Sales figures continued to track well across our sample group in February. MTD gross sales at the typical jeweler were $117,369, up 5.9 percent on the equivalent month last year. And although margins were lower than 50 percent, overall gross profit per store improved from $52,919 to $56,017, an increase of 5.85 percent, in line with the sales growth. As the chart below shows, these numbers represented a bounce back to February 2013, when sales numbers were similar to 2015 but a healthier margin of 50 percent contributed to a better gross profit of $58,073 against $56,017 in February 2015.
The most interesting transition during the two-year period has been in the quantity of items sold. Although February 2015’s figure of 453 represents an increase of 11.5 percent on last year’s 406 units, it is still down almost 25 percent on the sales unit figure in February 2013. Let’s have a quick look at this on an annual basis:
While the average number of units sold per store per year has bounced back in the last 12 months, as can be seen from the graph, these numbers are still well down on where they were 3 years ago – at the height of the recession, when approximately 7,500-8,000 units were being sold per annum compared to fewer than 6,000 items now. This is a significant drop of roughly 25 percent in units sold at a time when business has been recovering.
Yes, the average store has seen a recovery in demand for diamonds, and this has been reflected in a much better average sale – in simple terms the average sale has grown by more than enough to compensate for the drop in volume. But the question still remains, where have all the customers gone?
We might congratulate ourselves that sales growth has occurred, as has gross profit achieved (although margin has dipped slightly), however if one in every four customers has disappeared should we be feeling pleased?
This is, of course, a slightly misleading framing of the issue. Much of the volume back in 2012 came from beads and given that some customers bought multiple items at once it’s overly simplistic to say there are fewer customers when some of the decline has been due to fewer transactions per customer.
At the same time, the data underscores a simple lesson from the bead market that many jewelers have not picked up on – that the sale doesn’t have to end the first time the customer says yes. If they were willing to buy more than one item when it was beads, why wouldn’t they when it is another type of product?
It’s easy to feel suitably pleased when a customer drops $3,000 on a diamond ring, and rightly so, it’s a good sale. But could a $300 add-on be getting left on the table? Many sales associates feel they couldn’t ask a customer to fork out another $300 when they have just spent $3,000. But think about it for a second; is it easier to ask a customer who has just spent $3,000 to stump up another 10 percent or expect a customer who has spent $150 to triple the amount they are spending? Both are the same extra dollar value but only in one case can you argue the price range still fits within what the customer may have expected to spend when they walked in the store. It is a bigger mental shift for a customer to spend $450 instead of $150 than it is to spend $3,300 instead of $3,000.
There is a simple rule to follow when it comes to customers: never assume. You don’t know what they will spend until you ask. There is another golden rule related to this as well: you are not your customer. Don’t judge them on the basis of what you would do yourself. Ask … and keep asking until you hear no, and even then you should take it as a maybe!