Family stores versus AI agents—who will win this battle royale? My name is Jesse Korby, here at Jewelers Advantage. I'm a consultant in the luxury and jewelry space, so you can consider this video and what we will go over today as your consultation for the day on how you can develop your jewelry business and prepare for the future, because a lot is changing.

It might sound counterintuitive to be talking about AI without using the technology, but we find that a whiteboard presentation like this makes it so we can step back and start thinking strategically as humans before we even put any technology in anybody's hands.

So let's think about this for a second: we've got family stores. When you think of a jewelry store in the traditional sense, you probably think about the store that is in your community that maybe gets customers by doing a lot of jewelry repair. When people in the community know that they need to buy an engagement ring or some type of gift, this person probably has some type of long-standing relationship in the community. This is what we know to be the traditional jewelry business.

Now, there have been some major disruptions to this model over the past few years that were only further amplified by Artificial Intelligence coming on the scene, and that would be an e-commerce store. A lot of the family stores still haven't figured out how to put their business up in the cloud, which is quickly becoming very, very necessary. Because the way that we acquire customers now is through social media, a lot of the traditional buyers of a traditional jewelry store are aging out of the market. They're focusing more on retirement or their grandchildren or something like that, and jewelry isn't a major priority for them anymore. They're certainly not going to buy an engagement ring, and we can even get into what it could mean later on with AI and e-commerce, but this is your Millennial and Gen Z buyer now discovering a jewelry business through social media.

So the natural progression for this customer is going to be that they find out about a brand that they want to buy from, they're going to see a lot of really good quality production value on social media, and then go to a beautiful e-com store, and that's where they're shopping. It makes it really hard for this store because somebody else can enter the scene and steal their customers. So that, in a nutshell, is what is tricky about e-commerce in this industry. It's because there's a lot of operational requirements that this store would need to figure out in order to be effective in selling online, and then there's new people entering the market every day that could spin up a Shopify store. It's almost like they're poaching your customer—it's like this e-commerce store has a bow and arrow, and they're hunting your customer. Where this person is limited to a particular geographical area, this store can be anywhere.

So the trick is, how do we start to understand what competition in the market even means now? We've got this jeweler over here with a physical store, we've got this jeweler over here that might be working out of a spare office. They may have gotten an office space just to bolster their perception in the community, but also with a lower overhead. And this could be your private jeweler, custom jeweler, just starting out. They do customs, they go to bridal shows. They don't need the physical store to be able to make their sales of a custom—they just need somewhere to work out of and ship out of. And if they make the jump to an e-commerce store, that means that this person could be in New York City in a small shoebox office, or they could be in Tulsa, Oklahoma in a small shoebox office, and as long as they know how to present their brand in an effective way, they can get this customer.

So we need to be asking the question of who wins once this dynamic is further amplified by AI agents. Now, AI agents, you can think of as a digital employee living on the internet, and this is going to be a big, big buzzword for 2025. We've been trying to figure out how to explain this to the jewelry industry because most people in this industry are not super tech-forward or forward-thinking in terms of the technology that they want to use—being tech-savvy and so on. So how do you begin to describe an invisible employee that works 24 hours a day on the internet and is the intelligence of a PhD scientist? You will never find that employee to work at that physical store. How many people are going to get a PhD candidate working at this store?

So if the big problem in the traditional sense is we can't find good benchers, or we can't find good career salespeople to work here, what is going to be the answer to that question? Another question that we have to answer is: hey, if I can go on social media and find a 42-carat centerstone in a lab diamond engagement ring for $33,000, what is actually the profitable business case in this industry? Because there are going to be people that have made their entire career off of selling $10,000 and up engagement rings, and as far as the pie chart of their regular monthly sales volume is concerned, that becomes very important.

So we have this whole deflationary thing where people are finding out about the product on social media, maybe at a price point that can be sold on a website because they're accounting for volume sales globally. They could be selling into somebody else's zip code—they could be selling into a thousand different zip codes, and because of that, it changes what their pricing can be, which this store can't compete with.

Enter the AI agent. If a business had to have a great salesperson, and if we were abiding by the old rules of the industry, basically built by De Beers with "a diamond is forever," there are certain things that have to come into play with the pricing of the product and how people used to sell these products. Now, what is going to happen is this store that has limited business hours, limited talent, and a limited sphere of influence in their community is going to be competing with the chat window at the bottom right of an e-commerce store. And that chat window isn't going to need a human. This is going to be open 24 hours a day, and the AI—I've made it into a little robot in the chat bar if you see the antennas—AI agents could be manning this chat window, which means that you would have salespeople that can scale to any volume of inquiries needed from the customer side of things.

If you got a ton of web traffic, this would be able to accommodate. This store, if it's all human, can only take one call per rep at a time in their area. So what's going to become really challenging for the people that don't know about this one use case—this is just one AI agent. This is one employee that would be sitting in the chat bar of a live chat on an e-commerce store, selling 24 hours a day.

If we ask the question of who wins, if I'm just saying limited sphere of influence that can only sell into a community, human sales reps that work within a specific time window, that their talent isn't equal, that they aren't consistent day-to-day—somebody's coming in hung over, somebody broke up with their boyfriend or girlfriend, somebody's having some family drama within the time window—and they're competing with somebody that has no emotional baggage, that their only singular focus and goal in this world is to optimize for closing sales or elevating inquiries for bigger sales up to this person, so that way they don't miss the sales opportunity, makes it way, way more efficient.

