sales for the majority of retail jewelers had improved over the past 12 months; that uptick is expected to continue through 2011.

For his business, Miller attributes key growth to consumer demand in foreign markets like China, India and Brazil, which has driven prices and profits higher. With advancements in RFID technology, jewelers have the opportunity to get as creative as they desire in improving their operations, he says.

“The potential is there for someone to be extremely advanced in terms of shrinkage or in terms of just losing pieces. It just depends on how far you want to push [RFID technology]. That’s a software-driven thing — the technology is certainly there now from a hardware standpoint.”

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