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We don’t regard Zales as a retailer that offers value or quality. You are far better off getting your diamond jewelry from a company like Blue Nile or James Allen. If you want more personalized help, feel free to contact us.
We get into specifics below, but here are a couple of fantastic comparisons to highlight just how poor the value is at Zales. Here is a 1ct I VS2 round diamond in a platinum solitaire setting for $13,199. We will ignore the issues with their certification (more on that below). Here is a stunning 1.00ct I VS2 from Blue Nile. It is GIA certified and the cut is perfect. The price on this diamond is $5,242. If you add it to this elegant platinum setting, your total price is $6,037. That is 54% percent cheaper for a very similar, stunning ring.
Let’s also take a quick look at a princess cut diamond. The 1ct IVS2 in platinum from Zales is $10,499. Here is a far superior 1ct diamond from James Allen. This diamond is GIA certified and has a higher clarity, yet it costs only $3,960. If you pair it with this beautiful solitaire setting, your total cost would be $4,590. That is a whopping 56% savings, all while getting a superior diamond from James Allen.
Zales was founded in 1924 by brothers William and Morris Zales in Wichita Falls, Texas. The original store sold small appliances, cookware, cameras and, of course, jewelry.
In the late 1930s, Zales expanded into twelve separate locations. In the 1950s, they began a major shift in strategy that would forever change the face of the jewelry market in the United States: they moved into indoor shopping malls.
Zales Corporation now owns several jewelry chain store brands. Obviously, the most well-known is Zales itself which operates in almost 700 stores across the 50 United States and Puerto Rico. They also operate Zales Outlet stores at over 130 of the largest outlet malls in the USA.
Targeting the same level of the market is their Gordon’s Jewelers brand stores operating in over 190 locations. The Zales Corporation also has a presence in Canada operating under the names Peoples Jewellers and Mappins Jewellers.
The two store brands operate in a combined 215 locations all across Canada (as of the Zales Corporations 2010 Annual Report). Piercing Pagoda, also owned by Zales Corporation, is a lower market jewelry kiosk operated in roughly 675 locations.
The purpose of this review is to compare the offerings on Zales.com to what you can find on other leading fine diamond jewelry websites.
In order to accomplish this goal, however, I cannot divorce the online operation of Zales from their more well-established bricks & mortar operation of over 1,800 physical locations.
Revenue From Online Sales
The revenue their website generates amounts to little more than a footnote of their total revenue. According to their annual report, in 2010, Zales.com and GordonsJewelers.com generated approximately 4% of Zales Corp’s total revenue.
The company would never be so foolish as to undercut their in-store prices on the web and risk seriously deteriorating 96% of their revenue.
The Online Diamond Market
If you haven’t already, now would be a good time to read my article entitled “Truth about James Allen & Blue Nile” which traces a brief history of the evolution of the diamond jewelry market in the United States from the early 20th century until the online diamond boom of today.
In the article, I explain why traditional bricks and mortar jewelry businesses will never be able to fully compete with online-only stores. There are four primary reasons why this is so. I present them here as well:
The diamonds they list on their sites are actually owned by diamond wholesalers and manufacturers all over the world (or in James Allen’s case, in New York).
Only when an order is placed by a customer does the online-only store purchase the diamond from their vendor. The system works well because all the parties benefit.
The customer is happy, because he gets a low price. The online-only store is happy because they don’t have to finance an expensive inventory. And finally, the wholesaler is happy because he gets to tap into the retail market without displaying his inventory anywhere.
The wholesaler can still sell his diamonds whenever and to whomever he wants as the diamonds are only listed virtually on these sites. They are still physically located on his premises.
Comparing Online and Bricks & Mortar Stores’ Inventory Needs
Even with the rest of their inventory, online-only stores are able to keep the sales process more streamlined. Let’s take diamond earrings as an example. For each quality and size combination, Zales must keep at least one pair available at all times at each store.
In addition, at the main office, they need a significant number of backup pairs in the event they need to replenish the stock at a store. Usually, the main office must carry close to 1,000 pairs of each quality and size combination of diamond studs.
An online-only store only needs one stock. They only need to maintain in their inventory at any given time the amount they might possibly sell within the week—not more than 20-40 pairs, I imagine. The inventory requirements would certainly be less for smaller sites, too. The difference in inventory—1,000 to 40 pairs—is remarkable and certainly differs in cost.
2) Interest Expense
The primary expense traditional jewelry stores incur is financing their inventory.
For a bricks and mortar jewelry store to have any kind of serious inventory of loose diamonds to offer ample selection to their customers, they need to invest very large sums of money—several million dollars at least.
The vast majority of bricks and mortar store owners don’t have that kind of cash, so these purchases need to be financed. In other words, they must purchase their inventory of diamonds and jewelry with interest. Online-only stores simply don’t have this problem or expense.
