Walk into any major mall in America and you will almost certainly find three stores: a Starbucks, a Crate and Barrel and a Zales outlet. Over the years, Zales has become an integral part of the American landscape. They operate several well-known jewelry brands. Zales, Jared, and Gordons to name a few. We estimate that the store’s jewelry is owned by at least 10% of the adult population in the United States, with Zales engagement rings by far their top seller.
Zales was founded in 1924 in Wichita Falls, Texas by Morris Zale, William Zale, and Ben Lipshy. It is there they opened the first “Zales Jewelers Store” inside a larger department store that sold everything from furniture to crop seed. By 1930 the business had grown to 30 stores focused entirely on jewelry. Today between Zales, Zales Outlet and Gordons, Zale Corporation (ticker ZLC) operates almost 1000 Zales locations across America, primarily in high traffic malls and online at www.Zales.com.
At Jewelers.NYC, we specialize in educating our readers, and more importantly matching them with the perfect Jeweler who can deliver their exact requirements. You will notice that we don’t generally list national jewelry store chains on our site. Buyers at these stores don’t need us. Zales offering is fine for a specific demographic, because they offer a one visit, “buy and go” experience. Jewelers.NYC readers are more pedantic about their diamond purchase. This is neither good nor bad, but if you shop at Zales most of the time convenience is the driving factor (in our humble view).
When you walk into a Zales jewelry store, you are paying for big overhead and extensive inventory costs. Zales has to charge you more just to pay the bills. Below is a side-by-side comparison of Zale Corporation and Blue Nile’s 2013 income statement as a percentage of revenue.
|2013 Common Sized Income Statement||Zales||Blue Nile|
Cost of Sales
S.G. and A
|Source Zale Corporation and Blue Nile Inc. 2013 financial statements|
Look at the Cost of Sales line. This is the percentage of what you pay for you diamond that the store pays to acquire it. Higher is good here – this means they are selling it to you for closer to what they paid for it.
Look at the S.G. and A line. This stands for Sale (commissions) and General (rent) and Administrative Costs. For every dollar Zales takes in in revenue, it pays out 48.5% in overhead (S.G. and A). For every dollar that online diamond store Blue Nile receives, Blue Nile pays 15.4% overhead. The difference, 33.1%, largely goes to you, the jewelry, buyer in savings. It comes as no surprise that the cost of a nearly identical engagement ring is about 34% more at www.Zales.com – it’s all about the overhead.
Here are the results from www.Zales.com and www.BlueNile.com in an online shopping comparison. We test priced a ½ carat round, F color, VS2 diamond of the highest possible cut. We then added that diamond to a 2mm wide simple platinum setting.
|½ Carat, F, VS2, Best Cut||2mm Platinum Setting||Total|
*As of 29 November 2014
Specialist jewelers (like many of those listed at Jewelers.NYC) are often more educated, inventory less, and design your ring before they build it. The end result is that their overhead costs are lower (which, as you can see from above means your costs are lower too!) and they deliver a better, more customized product. For example, when you walk into a store in NYC’s Diamond District 40-50 jewelers occupy the same space as a single Zales retail outlet. This means those same jewelers pay 1/50 of the rent, making their overhead costs much lower.
If you have higher overhead and a generally less diamond savvy customer base, do you charge them a super competitive price? The math doesn’t work, so generally no.
Zales customers are far more likely to buy on the first visit than a diamond savvy customer such as you. When you walk into a Zales outlet, you will be amazed at its beauty. You are surrounded by polished wood and glass, with hundreds of diamonds (among other things) pre-mounted on settings displayed in the best possible light (Zales stores have great lighting).
By definition a certified gemologist does not work in a mall. They form the guts of the jewelry trade in major cities such as New York, Chicago, London, Paris, etc. Enough said.
If you just want to pick up something quick, find the nearest Zales outlet. If you want your purchase to be more considered, want it to be absolutely spot on, and are willing to educate yourself modestly and do it right. Take your time and meet and discuss your needs with a few of the New York Jewelers listed win Jewelers.NYC. Read each Jewelers page, and don’t forget to price compare before you go – see below.