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David Brown

5 Ways to Increase Your Jewelry Store’s Profit Margin

It doesn’t happen by chance.

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Despite some positive business data coming out over the last two or three months, the economy is showing some signs of headwinds on the back of the tariff war being conducted by the government and some overseas economies. The uncertainty is beginning to show up in storewide figures across our sample data.

Sales showed a decline of 0.45 percent in rolling 12-month data for May, the fourth such month of declines in sales figures.

Individual monthly numbers reflect that decline.

Gross sales for May dropped 5.5 percent from last year’s monthly result. Sales units sold showed a similar trend, being down 32 units or 8.5 percent on last year’s numbers with an increase in average sale from $311 to $318, or 2.2 percent. Margin stayed on track compared to last year. This resulted in gross profit declining by $3,786, or 6.1 percent.

In these articles we’ve often spoken about the decline in gross profit margin being achieved. Preserving or growing your storewide margin doesn’t happen by chance – it is a strategy that must be followed in order to achieve results.

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Here are some of the best proven ways to increase your storewide margin

1. Reduce discounting. Easier said than done, right? Reducing discount is about choosing what you are discounting and when you should offer it. Not all inventory items are equal. As we’ve mentioned on many occasions, as little as 10-20 percent of your product is giving you 80 percent of your sales. That means offering this item at full price is conducive to a substantial lift on the margin you will achieve. Rather than crumbling every time a customer asks for a reduction on any item, choose the ones you can do it on. Say “no.” Haven’t you had a situation where you’ve been told that’s the price and bought it anyway? Advise your customer, “Unfortunately, that’s the best price we can do on that item; however, if you’re looking for a deal, I can suggest this as an alternative.” This can have your customers choosing between a profitable sale for you or a reduction on a lesser item you want to move anyway.

2. Incentivize staff based on gross profit, not sales. Staff will focus on what is in their own best interests. If you’re more focused on gross profit than sales, your staff will become so as well, especially if you incentivize them from this perspective.

3. Put your prices up. What do others sell this item for? If you access our KPI data, you will be able to see this sort of information. If another store somewhere else is successfully selling that diamond for $200 more, why shouldn’t you?

4. Re-price fast sellers. Not only should you avoid offering discounts on your best-selling items, you should also be looking to sell them for more if they have proven they can handle the price. Again a small percentage of your products will provide most of your sales – you need to make the most from these opportunities where you can.

5. Reduce clearances. A few items on special are perfectly normal, but living constantly on sale is sending the wrong message to your customers. They will assume all prices are permanently negotiable, and this is not a position you want to put yourself in.

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Managing your margin is an important part of your business and can yield huge returns on your bottom line. Don’t forget – every additional dollar of profit you can massage from each item will stay in your profit column without any additional costs being accrued.

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Cleaning House for a New Generation

At Komara Jewelers in Canfield, Ohio, Wilkerson handled all the aspects of its retirement sale just as owner Bob Komara’s children took over day-to-day operations of the business. They’d used other companies before, says Brianna Komara-Pridon, but they didn’t compare. “If we had used Wilkerson then, it would have been so much better.”

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David Brown

What Business Owners Can Learn from Abraham Lincoln’s Failures

He would never have been in position to succeed if he hadn’t failed first.

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WE ARE CONDITIONED BY society to fear failure. Our education system defines performance as “getting the answer correct.” This result-based measurement is an effective method for assessing a level of knowledge, but it doesn’t encourage the hands-on learning process so necessary to develop true understanding and retaining of information — nor encourage the discovery of new knowledge.

Sadly, this aversion to getting things wrong starts at an early age and continues our whole life. Despite the copious number of successful people who have failed spectacularly before achieving success, we still attempt to follow a path that has more to do with avoiding ignominy than with enjoying the benefits of stretching ourselves into uncharted territory.

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Podcast: How Can Jewelry Stores Stop Losing Their Best Employees?

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Podcast: Using Social Media to Win Customers and Lower Your Intimidation Factor

Abraham Lincoln never feared failure — he could little afford to. His list of unsuccessful endeavors in both business and politics would have forced a lesser man to give up. Here are just some of his “failures.”

1831: Failed in business.
1832: Ran for state legislature — lost.
1832: Also lost his job — wanted to go to law school but couldn’t get in.
1833: Borrowed some money from a friend to begin a business, and by the end of the year was bankrupt. He spent the next 17 years paying off this debt.
1838: Sought to become speaker of the state legislature — defeated.
1840: Sought to become elector — defeated.
1843: Ran for Congress — lost.
1846: Ran for Congress again — this time he won — went to Washington and did a good job.
1848: Ran for re-election to Congress — lost.
1849: Sought the job of land officer in his home state — rejected.
1854: Ran for Senate of the United States — lost.
1856: Sought the vice-presidential nomination at his party’s national convention — got less than 100 votes.
1858: Ran for U.S. Senate again — again he lost.
1860: Elected president of the United States.