3) Memo vs. Cash Prices
There is an alternative to the expensive option of interest and that’s generally referred to in the diamond business as “memo”—industry jargon for consignment.
In such an agreement, a wholesaler or manufacturer will give inventory to a store to work with. The store will only receive an invoice for a diamond once it’s sold. Diamond manufacturers are reluctant to agree to such an arrangement for several reasons.
Why Diamond Manufacturers Avoid Memo
Firstly, there’s never a guarantee that the desired amount of goods will ever sell. Secondly, and perhaps more importantly, while the diamonds are on loan at this store (or chain), they can’t be sold to anyone else.
Because of these two issues, memo prices are typically significantly higher than regular cash prices. So even if Zales can arrange a memo agreement with a supplier, they still haven’t solved the problem of built-in higher prices.
They might have less pressure from banks in such an arrangement, but their cost basis will be higher than the cash customer that doesn’t tie-up a manufacturer’s stock of goods (ie. online-only stores).
Just imagine for a moment the massive amounts of overhead that are expended running an operation with over 1,800 physical store locations. Each location has utilities. Each location pays rent. And each location has a team of employees.
According to Zales’ 2010 Annual Report, they generated a total of $1,616,305,000 in revenue. Fixed costs unrelated to the cost of the products sold totaled $846,205,000.
That means that they generated almost $900,000 in revenue per store while their annual overhead per store was about $470,000. Their overhead is a significant chunk of their overall costs and is much higher than an online-only retailer. As another reference, Zales’ cost of goods sold was $802,172,000 or approximately $450,000 per store.
Comparing Zales and James Allen
Doing some simple math makes it clear that even though Zales averages a one-hundred percent gross profit margin, they still could not manage to be profitable at the end of the year because of their astronomical overhead costs.
Online-only stores, as expected, suffer no such problems. Each store in the Zales Corp chain incurs high expenses only to service a relatively small and local clientele.
James Allen, on the other hand, services the whole world with only two offices and about 100 employees. Their overhead load per customer served is exponentially lower.
Zales’s Prices Aren’t the Only Issue
The above points explain why Zales cannot compete with the best online-only stores in price. But the advantage of online-only stores is not limited to price alone. The quality of the products offered at Zales is, generally speaking, notably inferior to that which is offered by the online-only stores.
Before the days of buying diamonds on the Internet, a potential consumer of diamonds had limited options when it came to educating himself before the purchase.
What would typically happen is that the customer would enter a store, and the salesperson would give the customer a quick education. But as you can imagine, a salesperson is not going to give the unbiased truth about diamonds.
He or she is invariably going to slant his lesson toward convincing the customer to buy his or her diamond and not the diamond being sold by the store across the mall pavilion.
Zales’s Kind of Customers
For the major bricks and mortar jewelry store chains, the slated and bias education given by a sales associate still occurs regularly. The best possible customer for a retail chain like Zales is the uneducated customer.
After all, if a customer walks into a Zales store armed with the knowledge gained from reading the articles on a site like Diamond Pro, he would never decide to buy there.
Unfortunately for Zales, the number of diamond consumers entering into the buying decision without first educating themselves on the internet is dwindling rapidly.
Stores that we recommend (such as James Allen and Blue Nile), will only sell diamonds with certificates from reputable labs such as GIA or AGS. Zales, on the other hand, sells diamonds primarily certified by the IGI lab.
A potential customer who doesn’t know better might see an IGI certified diamond priced the same as a GIA certified diamond and think he’s getting a bargain. This is certainly not the case, as GIA diamonds maintain a higher standard and more consistent standard of grading. IGI diamonds and GIA diamonds cannot and should not be compared equally.
The Educated Consumer vs The Uneducated
An educated diamond consumer knows that you cannot compare the results of the GIA and IGI labs. In order to properly compare prices, you need to compare actual equivalent diamond quality—not what’s written on the paper.
An uneducated customer might be impressed by hearing how Zales’s special cut “celebration diamond” has over 100 facets.
An educated customer would know that it’s not how many facets a diamond has that makes it beautiful, but rather how those facets interact with each other, which is determined solely by the diamond’s proportions and angles.
C) Head to Head Comparison
Let’s look at how much value you get for your money when shopping at Zales. I’ll compare three separate basic 1 carat diamond solitaire rings from Zales.com to their closest counterpart on JamesAllen.com whom I feel is currently the premier online-only jewelry store.
Each of the diamond rings I’m comparing from Zales is from a different general product category. The first ring will be from Zales’s “Signature Collection” which is described as including “only the finest diamonds in the finest cuts, ensuring unrivaled, dazzling brilliance.”
The second will be from Zales’ generic product category but will be a stone graded as a VS1-VS2 in clarity (significantly higher than the rest of Zales’ stock). And finally, the third will be from their “Celebration Diamond” category.
