Connect with us

David Brown

Are You Neglecting Colored Stones? That Could Be a Big Mistake

How do you compare to similar-sized stores?

mm

Published

on

March results across our same-store data showed a slight decrease on rolling 12-month sales achieved since February.

Same-store data showed a drop in year-to-date sales to $1,612,542 from $1,616,481, a decline of 0.24 percent for the month. Twelve-month unit sales declined from 4,147 to 4,116, a decrease of 0.74 percent, with a slight increase in average sale achieved from $390 to $392 helping to offset the drop.

Month-to-date comparison data for sales show March sales results are below the equivalent period in 2016 after increasing during the 2017 year. Total monthly sales came in at $103,571, down from last year’s $107,510 and the March 2016 result of $104,960. Sales units continued their decline to 247 items, a drop of 11 percent from 2017 and 21 percent from 2016.

The average sale of $356 was ahead of last year’s equivalent amount of $352 and the 2016 average sale achieved of $307. Margin held at 45 percent with the result that gross profit was down 2.4 percent on 2017 and 2 percent on 2016 respectively.

This month we focus on colored stones, an area often not given much priority by jewelers compared to other departments. Nevertheless, for most stores it can contribute up to 10 percent of sales and is an area that shouldn’t be neglected.

Advertisement

With the recent split of our data gathering into stores under $1 million sales, stores over $1 million sales, and stores over $3 million sales, we are better able to compare the impact that colored ring sales are having in each respective area.

Understandably, larger stores doing $3 million per year are able to achieve more sales and a greater volume of unit sales across these areas. Where they also gain, however, is in average sale achieved in colored stones. The difference between the average sale for a store doing less than $1 million and those doing $3 million is $460 ($1,061 – $601). That represents an average sale that is 76 percent higher, a significant difference. The largest stores are achieving 4.8 times as many sales as their smallest counterparts but, due to a lower markup (99 percent versus 117 percent), this converts into a gross profit that is only 4.4 times higher ($155,358 versus $34,973). They are doing these sales on only 4.3 times as much inventory, meaning their stock turn comes in better at 0.45 turns per year compared to 0.38.

Not surprisingly, medium-sized stores doing between $1 million and $3 million are sitting in the middle with unit sales 66 percent higher than the smallest stores, and average sale coming in 38 percent higher. Markup sits comfortably in the middle at 106 percent, but their stock turn more closely resembles the smaller stores at 0.39 times per year.

The law of diminishing return would tend to suggest that the more items a store holds, the lower its stock turn is likely to be, as eventually there will be far more selection than buyers. Clearly the $3 million plus stores haven’t reached this point and smaller stores should be asking the question as to how they are able to achieve this.

Based on the relatively low stock turn, small to medium stores are not understocked relative to sales, but a clue may sit in the price point that the largest stores are achieving. Are the smaller stores carrying items in the right price range relative to what the market wants?

Advertisement

This is a question to ask your own business. With diamond average sales sitting in the range of $1,500 to $2,500 for most stores, should colored stones be averaging a unit price as low as this? When compared to their diamond average, each store size looks like this:

There is a clear pattern of diamond averages being more than twice as high as colored stone averages, and that’s understandable given the more significant role that diamond plays in high-end bridal. The difference is slightly lower for stores doing more than $3 million, but still noticeable.

So what role do colored stones play in your store? Are you achieving an average sale in line with similar stores? Is the difference between your diamond and colored stone average sale similar? A comparison with your peers may just show an area of potential growth that you could be improving on.

David Brown is president of the Edge Retail Academy, a force in jewelry industry business consulting, sell-through data and vendor solutions. David and his team are dedicated to providing business owners with information and strategies to improve sales and profits. Reach him at david@edgeretailacademy.com

Advertisement

VIDEO HIGHLIGHT

Wilkerson Testimonials

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.”

Promoted Headlines

Want more INSTORE? Subscribe to our newsletter.

Comment

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.

mm

Published

on

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.

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

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

Podcast: A One of a Kind Family Heirloom is ‘Vaporized’ … and a Jeweler Goes Above and Beyond to Replace It
Over the Counter

Podcast: A One of a Kind Family Heirloom is ‘Vaporized’ … and a Jeweler Goes Above and Beyond to Replace It

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

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.

Continue Reading

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.

mm

Published

on

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.

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

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

Podcast: A One of a Kind Family Heirloom is ‘Vaporized’ … and a Jeweler Goes Above and Beyond to Replace It
Over the Counter

Podcast: A One of a Kind Family Heirloom is ‘Vaporized’ … and a Jeweler Goes Above and Beyond to Replace It

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

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.

Continue Reading

David Brown

How Eating Right Is Like Managing Your Inventory

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

mm

Published

on

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.

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

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

Podcast: A One of a Kind Family Heirloom is ‘Vaporized’ … and a Jeweler Goes Above and Beyond to Replace It
Over the Counter

Podcast: A One of a Kind Family Heirloom is ‘Vaporized’ … and a Jeweler Goes Above and Beyond to Replace It

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

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

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.

Continue Reading

Advertisement

Advertisement

Advertisement

Subscribe


BULLETINS

INSTORE helps you become a better jeweler
with the biggest daily news headlines and useful tips.
(Mailed 5x per week.)

Latest Classifieds

Most Popular