The pre-election blip appears to have passed with the second straight month of sales gains being reported in our comparative sales data from stores across the U.S. The rolling 12-month average store sales figure for the year to date was $1,594,175, up from last month’s total of $1,586,972, an increase of 0.45 percent.
Average December sales for the month of $359,919 were up from $352,716 in the previous month — a nice 2 percent increase. Average sales figures per item saw an increase from December 2015, rising from $251 to $297, but a decline of 14 percent in units sold from 1,295 items to 1,106 constrained the growth substantially. Margin was down 1 percentage point from 48 percent to 47 percent, resulting in a decline in gross profit achieved for the month from $171,058 to $169,686.
After flat-lining for the last couple of years, silver sales suffered a noticeable decline in volume last year. Since the start of 2016, average rolling unit sales dropped from around 3,100 units per store per year to just over 2,000 units, a drop of over 33 percent.
It seems clear that the drop in silver units has contributed to the overall decline in sales volume being achieved. By comparison, total unit sales overall dropped from 5,777 to 4,798 units per average store.
With an almost identical drop in units it seems clear that almost all of the decline in volume is attributable to silver with other departments holding their own. Despite this, overall sales have decreased only slightly from $1.624 million to $1.594 million, a decline of around $30,000, or 1.8 percent, implying that the average unit sale across all departments was on the rise.
Not surprisingly the dollar sales of silver have reflected the trend in silver volume.
It seems clear that jewelry stores, after large-scale growth from silver, particularly the bead market, since 2008 are getting back to basics. This level of change in any jewelry store will have a major impact on resources, particularly the required levels of staffing. For stores that have developed a culture of high volume, low-priced trading with minimal knowledge and training there may now be a need to concentrate on developing the level of staff expertise and information, particularly concerning higher-priced diamond product.
In recent years, a whole generation of selling staff has been added, many of whom have not experienced the traditional concept of jewelry-store sales focused on bridal and diamond jewelry. With less opportunities now appearing in the silver market, these staff members will need help developing their sales approach and ability to build a lasting rapport with customers in a way that differs from the “low impact” nature of selling in the silver market. Foremost here will be the ability to build trust with the customer, as their perception of buying risk will increase in direct proportion to the value of the item they are looking to buy.
With lower sales volume will come a greater competitiveness for each sales dollar. Along with nurturing a long-term relationship with customers, they will need to foster the ability to “create” sales opportunities for themselves.
We have long been fans of clienteling — proactively contacting customers with suggestions of ideal products based on their past purchases — and with increasingly smarter software systems and client information available it has never been easier for stores to put this process into place. It does, however, require a fundamental shift in the approach and attitude of staff to the customer, and a change in their understanding of what helping the customer is truly about.
Now is the time to be reviewing your staff and asking the questions “Who is ready for this next stage of development in the retail mix?” and “Who truly wants to help the customer and has the ability and attitude to do so?” Hand-in-hand with this is the question, “What training and resources do I need to make available to help them make this transition?” A sales team, previously dependent on passive, low-dollar value sales, will need to adapt to the changing market place in order to help your business grow.
This article is an INSTORE Online extra.