It’s been a little over a year since Brilliant Earth became a public company and it’s had its ups and downs throughout the process.
With fiscal 2021 revenues of $380 million, it’s tiny by comparison to U.S. market share giant Signet Jewelers
Yet Brilliant Earth is bigger than 99% of the nation’s ~14,000 jewelry firms, which have fewer than 100 employees. Brilliant Earth employs some 420 people.
But size isn’t everything in the fast-paced, changing world of retail. And being less than 20 years old, Brilliant Earth has been unhampered by the traditions of legacy jewelry retailers when it comes to serving the personal needs of next-generation consumers.
Brilliant Earth is destined to get on the modern jewelry consumers’ consideration list. It has an asset-light, digitally-native business model with a rock-solid commitment to sustainable, ethically-sourced jewelry. It also offers designs that can be customized to fulfill the buyer’s dreams at affordable prices.
And its growing network of showrooms enable the brand to breach the digital divide, which makes it more likely to cross the customer journey finish line.
Cowen’s Oliver Chen calls Brilliant Earth the “premier GenZ digital-first jeweler” as he rated its stock outperform in a recent research note.
“We believe Brilliant Earth is well positioned for market share gains in a fragmented industry given strength in their branded mission. Brilliant’s marketing strategy focuses on word-of-mouth referrals and growing brand awareness among younger generations. We believe BRLT is poised to gain market share as a jeweler of the younger generation,” Cowen predicted.
Ups and downs
Take market share is what it did during the first six-months of 2022. Sales increased 28% compared to last year, reaching $209 million compared to $163 million, with adjusted net income of $10.7 million. Orders also rose by 36%, reaching 68,000 over 50,000 previous six-month period, and it is guiding to reach net sales between $450 to $470 million by year-end.
But Wall Street hasn’t given Brilliant Earth the credit it deserves. It initially made $115 million in its IPO with shares priced at $12 after going public on Nasdaq in September last year. But now shares are trading at about half that. The stock market volatility takes some of the blame, with Nasdaq hitting a two-year low this week.
Brilliant Earth co-founder and CEO Beth Gerstein sees it as more fundamental. Investors have yet to wrap their heads around the distinctive, disruptive difference Brilliant Earth brings to the traditional jewelry market, most especially the bridal and wedding jewelry segment. That category alone accounts for about one-fourth of U.S. fine jewelry sales.
“We run our business very differently from a traditional jewelry retailer, including our omnichannel model and sustainability mission,” Gerstein explained in an interview conducted before the IPO first-year anniversary.
“Investors tend to draw on their own experience buying a diamond engagement ring to understand our business. But things have changed dramatically since many investors got engaged,” she continued.
Women drive the purchase
One of the bigger changes has been the shift from the man being the primary driver of an engagement ring purchase to the woman being in charge.
The company’s proprietary research found that half of women do all engagement ring shopping and research themselves, no men allowed. And once she makes her pick, some 72% go together to make the purchase.
“She’s actually taking charge of the process and our brand resonates with her,” she continued. “We have been very conscious of meeting her where she is and not just speaking to him, as is traditional in this industry. Investors don’t understand this or how much brand means to her. They tend to think that price matters most.”
By being a jewelry brand that a woman trusts for this once-in-a-lifetime jewelry purchase, Brilliant Earth is well positioned to serve her – and him by extension – in future self and gift purchases for other milestones and at different life stages. And the company can bank on the couple’s spending power to grow as they mature.
Knows how to reach her
To be there for her, Brilliant Earth has found social media her chosen path. “Men Google but she doesn’t. That’s how dinosaurs do it,” Gerstein quipped.
Brilliant Earth has found TikTok is the perfect medium to bring her on board, with 13% of its customers originating there. “It’s a new platform, but we find the vast majority of people who tune into our 15-minute live education sessions stick around for the entire presentation. That’s an eternity on TikTok,” she said.
Jewelry specialists host the presentations. They work with Brilliant Earth customers every day, so they know what information is essential to making the right jewelry choice and right choice of brand.
“People don’t want to see hot, glossy print types of execution. They want it more informal and informational,” she shared. “Investing in social media builds community which is so important for our Millennial and GenZ audience,” she continued.
And the investment in social media and community building has an added ROI: 62% of customers said word-of-mouth referral was an important factor in their decision to purchase from Brilliant Earth.
Back in the day, when it came to buying an engagement ring, male customers were guided by the 4 Cs – Cut, Color, Clarity, Carat – and the “two month salary” formula for how much to spend. Today many other factors play into the purchase decision and Brilliant Earth works to meet them all.
“Are they looking for something with exceptional rarity and quality? Are they looking to maximize sparkle within a budget? We guide customers toward what they are trying to achieve. And our ability to personalize their piece is compelling. We try to make the entire process less intimidating and make it fun and creative for the customers,” Gerstein explained.
Its personalization offering, called Create-Your-Own, supports the company’s asset-light business model. It holds a virtual inventory of more than 150,000 natural and lab-grown diamonds and typically turns around an order in six to 12 days.
For the next-generation jewelry customer, their concerns go beyond design and price. They care about sustainable, responsible sourcing and business practices too.
Brilliant Earth offers mined diamonds, lab-grown diamonds and colored gemstones across a full range of jewelry designs, not just rings, with the same promise of transparency and sustainability.
Consumers are confident that the company stands behind those promises, going beyond “conflict-free” for natural mined diamonds and gems. It assures its mined suppliers protect against human rights abuses, uphold responsible labor practices and safety, support community development and minimize environmental impacts. The choice of lab-grown and recycled diamonds completely removes those worries about mining.
Further, it tries to use recycled precious metals as much as supplies allow. And it was early into using blockchain to trace the custody of a diamond from its source.
Crossing digital divide
Perhaps more than anything, Brilliant Earth confounds investors with its showroom model that looks nothing like a typical jewelry store. Showrooms aren’t filled with lots of inventory. What’s on display in cases has been carefully curated to match the tastes of the local market.
Brilliant Earth now has 22 showrooms after the recent openings in the Birmingham neighborhood in Detroit and Central West End in St. Louis. The company relies on where its customers live to find new markets rich in similar next-generation customers. This assures maximum growth potential.
It also makes different choices than a traditional jeweler in store locations. It selects repurposed boutique office spaces, upper-floor retail in cities and lifestyle centers with the added benefit of reducing rent expenses.
Many customers arrange to come in by appointment, creating more upfront commitment in their first meeting and spend about one hour or more working with jewelry specialists. Showroom staff also multi-task, serving customers online when they aren’t engaged face-to-face with customers.
“We’ve built our company on discipline. We set our budgets carefully and have always been conservative regarding costs and profitability,” Gerstein said. “We exert our best efforts to control the controllable. Our disciplined mindset comes from bootstrapping the company initially.”
Brilliant Earth has an overarching mission to “create a more transparent, sustainable and compassionate jewelry industry.”
Gerstein and her team are taking the same bootstrapping approach to building a more transparent, sustainable and compassionate jewelry industry. They are working from the ground up to show what a next-generation jewelry retailer that serves the next-generation jewelry customer looks like.