One of the least surprising results from the 2024 Big Survey was that that better performing jewelry stores get a better return from their investments in inventory, with 51% of the “Thrivers” achieving a GMROI above $1.00 compared to just 29% for the “Strugglers”.
“Above $1.00 and the store will have more cash and way less debt,” explained store consultant David Geller. “Lower than a dollar, much more debt.”
GMROI, or gross margin return on investment, is used as a key indicator across the retail industry for analyzing and calculating the profitability of inventory purchases.
And yet alarmingly, almost 4 in 10 of the respondents to the INSTORE Big Survey said they don’t know what there is.
Geller said he wasn’t surprised. “Most owners don’t know. They buy a point-of-sale program because of how it sells product and services. They rarely ask important questions, like GMROI.”
Advertisement
This awareness of the importance of GMROI – and inventory management – was one of the key findings of the survey, which sought to identify what the best-performing jewelers (who we dubbed “Thrivers”) were doing compared to their underperforming peers (“Strugglers”).
It also showed up when survey respondent were asked what was the big area they felt they needed to improve on: 40% of the outperformers cited inventory turnover (vs. 29% for the underperformers). In contrast, the largest share of Strugglers, or 46%, said they needed to boost their sales (vs. only 25% of the Thrivers).
Return on inventory investment is a key area most jewelers evidently need to focus on. But as the old maxim goes, you can’t manage, and ultimately improve, what you don’t measure.
NOTE: The INSTORE 2024 Big Survey was conducted via an anonymous online form from mid-August to late September, attracting more than 700 responses from American jewelry-store owners and managers. The full results will be published in the November edition of INSTORE.
