PARIS — French hypermarket chain Centres E. Leclerc has the Midas touch when it comes to selling 18-karat gold jewelry to the masses.
Leclerc has been developing in-store shops, called Le Manege a Bijoux, or Jewelry Merry-Go-Round, which sell traditional-to-fashion-forward styles of 18-karat jewelry at roughly 20 percent below prices offered by traditional French jewelers.
Since 1987, it has opened 163 Maneges and has become the largest jeweler in France, according to the French jewelry federation, and recorded a 21 percent increase in sales in 1993 to about $169.5 million (1 billion francs) at current exchange rates.
In 1992, Leclerc converted six tons of 18-karat gold. In volume, that represented 12 percent of France’s national consumption of French-made and imported 18-karat gold jewelry, according to Statistiques de la Garantie Pour l’Or, which are French government figures.
There is still a clear demand for luxury goods, noted Michel Eduard Leclerc, managing director of the giant hypermarket chain, but only as long as the product features a good price-to-quality ratio.
He admitted that selling fine jewelry in a hypermarket was not easy at first. People were not convinced that a hypermarket was the best place to pick up a diamond ring, or were perhaps embarrassed about saying they got their wife’s anniversary present at a store that also sells washing machines, bulk food and electronics.
“But now, there’s no more taboo,” Leclerc said, pointing to last year’s sales gains.
Shoppers no longer hesitate to wheel their shopping carts up to the Manege to buy a luxury product while they are picking up inexpensive household goods.
Leclerc achieves its discount the same way that most mass merchants do: buy in large quantities, work only with a select but faithful group of suppliers, and directly manage the distribution.
Leclerc’s central buying office, Devinlec, buys 18-karat gold on the international market. The gold is shipped to 50 French jewelry makers, who manufacture over 1,400 styles.
Designs are developed by the manufacturers and in-house designers at Devinlec. The collections, which come out twice a year, tend to be traditional in style. Stock in the Maneges is turned four times annually.
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Prices are low for the French market. For example, a current animal-theme group, which ranges from about $38 to $216 at retail, has a pair of starfish earrings for $38, while an Etruscan ring with elephants and small rubies and emeralds sells for $186.
A colorful line with precious and semiprecious stones retails from $60 to $271. In lacquered jewelry, there are heart-shaped earrings with amethyst stones for $169, and a large gold ring with inset ruby, sapphire and diamond stars for $167.
A basic gold collection, which retails from $77 to $923, offers a large brooch for $169; a gold-link necklace for $923, and a simple but heavy gold ring for $113.
Leclerc isn’t the only hypermarket chain in the jewelry business. Carrefour, a competing hypermarket operator, launched its Polygone l’Or fine-jewelry in-store shops in 1988. Now, Carrefour operates 42 Polygone shops and expects to open another 20 by year’s end.
Just as the presence of hypermarkets threatened small grocery stores, bakeries and independent shops, Leclerc’s Maneges are not scoring points with independent jewelers. The jewelers say that making fine jewelry more accessible is good, but claim that Leclerc’s buying power is squeezing margins of jewelers and jewelry makers, who are now forced to compete on price.
That, in turn, has made it tougher for Leclerc to maintain its original 20 percent discount.
“The Maneges have really developed well,” said Christian Benoit, general secretary of France’s Chambre Syndicale Bijouterie Joaillerie Orfevrerie, an association for jewelry makers and silversmiths. “But 70 percent of the market is made up of independent jewelers, and the Manege is a very tough competitor.”
A potential threat to the success of the Manege network is the recent move by the French government to recognize 14-karat and 9-karat gold as true gold, which would conform to the European Community’s norms.
Previously, only 18-karat gold was the acceptable standard. While this could bring new price competition to the market, Leclerc is betting that 200-year-old French preferences won’t change, and has vowed that the gold products it sells will remain in the 18-karat caliber.