The Signature Collection solitaire ring from Zales can be found below.
This is a 1 carat diamond solitaire engagement ring set in 18K white gold from Zales’s “Signature Collection.”
As with Kay Jewelers, it’s important to keep in mind that when Zales labels a ring as “1 Carat,” it can actually be as light as 0.93 carats as per their disclaimer which reads as follows:
Diamond carat weights (CT.) represent the approximate total weight (T.W.) of all diamonds in each setting and may vary no more than .07 below the stated weight.
Potential Surprise with Carat Weight
Just imagine your dismay should you order this “1 carat” ring and find out upon arrival that it only weighs 0.96ct. I can speak from experience working for a major supplier of the largest national jewelry store chains that the diamonds in the big chains’ 1 carat inventory at any given time is filled mostly with stones below 1 full carat.
This is an important distinction, because in the regular certified diamond market, the moment you drop below 1.00 carats, the price drops about 20%! For purposes of this comparison, I will attempt to find an equivalent 1.00+ carat stone and an equivalent 0.99- carat stone.
Comparison With James Allen’s Inventory
For the signature Zales’s ring, the price is $4999 for an IGI certified I SI2 solitaire ring. Is this a good price? To determine that, we’ll compare it with a similar ring at James Allen.
James Allen specializes in GIA and AGS certified stones, but they do carry a small inventory of IGI certified diamonds. Lucky for us, they happen to have a 1 carat stone in their IGI inventory that is also graded as an I SI2. You can see for yourself HERE.
The price is no longer displayed, but the price for this ring was $3650. Please don’t take our comparisons here as recommendations for what you should buy (though that is a great looking diamond). We are just trying to find similar diamonds so we can compare apples to apples. If you’re looking for help buying an engagement ring, contact us and we will make personal recommendations for you.
Difference in Price and Quality
Matching the James Allen stone with a basic 4-prong 18k white gold solitaire setting like the one at Zales only adds another $360, making the total $4010. The difference between James Allen and Zales, in this case, is about 19%.
But we must keep in mind two very important things. In most cases, the Zales diamond would be below 1.00ct which would significantly affect its true value. For example, here’s a GIA certified 0.91ct J Color SI1 Clarity stone: https://www.jamesallen.com/diamonds/J-SI1-Premium-Cut-Round-Diamond-3605263.asp.
At IGI, this diamond would in all likelihood receive an I color grade and probably a VS2 clarity grade. Nonetheless, the stone only costs $3270.
Zales’s Sales Tax
The second important thing to keep in mind is that if you buy locally at a Zales store or from Zales.com, you’ll have to pay state sales tax since Zales has a business presence in every one of the 50 States.
If you buy online from one of the recommended online-only stores, you’ll only have to pay sales tax if you have the product shipped to the one or two states in which the company has a presence.
Paying tax is usually easy enough to avoid even if you live in the same state, since you can have the ring shipped out of state and held at a Fedex location for pickup.
The relevant 1ct ring from Zales’s generic solitaire collection can be found below.
This is a 1 carat diamond ring set in a basic 18K White Gold solitaire setting, much like the “Signature Collection” ring above. The center stone is guaranteed to be graded at least H or I in color and at least VS1 or VS2 in clarity by IGI.
We, fortunately, found a direct comparison on James Allen with an IGI certified stone of the same characteristics.
IGI Certified Comparison
You can find the James Allen comparable diamond here: https://www.jamesallen.com/diamonds/I-VS2-Ideal-Cut-Round-Diamond-4373652.asp
This diamond is an IGI certified Ideal Cut I color VS2 clarity diamond that is almost certainly a higher quality cut than the majority of stones you’ll find in a generic diamond program at Zales. At the time of writing this article, this diamond was listed for $5270.
As with the Signature comparison above, adding in a basic 18K white gold setting brings an additional $360 dollars to the total cost, making the ring $5630.
The cost of the Zales ring is $8499—a whopping 33% more!
And that 33% doesn’t even factor in the fact that most of Zales’s stock of diamonds is likely to be below 1.00ct.
Almost Twice the Price
Let’s leave out, for now, the difference between strictness at GIA vs IGI. Assuming the James Allen stone would also receive an I VS1 at IGI (most likely, it would receive a significantly higher grade), it would fit perfectly into the Zales generic program.
The price on the James Allen diamond is $4410. Adding the $360 for the ring brings the total to only $4770. In that case, Zales is almost twice as expensive! It’s hard to believe the price difference is 90%!
The diamond we’ll evaluate in the Zales Celebration Diamond collection can be found below.
Admittedly, the Celebration Diamond is going to be harder to compare with another diamond to because it’s a special cut. By “special,” of course, I simply mean that it is a standard round cut with many additional facets added on. In my professional experience, I’ve always found these super-faceted round diamonds to look more gimmicky than anything else.
