Loans Answers

I wonder how badly I was burned…

Question: I took my wife to a Service Merchandise liquidation sale (“EVERYTHING MUST GO”…blah blah blah) the other night. (They are closing their stores, for those unfamiliar with the chain…)

She fell in love with a tanzanite ring and I bought it for her. Neither one of us know squat about jewelry; we both have wedding bands and she was given my mom’s wedding ring when we were younger, so that’s about it as far as our experience with rings. Anyway, it is a pretty ring. The light colored (which I’ve since read means the cheaper tanzanite) stone is nicely set in a 14k gold ring. The approx. 6mm tanzanite stone is surrounded by numerous little diamonds of cylindrical and oval shapes. I was reminded (by the clerk) that the

Now, I have always had the idea that jewelry was greatly over-priced by the folks who sell the stuff. I’d really like to know what the ring is actually worth, but my common sense has made me hold off on an appraisal. I’ve suspected that taking a piece of jewelry to two different appraisers would often yield two different figures…am I right? I did a little google searching, and I’ve seen some posts that seem to jibe with my notions about appraisers. I hope I’m not rambling here too much, but I’m sort of at a loss. She (wife) loves the thing, and that’s all that really matters to me, but at the same time, the practical side of me would like to know just how dishonest the whole pricing thing was. I figured some of you on these NGs would have some experience with this type thing and at least could give something in the way of good feedback. Thanks a bunch for reading!

Answer: Of course. I never suggested that Service Merchandise was any better, quality wise, than other stores. They’re just a discount outlet, and as I recall, mostly a catalog based store. That has it’s disadvantages. but while the quality seemed usually rather on the “economy” side, it seldom seemed really lousy, and I never had the impression that things were overpriced for what they were, compared to other outlets selling the same stuff. Some of the department stores, places like J.C. Penney, Sears, etc (don’t quote me on the exact stores. Those are generic examples of the type) often leased space to a jewelry sales company, which would run the jewelry counter in their stores, under the store name. You thought you were buying directly from the store in question, but actually were buying from this outfit that ran the department, with the store taking an additional cut of the profit. That rather increases the markup. The quality of that type of merchandise was often similar to S.M., but at a somewhat higher price. I’d guess that S.M. prices averaged out to about a 2.5 x markup, or so it often seemed, again at least, compared to other stores. Their actual markup may have been more, if they were buying in large enough quantities to be getting better prices than I’d guess. But the leased departments quoted above, usually seemd to charge more like a 3.5 x markup… And those stores that based their marketing on very easy credit, also often had to charge a higher markup. in the early 80’s I was working in a small independent mall store (not a chain, a single independent store) At the time, our usual markup was about 2.5 x, a considerable increase from when the store had been a normal “on the street” establishment rather than in a mall. But the mall’s price per square foot was a lot higher than we’d been paying for rent in the old building, necessitating the higher markup. One of my casual aquantances was the manager of one of the other stores in the mall, a now defunct (I think) Detroit area chain called… um, well.. I guess I won’t mention it. Because I was, at the time, doing our store’s appraisals, I tried to keep current with what the competition was charging, and was a bit taken aback by how much this store charged compared to our prices ( they charged a 3.5 to 4.5 x markup in some cases, which seemed extreme to me.) When I asked why, and how they both justified and maintained it, His answer was simple. Virtually anyone could walk in, with any sort of credit rating, and get store credit, make a minor down payment, and walk out with their jewelry. That meant that about 25% of the clients never finished paying for their jewelry. They’d make a few payments on the account, then dissapear, or go bankrupt, or pawn the ring, or whatever, and then just stop paying. The store simply set their prices high enough so that those customers who did pay appropriately were paying enough so the store still stayed in business despite all the bad credit accounts. That store had the highest markups for mostly fine jewelry I’ve ever encountered. True to the stereotype, most of their clientelle was from the inner city population of Detroit, which at the time was, in short, a drug ridden ghetto. These were people who couldn’t afford the jewelry most of the time, usually had no credit rating, and were often the victims of the resulting very high prices merchants felt they had to charge to serve that clientelle in this manner. Rather distasteful stuff, frankly.

Compared to that store, Service Merchandise was both cheaper, and better quality by a long shot. But, almost any decent independent jeweler, the type where the guy who owns the store really is a jeweler, where the store is not one of a faceless multitude of similar chain stores, where there’s at least one, and often more, actual bench jewelers making and designing jewelry, and where at least some of the sales help have actually been trained in gemology… Well you get the idea… THOSE stores are almost always better values, both in price, and in quality, from any of the chains, including Service Merchandise.

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