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|Michael Fried|| Overall Score:3.67|| Price:3.5|| Selection:4|| Customer Service:3.5||Pros||Cons||Other Recommended Retailers|
Bottom Line Recommendation
Jared has made significant strides in improving their quality and pricing recently. The difference in secret shopping Jared a few years ago compared to today is palpable. They have become an intriguing option for buying your diamond jewelry.
Yes, you can still save money by ordering from James Allen, but the gap has narrowed and there is a definite possibility that you can buy an excellent engagement ring at a fair price from Jared.
Jared, The Galleria of Jewelry, is one of the flagship jewelry chain brands owned by the Signet corporation. They are Signet’s attempt at offering a more personal experience than their mall store chains like Kay Jewelers and Zales.
You usually find them in shopping mall areas as a standalone store. There are roughly 250 Jared locations in 39 states. Jared stores bring in $1.2 billion dollars in revenue for Signet, making up about 1/5th of their total sales.
Jared locations differ from their sister stores (Kay and Zales) in a few ways.
Firstly, their staff is slightly better trained and have a little more knowledge of the products. We will get into this a bit later. Secondly, they do offer better quality . Lastly, each location has an in house jeweler that can do minor repairs and modifications.
I guess this gives them a leg up against their sister brands as they don’t have to be plagued with the same accusations of diamond swapping that has cropped up in the press recently.
Here we will explore Jared’s business model in depth to figure out why their prices and quality are not competitive and how they try to make up for that. We will explore the costs the company has and how that factors into their products and pricing.
1) Inventory Costs:
This is, by far, the biggest cost for any store. A typical Jared Galleria sells roughly $4.8 million dollars of jewelry a year. The rule of thumb in retail is that a good store turns over their inventory around 2.5 times a year.
Most stores likely average about $2 million dollars of inventory on hand at any given time. Multiply that by 250 Jared locations, and that’s $500 million dollars of diamond inventory the Signet Corporation must carry just for their Jared stores.
The company has two ways of supplying their stores; buying diamonds using credit or taking the diamonds on consignment (the diamond manufacturers “lend” them the diamonds and Jared only needs to pay when the diamond is sold).
Either of these choices adds significant cost to the actual product. Either they are paying bank interest on their inventory or they are borrowing products from the manufacturer. That manufacturer needs to make more money on the product if they have to float Jared a loan at the same time, so the cost basis for the product goes up.
This is in stark contrast to the business model of Jared’s stiffest competition: online retailers.
Online retailers don’t need to have millions of dollars sitting in one store waiting for people to walk in. In fact, online retailers don’t need to own any inventory at all.
As we explain in our Online Vs. Brick and Mortar article, online retailers list diamonds on their site directly from the major diamond manufacturers. They only purchase the diamond when the customer buys the diamond.
The better online retailers like James Allen have contracts set up so that every diamond listed on their site is guaranteed to be available. This saves online retailers a significant amount of money and is one reason they are able to offer better products for lower prices (more to follow).
Two other major costs that weigh down a large company like Jared are employee costs and property costs.
Let’s start with employee costs. Unfortunately we can’t get specific breakdowns of Jared’s employees, so we’ll use the overall costs for the company to get a ballpark figure.
Signet has roughly 30,000 employees. Overall, they generate $6.5 billion dollars in sales. That means that for every employee that Signet pays a salary to, about $216,000 in sales are generated.
The major online retailers have about 300 employees that generate $475 million dollars in sales. That means each employee accounts for $1,578,000.
This puts Jared at a severe disadvantage on two fronts; first their overhead costs are significantly higher and must be factored into the cost of the diamonds. This also gives online retailers the luxury of investing more in their employees. This results in more knowledgeable and experienced sales staff and better craftsmanship and quality in the product.
Property costs are another large cost that gets factored into the cost of a diamond. As said before, the average store location sells $4.8 million dollars in product. Remember, Jared locations are not small mall stalls, they are large free-standing buildings in prime retail areas.
Jared, like all Signet stores, used to rely heavily on branded diamonds. Given that Jared is Signet’s “upscale” choice, during my visit the salespeople used to push their better brands hard. In my more recent visits, that approach has changed. During our last visit, the saleswoman seated us right in front of a display case filled with GIA certified diamonds.
Certification is Paramount
Let us digress for a moment to talk about those GIA certified diamonds and their importance. As we discuss in our certification article, it is important to get a diamond with a GIA or AGS certificate. Those are the gold standard in the industry. Why is that so important? Without them, there is a strong possibility that the quality claims of the certificate are inflated.
When you look at a diamond with inferior certification, you may think you are getting a great deal on quality “x”. In reality, the diamond is really quality “y” and you are overpaying for it.
This is why I’m so happy to see Jared has made the move to offer GIA certified diamonds. Not only does it give you, the consumer, comfort in knowing that you are getting exactly what they are claiming. It also allows you to effectively compare those diamonds to others and see what kind of deal you are getting.
Now that we know we can rely on the certification of Jared’s diamonds, let’s dig into the actual diamonds I was shown while visiting. I looked at several diamonds, but I will focus on the three round diamonds I looked at while there. Since round diamonds have more widely accepted standards for cut quality, it’s easiest to ensure I’m comparing apples to apples.
The first diamond I looked at was a 1.50ct I color, VVS2 clarity round diamond for $10,730. The diamond was superbly cut (it was a triple excellent cut grade from GIA) and it appeared to be bright and brilliant.
Here is a comparable diamond from James Allen for $8,550 This diamond is virtually identical to the one offered by Jared and it is 20% cheaper.
The next diamond I looked at in Jared was a 1.44ct I color, Si1 clarity round diamond for $9,100. Again, the diamond was well cut, bright and, despite the SI1 clarity, eye-clean. It was a very nice diamond. For comparison, here is a 1.42 I, SI1 round diamond from James Allen for $6,980 (22% cheaper).
The last diamond I saw from Jared was a “First Light by Leo Schachter” I won’t compare this one to a James Allen diamond as it is a unique cut. The diamond was a stunning 1.50ct I color, VVS2 clarity round diamond for $12,000. You are paying a premium for the brand, but the diamond truly was stunning.
As mentioned before, Jared Galleria of Diamonds has a better track record of hiring (and retaining) salespeople. On average, their knowledge and sales skill rank somewhere between your typical mall store and independent jewelers (who usually have the most knowledgeable staff).
My experience secret shopping Jared have ranged from average to above-average interactions with the staff. The experiences have been friendly and not too pushy (that is always a plus as many salespeople in the industry work on commission). The level of knowledge when it comes to diamonds has been pretty mediocre, but that is expected in a chain store (it’s impossible to train thousands of people to be diamond experts). On the other hand, they had a strong understanding of the different brands and offerings in the store (rare for a chain store).
So let us recap. Jared Galleria of Diamonds offers high-quality diamonds, above-average customer service, and a decent in-store experience. Let me be clear. That is way above the typical experience I’ve had secret shopping retail locations. You can definitely purchase a diamond engagement ring from Jared and be satisfied that you are getting a nice ring at a decent value.
Can you save some money? Well as we explained above, no physical jeweler can compete with an online-only retailer. Our secret shopping bore that out (with premiums being around 20% for the diamonds). But that doesn’t mean that Jared is overpriced. There are advantages to purchasing from a local physical retailer. The question is whether those advantages are worth the premiums.
It has been my experience that most physical retailers are charging premiums in the 35-50% range. Jared Galleria of Diamonds was far more competitively priced. Yes, you can get a cheaper engagement ring from James Allen. But if you want to buy at a local jeweler, Jared is the way to go.
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