JEWELLERS are facing tough economic conditions but they can still ride out the crisis if they find their own niche, said the Singapore Jewellers Association (SJA).

SJA president Ho Nai Chuen, 53, said in an e-mail interview with The Straits Times that the industry has been hit by an across-the-board 'sharp drop in demand for luxury goods'.

This drop comes on top of already existing problems such as severe liquidity issues, high operating costs in areas that include rental, manpower and government levies, and a shortage of trained personnel.

But Mr Ho, managing director of On Cheong Jewellery, urged small and medium-sized enterprises (SMEs) in the industry to relook their business models and identify core strengths and weaknesses in order to consolidate.

He said SMEs should close down unprofitable outlets and clear slow-moving stocks - even at a loss - in order to improve liquidity.

He added that jewellery SMEs should also consider reducing the size of their operations.

'(This would) cut down rental and manpower costs if all avenues are exhausted,' he said.

He also suggested that management replace ineffective workers with more skilled retail staff at a time when the job market is not tight.

He advised firms to join forces, 'leveraging on one another's core competencies to reduce marketing and promotional expenses so as to achieve a win-win formula'.

Mr Ho has been impressed with the Blue Ocean Strategy, set out in the popular 2005 book of the same name by Insead professors W. Chan Kim and Renee Mauborgne.

The book uses the terms red and blue oceans to denote the market universe. In the red oceans, companies try to outperform their rivals to grab a greater share of existing demand, and cut-throat competition turns the ocean bloody.

Blue oceans describe the wider, deeper potential of market space that has yet to be explored.

'Blue Ocean theory is simply about not going in for intense competition where the market is saturated. One should find a niche where the market has yet to be developed,' said Mr Ho.

'With so many jewellers operating multiple outlets selling identical designs, jewellers may consider customised design jewellery specially made for the customers who prefer something unique and with character.

'The Blue Ocean Strategy is to get away from the bloody competition, avoiding the already saturated mass-produced jewellery market. Instead, find your own market segment where competition is not as severe.'

ELIZABETH WILMOT

This article was first published in The Straits Times.