So the answer is this store could never compete with this, and this is coming down the pipe now. Like, if you look up what Nvidia is doing, if you look up what any of the major AI providers are doing, everyone is saying 2025 is the year of the AI agent. So this is just one example in a sales situation where it could either be closing the customer on tier-one items that are below $11,000 or could be elevating the inquiries up to the jeweler that is working out of anywhere and is essentially treating their physical space as a shipping hub. That's what the whole game becomes.

So then you have to start asking the question of, okay, well, what if we have AI agents being our whole product design team? What if all of our social media is getting organized and scaled, and we have even AI agents in Adobe doing Photoshop and doing video editing, and we have them scheduling the social media? Then on the sales and service side, you have a live chat here. This is just one use case. On the operation side, what if you have AI agents helping with all of the supply chain management? And then, of course, when it comes to making sure that the accounting is accurate and the financial data of the business is accurate and optimized towards coming up with the right budget to run this e-commerce business, that all then becomes really powerful.

Because again, remember, the IQ will not be equal. This will be PhD-level intelligence across all areas of the business, and we've just highlighted one use case here, which is the only one that they need to beat this store. All they need is to be open 24 hours a day and have the staff limited down, and the overhead limited down, so that way a 4- and 2-carat centerstone engagement ring selling for $3,000 actually makes good business sense.

So when we talk about the argument of natural diamonds versus lab diamonds, that plays a factor in this as well, because the customers are being educated on what the pricing can be for these lab diamonds, and then the businesses actually have the legs to stand on to make that pricing functional in a business case and make the business still profitable.

So family stores versus AI agents, if it becomes a "this or that," nobody is going to beat this when it comes to the actual competitive element, and there being one deciding factor from the technology side of things of what is going to make the winners and losers, it's going to be the people that understand how to deploy AI agents into an e-commerce jewelry store.

Now, the trick is, here's the Wild Card: what if you combine these two? What if you've got some type of movie set where you can be doing your social media if you're treating this as almost like a content studio and a shipping hub that also can serve the market, which is great if you're in a place like New York or Miami or LA or Houston or any other major city? That can be a really powerful combination because then you can get the foot traffic coming in, but then if you're thinking more than just being a family store like "this is John's jewelry" or whatever it's going to be, if you start thinking of it in terms of what could a brand name be for a beautiful e-commerce store and this just happens to be a physical base of operations, we don't even really need to worry about franchising out and having multiple physical locations because we just need one great place to ship out of from here.

So I just wanted to kind of bring this idea into the fold, because it is going to become impossible for people to compete in the jewelry industry if they don't have an e-commerce presence that can be the handshake with the customer on social media where they find you. You have to go meet them there, and then there has to be a real funnel into a place where they can spend money. Because e-commerce jewelry is possible now, and there are already companies starting to experiment with AI agents out of their store.

So the Holy Grail situation would be to have some type of physical retail that is also prioritizing the sales of the e-commerce store because one can scale more than the other can. But then, if you're also starting out, know that the barrier to entry, if it's about staffing up a jewelry business and being able to actually service the orders and actually run the business with much more help, there's no better time to get into the jewelry industry than being a private jeweler, custom jeweler, personal jeweler—however you want to describe yourself. But then also know it's not so much about tying yourself to the business forever if you can build a brand.

So the big takeaway here is that this little chat window powered by AI is going to be another deflationary-type impact on the jewelry industry, similar to what lab diamonds are, and it's in terms of pricing. But it's also going to factor into how profitable businesses can sell that product for cheaper.

So if you want to learn how to do this and you want to learn how to position yourself for the future and understand that you need to have a relationship with AI and that you're going to need to build a real brand beyond just looking like a family store that has a social media account that doesn't lead to sales, I recommend that you head to JewelersAdvantage.com. We do have some free AI tools there. What you're going to want to start with is something called the Brand Prism that's built into the tool. You'll see it. We have a ton of video on it, and it's a button in the tool called "Brand" that you won't miss. You're going to want to start thinking how you can present your business like a brand.

There are plenty of really, really good-looking businesses in the jewelry industry that are actually run by pretty small teams because they understand that perception is reality, and as long as they make a really great store and they can deliver the product through their shipping, it makes the customer happy, and they can win in the industry. This is the future here.

So if you are a physical store, you have to start thinking about e-com now, because that whole principle of people selling into your community and it just getting quieter and quieter and quieter—that's about to be on steroids with these. And then, if you're new to the industry, you can be thinking, "I need to prioritize my e-commerce store and my social media." I do need to have real operations and understand that operations for an e-commerce jewelry store is more complex than selling t-shirts, and the AI will help you with that as well.

Other than that, go to JewelersAdvantage.com, check out some of our knowledge base, and our educational resources and our blog. We have a ton of free video in there that's going to teach you. We have free AI tools that will help you start to develop a relationship, and then just understand that it's not going to be about simply plugging in AI agents into just whatever your store is now. It's going to be how can I use AI to develop a real brand and business? Understand what the operations are really supposed to be across product, marketing, sales and service, operations, and finance, and then how do I make sure that the AI agents can be built in underneath that with the right system?

My name is Jesse Korby here at Jewelers Advantage. Hope that you enjoyed this short talk, and we will see you in the next one.