IF YOU’RE LIKE most jewelers, the mountains of paperwork you can be bombarded with each year can prove frustrating and time consuming. Many get filed in the folder called “someday I’ll get around to it” while others find their way to the wastepaper bin.
There can however be some worthwhile gems of information among it all and sorting the wheat from the chaff is critical to running an effective jewelry store.
Good reports are like a roadmap. And just like a roadmap, they are useful only if you know where you are relative to where you are trying to get to.[/inset]Good reports are like a roadmap. And just like a roadmap, they are useful only if you know where you are relative to where you are trying to get to.
Financial profit-and-loss reports are useful for tracking expenses, however they can be limiting for a number of reasons. They tend to be historical. There is little you can do at the end of the year if you discover your wage bill has blown out.
The other limitation is the depth of information they provide. Sales and margins, the most important drivers of the business, are invariably reported as one line item with no breakdown as to the individual contribution from different products or categories.
That’s why a good inventory management system is essential for any progressive jeweler. The information contained in the reports provides breakdowns of sales revenue, cost of sales, average retail value, number of items sold, stock-turn and margins on an item-by-item, department-by-department or category-by-category basis.
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Your system will also give you the opportunity to review these results on a daily, weekly, monthly or yearly basis providing you with the chance to rectify discrepancies as they happen and before a pattern of poor numbers emerge.
So which reports are the most critical? It’s important not to be overcome with paperwork so I would suggest concentrating on these four:
- Daily sales report. Regardless of your system, this report will be available. It should provide you with a list of what sold on any given day, who sold it, how much profit was made on the item, whether it is still in stock or needs to be reordered. It also provides you with totals for the day of sales, discount given, average retail value and mark ups achieved. Consider this report to be like a letter from your customers telling what they like … and what they don’t like.
- Category reports on a monthly and yearly basis. This report should provide you with a summary of sales for each category for the month or year (depending on which you select), showing total sales, the percentage each category contributes to your overall business, average retail value, mark-up achieved, inventory on hand and stock-turn. This report is essential for determining which areas you need to concentrate on.
- Vendor reports on a monthly and yearly basis. (Similar to the category report but this time by vendor.) Which vendors contribute the most to your sales and gross profit? What percentage of sales comes from your top vendors? Whose product gives you the best average retail value and the best margin? Whose products have you too much/too little stock of?
- Stock by age. This report will show you the categories where you have the most fast-selling inventory, the most new (but as yet unproven) inventory and the most aged inventory. There is a direct link between a high level of aged inventory and a decline in sales. This report will show which categories you need to pay attention to.
You can’t manage what you don’t measure. Use the valuable information that your store system can provide you with and reap the benefits.
This story is from the February 2010 edition of INSTORE.