In my humble opinion, it takes the beautiful symmetry and pattern of a classic ideal cut round diamond and turns it into the “broken glass” look of a radiant.
True Hearts Comparison
The question arises, though, of what to actually compare a Celebration Diamond to? To be fair, and to reduce any claims of bias, I’ve decided to use James Allen’s premium cut stone as a basis of comparison: their “True Hearts” diamond.
Needless to say, I’m 100% certain that a “True Hearts” stone from James Allen will be more brilliant and desirable than a Celebration Diamond from Zales.
But just to be fair, we’ll use such a diamond. Just like Celebration Diamonds represent the top choice at Zales, True Hearts diamonds represent the top choice at James Allen.
Again, though, we run into a simple technical problem that James Allen’s True Hearts are certified by AGS (a premium lab just shy of being on par with GIA) while Celebration Diamonds are certified by IGI. In general, IGI is more lenient than even AGS. We generally do not recommend purchasing a diamond that is IGI certified.
But for purposes of this exercise, we’ll assume that IGI is equally as strict as AGS.
Here are two comparable options that I have found on James Allen:
Evaluating Carat Weight and Cost
Both stones are Hearts & Arrows ideal cuts. Both are certified by AGS to have I color and SI2 clarity. The only difference is that the first one is 0.93ct and costs $3850, while the second one is 1.02ct and costs $5390.
For this review, let’s assume there would be a 50/50 balance of under/over 1.00ct stones at any given time in Zales inventory. In all likelihood, the balance of sizes would tilt heavily towards the under 1.00ct side (as this would be more lucrative for the business). But we’ll take an average of these two prices: $4620.
Add on another $360 for the 18K White Gold solitaire setting, and you come to $4980 on average for the ring at James Allen. The Celebration Diamond 1ct Solitaire costs $5995 on Zales.com. That’s a difference of 20%!
Additional Considerations for Comparison
Now, again, it’s important to remember a few important facts. Firstly, the balance of sizes at Zales, especially with a special cut like this, is most likely to be much more heavily skewed towards the stones under 1.00ct.
The reason is simply that their supplier of the program chooses diamonds from their regular inventory to be re-cut into Celebration Diamonds. So the diamonds are already heavily weighted to 1.00-1.02 carat weights.
When you re-cut those sized stones and add the extra facets, enough weight is lost to knock the stone down under 1.00ct.
Secondly, in reality, IGI is noticeably more lenient than AGS. So, in actuality, we should compare J color AGS certified stones to the I color IGI stones. This would have a major effect on price as well.
As I mentioned in my Kay Jewelers Review, for the online-only sites that we recommend, I decided to order the actual product from them to be sure that I, myself, experienced the typical customer experience.
With Zales and Kay Jewelers, however, the basic price comparisons didn’t justify going through the hassle. Even if their customer support were stellar, it could never justify overpaying by so much.
If you want to find out, though, what the customer experience is like at Zales, I invite you to poke around the internet. There is no shortage of personal reviews of Zales out there—many of which are extremely negative.
Going Back to the Pie Analogy
As I mention in the “Diamond Clarity” article, I like to think about buying diamonds with a pie analogy. Each different facet (no pun intended) of the diamond purchase is a slice of the pie.
There’s a color slice, a clarity slice, a cut quality slice, etc. The overall size of the pie represents your budget.
The goal of buying a diamond should always be to maximize the size of the slices that actually have a noticeable effect on the visual appearance of the stone, while minimizing the size of the slices that don’t affect the visual appearance of the diamond.
Bricks & Mortar Stores Take a Big Slice of the Pie
One of the most overlooked “slices” of a diamond purchase is the actual amount of profit the store is taking. This slice, out of any of them, is the one with absolutely no effect on the diamond—not visually and not financially.
Simply put, this slice (the store’s profit margin) is greatest at national chains like Kay and Zales.
The Choice Is Yours
So, what would you rather do: give Zales more money, or use your hard-earned money to get yourself a larger stone, or a cleaner stone, or a whiter stone, or a better cut one, or any combination of the above?
Or perhaps you’d like to take that money you’d otherwise give to Zales for their overhead costs and simply put it back in your pocket and save it.
The choice is obvious.
From our extensive experience, we don’t see Zales as a retailer that offers value or quality. You are far better off getting your diamond jewelry from a company like Blue Nile or James Allen. If you want more personalized help, feel free to contact us.
Several jewelers, including Zales, offer seemingly great options for Mother’s Day. Their advertisements often target a particular line or specific item. While these can appear as wonderful gifts for mom, the jewelry is often poorly made and of low quality.
Instead of going with a sub par jeweler, choose a reliable vendor with high-quality diamonds and settings, like James Allen or Blue Nile. For beautiful, timeless jewelry options for Mother’s Day, check out our Mother’s Day gift ideas.
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