What’s the best way to handle the drop in gold prices, especially for chains and other mostly gold items?
Sadly, there is no simple way to deal with this. You may have to bite the bullet and cut your prices to move items and take comfort in the likelihood you will sell more product at a lower gold price. The problems is that gold, which has declined from $1,800 an ounce in October 2012 to less than $1,100 in December, may continue to fall (gold doesn’t like a healthy economy). We asked our Brain Squad how they handled this issue and they offered a range of suggestions:
- Make adjustments in response to broad swings, say after a move of $200 in the price or at the end of every quarter.
- Run a thin gold inventory and order on an as needed basis.
- Focus more on custom.
- Boost estate buying, such as “pre-owned gold pieces” to cover the swings in the spot price.
- Use more sample lines. “We love Stuller’s line of prototype jewelry,” says Jen Foster, manager at David Douglas Designs, in Marietta, GA. “We can hop on their website (in showcase mode) in front of the customer and get a daily quote, so regardless of what gold does, the customer pays whatever the item’s price is the day we order it.”
- Check your selling skills. “You don’t sell a car by the pound, why do you sell gold by the gram?” said Karen Fitzpatrick, Harris Jewelers in Rio Rancho, NM. “We sell the quality, craftsmanship, warranty (Leslie’s) and have layaway and financing. A young man comes in and he wants to get engaged, he’s not thinking about the price of gold,”
- Do nothing and stop sweating it. Shoppers aren’t aware of your margins, anyway, said about one in four of the jewelers we asked. If you take this approach, David Brown of Edge Retail Academy suggests first running an inventory by age report. “If your product is mostly over 12 months old, you could be dealing with items that are no longer price competitive,” he notes.
What length of radio ad — 15, 30, or 60 seconds — generates the best ROI?
We could answer that in 2 seconds — “It depends” … which would get our message across but not be very helpful. Brevity is always preferred in advertising except:
- When the issue is complex.
- It’s vital that you include
specific details to answer a
question lurking in the
listener’s mind.
- You need (some) time to set
the emotional scene.
- You need to create the
realization of a need before
you can sell your solution.
In those cases, you will probably need 60 seconds. That doesn’t mean you should take license to waffle — many ads are too long and lose the listener’s attention. In short, says Roy Williams, author of the Wizard of Ads, your radio ad should be exactly as long as it needs to be. “Use 30-second ads when your product or service category is clearly understood and you’re making an easy-to-understand offer,” he says, stressing that you should aim to make only one point per ad. Williams advises using 15-second ads when you have a very powerful, simple message or there is little competition in your market and getting your name out is all that matters.
Final point: Your budget should never dictate the length required to make the ad effective, Williams says. “Reduce the number of people you’re reaching instead of cutting the length of your ad, or buy a less expensive time of day or from a smaller station,” he says.
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Do customers who love jewelry really make good salespeople?
We have heard stories of it working out well and we know of at least one store where all the staff are former customers. But you also need to be aware of the downside should you have to fire them for underperformance or a discipline issue. As one of our Brain Squad members put it, “They’ll hate you and tell their high-spending friends.”
Is there a number that tells you the cost of holding unsold goods?
Yes, it’s known as the carrying cost and at most small jewelers it is about 30 percent of the price they paid for their goods. That should be a sobering figure, and what’s more, it’s inching up, says Lynn Baldwin, director of operations at the Edge Retail Academy. “This is due to an overall loss of average markup over the last several years at the stores we measure. Since the markup goes to pay the overheads, this is placing additional pressure on the funds needed to cover carrying cost,” she explains. In other words, get those older goods moving!
