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Buying Discounted Goods From Bankrupt Jewelry Chains … and More Jeweler Questions for March

Buying event signs, communicating with top customers, and more answers to jewelers’ questions.

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LIQUIDATION

Piece of the Action

Is it possible for an independent retailer to get a piece of the liquidation action when a big chain like Friedman’s goes under?

It’s unlikely. Most of these auctions require the participants to have considerable financial muscle, such as the ability to make a lump-sum bid or to put $1 million dollars or more in escrow. Other times, you have to be known as a major player in the liquidation sector of the industry to get invited. That doesn’t mean you can’t get a piece of the action, even if you’re one level down from the big players.

Neel Madhvani, of SimplexDiam, which bought all of Friedman’s residual inventory for $50 million, says its closeout division sells the pieces at “enormous discounts” off wholesale, explaining prices can be almost 50 percent those of almost identical pieces that SimplexDiam’s own manufacturing arm sells them for. “We are the closest a customer can get to the actual buy because they can spend as little as $10 with us and get an enormous discount off wholesale …. If a customer is buying 20K we’ll fly him down to the office and put him up a short ride from the city.” Of course jewelry isn’t the only asset that needs to be disposed of when a chain or store goes down. Friedman’s also sold fixtures, showcases and safes. No $1 million escrow accounts were required there; just an ear to the ground.

SIGNAGE

Website works as one-stop shop for event signs

We’re in Spokane, WA. Where can I go to buy in-store event signs?

In the interests of providing an answer to the 22,500-odd jewelers who don’t have a presence in Spokane, beautiful town that it is, we’d suggest making SignSearch your first place of call. The website is a network of close to 31,000 sign makers around the country. You just type in your location and the type of sign you want — everything from full color banners, to in-store signs to point of purchase displays (and even truck lettering if you need it) — and it will spit out a number of local sign companies. Another choice is to dig out the old exhibitors directory from the last time you went to Vegas and check the names of sign companies there. Or, you could go for a wander through your local mall — see the type of sign you like and ask the store owner for the contact information.

VENDOR RELATIONS

Nervous Lenders

A vendor asked us to charge a memo item to our store credit card, saying he would issue a credit on the return of the piece as a way to give him some protection. Is this becoming common practice?

It’s the first we’ve heard of it but it wouldn’t surprise us if it becomes more common. Everyone, from banks to vendors to retailers, is nervous. Retailers are asking vendors for more memo goods, even items under $300, and banks are going after everything when a store fails. Unless a retailer has listed a memo as inventory to borrow money against — a big no-no — the bank has no right to claim it, although that won’t stop it from trying. You can suggest a vendor file a UCC to gain secured creditor status when it comes to the goods they have supplied you, but the problem for the vendor is that he has to file the document in every country in which he does business, which could be thousands if it’s a national name. These are tough times with no easy answers. It’s buyer, seller and everyone else in between beware.

CUSTOMER RELATIONS

Feeling Special

Everyone says that with times being tough, you should go back to your existing customers. But how do you ensure you don’t bug them with repeated invitations to come and buy stuff?

The secret is to make them feel special. Let your best customers know when new merchandise will be coming in, and especially, if you decide to put it on sale.

Second, show them you value them, that they are different from the customer who just walked in off the street. This can be done in a variety ways from small rewards — free regular cleaning service, free appraisals, even fridge magnets — to keeping notes about the little things in their lives that you can bring up in conversation later.

Then it’s a matter of not only seeking to maintain your history of sales with them but increasing the sales cycle by upselling as well with add-ons and extended service offers. Remember that each time your focus should be on finding the right piece for each particular customer, not just any item to top up the bill.

EVENTS

Block Party Time

As a small store in a depressed city, we need suggestions for mom-and-pop promotions. Big stores have room for that party, but what can I do in a 400-square-foot store when eight people fill the store?

Store too small? Then take the party outside. Kate Peterson, the president of coaching service Performance Concepts Inc, suggests you partner with other local merchants to create a “block party” of sorts. “A restaurant, a flower shop, a coffee house, even a pet store … any business that is a part of your community and that shares your essential values for service and customer appreciation should be approached,” she says.

The type of event you stage will depend on the types of partners you can attract. Every merchant can contribute something — from the location to the food to the decor to the entertainment. Since you’ll be working away from your own store, you might have to be innovative when it comes to displaying your product, but that’s the easy part, says Peterson. “Make the objective to have some fun and to use a cooperative commitment to inject some spirit into the heart of your depressed town. Being creative means looking at something that is ordinary (like a typical in-store party) and making it extraordinary.”

Over the years, INSTORE has won 80 international journalism awards for its publication and website. Contact INSTORE's editors at [email protected].

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