Margin trends that reflect changes in commodities prices suggest something is askew
Looking at the changes in margins at big and small jewelry stores over the past nine months reveals some interesting trends. In diamond jewelry, for example, smaller stores (less than $1 million in sales) have seen their margins fall from 106 percent to 95 percent, while at larger stores they have dropped only slightly less, from 81 percent to 78 percent. In silver, margin has also declined, from 128 to 122 percent at smaller stores, and from 114 percent to 109 percent at larger stores.
In contrast, margins on gold have improved, but again by almost the same degree: from 136 percent to 138 percent at smaller stores, and from 121 percent to 123 percent at larger stores. Meanwhile, the margin achieved on watches has remained the same.
Such uniform price movements suggest that margins are being affected by the prices of the raw materials, which prompts an important question: Is that what a customer chooses to buy?
We think not.
Pricing fine jewelry on the basis of the raw inputs is no different to a Picasso selling based on the current market value of paint and canvas. Customers don’t buy silver, gold or diamonds. They buy the feeling they get when they wear an exquisite piece. If you sell based on raw material cost you offer nothing more than your competitor down the road. Business success is dependent on creating a brand that delivers value above and beyond the raw materials with which you work.
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This article originally appeared in the May 2016 edition of INSTORE.
Ready to Relocate? Wilkerson Makes Your Move Seamless
When Brockhaus Jewelry decided to leave their longtime West Main Street storefront for a standalone building elsewhere in Norman, Oklahoma, owners John Brockhaus and Brad Shipman faced a familiar challenge: how to efficiently reduce inventory before the big move. Their solution? Partnering with liquidation specialists Wilkerson for a second time.
"We'd already experienced Wilkerson's professionalism during a previous sale," Shipman recalls. "But their approach to our relocation event truly impressed us. They strategically prioritized our existing pieces while tactfully introducing complementary merchandise as inventory levels decreased." The carefully orchestrated sale didn't just meet targets—it shattered them.
Asked if they'd endorse Wilkerson to industry colleagues planning similar transitions—whether relocating, retiring, or refreshing their space—both partners were emphatic in their approval. "The entire process was remarkably straightforward," Shipman notes. "Wilkerson delivered a well-structured program, paired us with a knowledgeable advisor, and managed every detail flawlessly from concept to completion."