What sort of president would Lincoln have become if he had not had his failures? Had his life been a succession of unbridled achievements, would he have had the fortitude or fighting qualities to drag the country through its toughest challenge ever? Or would he have been ill-prepared for the physical and mental battle the presidency required? I believe his history of failing provided him with the steel and determination he needed to see the job through. Had he not “failed” so many times, he would not have become the man he was — and the history of the United States may have looked sharply different.

Learning to fail helps you overcome the fear of testing your boundaries and ultimately helps you grow and succeed. When it happens, embrace it for the lessons it can teach.

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David Brown

9 Ways to Unload Dead Inventory

When old inventory clogs the cash-flow arteries of your store, here’s how to clean it out.

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LAST MONTH, WE talked about the process of controlling what you buy and what you consume with your inventory. Much like dieting — where your buying and consumption dictate how many pounds you put on — the process of clearing extra inventory is much like shedding that extra weight that works its way onto your hips and stomach. You have to hit the exercise gear when the weight goes up, and the same is true with your surplus inventory. If you don’t move it on, that inventory will sit around your business waistline, clogging up your cash-flow arteries and damaging the health of your business.

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Podcast: How Can Jewelry Stores Stop Losing Their Best Employees?

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Podcast: Using Social Media to Win Customers and Lower Your Intimidation Factor

Here are some of our best suggestions for shedding those surplus items that are no longer helping your business health:

1. Run a sale. The obvious answer is to have a major clearance, but care needs to be shown here. Some businesses live constantly in sale mode to the extent that it harms the ability to generate sales at any other time. Use this sparingly and be creative in how you promote it.

2. Have a clearance area. Less harmful than a full-on sale to your bottom line, this can allow you to drip out items that are not going anywhere at full price.

3. Talk to your vendors. In some circumstances, vendors will be happy to exchange items that are not moving for you. This, however, will depend on the item and their ability to sell it elsewhere. Don’t expect this as a right. This needs to be done in a way that is a win/win for both parties involved.

4. Talk to your fellow retailers. As the old saying goes, “One man’s trash is another man’s treasure.” Product that may not sell in your store can be fast-selling items for other retailers.

5. Try online. Giving your product a different exposure via your web store may help it move.

6. Reposition the product. It may be good product that’s in a bad location. Have you rearranged your store displays so the product is in a more prominent place? It may be in a spot that customers don’t access easily.

7. Melt it down, make it back up and move it on.

8. Bundle it up. Often, those slow-moving items will benefit by being combined with other pieces. Maybe slow items could be put together as a special, or you could combine a slow item as a deal to go with a full-priced fast seller.

9. Use as a contest giveaway. Of course, if it’s particularly bad, it won’t encourage contest entries!

Managing dead inventory is a fact of business. You can never eliminate it completely, but regular “inventory exercise” is needed to make sure the fat in the system isn’t causing trouble to your business health.

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David Brown

How Eating Right Is Like Managing Your Inventory

The right items and advance planning can make your business fit.

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KEEPING YOUR INVENTORY in order is a little like painting the Eiffel Tower … you no sooner get to one end than you feel you have to repeat the process all over again!

Inventory is a dynamic part of your business. It is constantly in flux, and as such, difficult to manage. However, having a good system will go a long way toward helping you keep your inventory under control.

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Podcast: How Can Jewelry Stores Stop Losing Their Best Employees?

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There are two aspects to your inventory: what you buy and what you keep. It’s the buying part that contributes most to what is left after the customers don’t want it, so let’s start with that first.

Food dieting consists of what you eat and how much of it you consume. Buying inventory is the same. There is what you buy, and then there is how much you are spending. If your diet consists of eating healthy greens, vegetables and fresh fruits, then part of your food diet will take care of itself. The same is true of ordering fast sellers — make these the mainstay of your inventory diet, and you will take care of a good 70-80 percent of the inventory you will need to consume. That leaves the remainder — the combination of poor choices and overconsumption that can cause the most problems (I’m still talking inventory here!).

In the same way that meal planning can reduce overeating or making poor food choices, planning your purchasing will work the same way. We recommend an open-to-buy budget as the most effective way to do this. An open-to-buy will balance what you are selling with what you are buying. Think of it like a calorie checker that enables you to eat once you have burned enough fat. The open-to-buy will track the money released from outgoing inventory that is then freed up to spend on new product and let you know how much this is so you don’t over-buy. This will help you to keep your inventory situation from becoming any more bloated.

So what about the surplus inventory that is aged and isn’t going anywhere now? This is the same as the few extra pounds that might be sitting around your hips — it’s one thing to stop the increase, but it’s another thing entirely to get rid of that unwanted fat.

Much like systemizing your buying with an open-to-buy program, you can systemize the aged inventory with a series of means to move it on. This can consist of a variety of options that work well for you on a regular basis to keep that aged inventory from clogging up your store arteries. I’ll talk more about these options in the next article.

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