AT A TIME OF the year when many are still on holiday mode, and with talk in the media of another possible recession, I must confess to being a little nervous at how the results for August’s data would show up. It looks as though my fears were misplaced[/dropcap]
The average U.S. store reported August sales figures of $81,004, up 10.4 percent from $73,337 in the same month in 2010. The result lifted the annual sales figure for a rolling 12 months to $1,115,000, the highest level since we started recording data, and a full $100,000 ahead of the annual sales recorded by our sample data in October 2010.
Although the monthly percentage change has stuttered recently, the majority of months have shown an increase in sales rather than a decrease; in fact, there have only been four months in the last 15 when the annual sales figure has declined, and on each occasion the drop has been less than 1 percent.
It is a more positive scenario than the media would have us believe, and has come on the back of a slowdown in silver sales.
One of the more positive factors has been the reduction in inventory being carried by the average store. For too long many stores have been bloated by too much dead product that sits gathering dust in a corner cabinet or the safe. When times have been good there is less pressure to deal with these “old friends” but the economic crisis has forced even the most cashed-up retailers to focus more on eliminating unnecessary costs and it’s pleasing to see this area has not escaped scrutiny.
From a level of $724,000 in July 2008, the typical store is now running on an inventory level of $683,000. The issue here is whether this stocks is made up of good sellers or not. The tendency for most stores is to not replace fast selling items and allow the old product to gather more dust. This can lead to slower sales as customers find the selection of fresh and good selling items becomes narrower. Generally speaking, our data have shown that most jewelers have been able to maintain their ratio of fast selling inventory at around the 8-10 percent mark; this shows that there has been a reasonably even mix between clearing old pieces and a reduction in good product not replaced.
So what steps can the typical store take to ensure the older items in the showcase keep moving on?
- Have a sale. Tried and true, but still one of the more effective means by which product can be cleared. Alternatively a clearance cabinet can help move this product along
- Exchange it with a fellow retailer. What may be soil to one store might just be pay dirt to another. Look to swap slow sellers on memo with another store you have a good relationship with. If they can sell it they keep the profit and pay you back your cost. You’d be surprised how often the very product you want to get rid turns out to be a fast seller for another store. If the item is already a good seller for them they may decide to ” reorder” the item from you when it next sells (this can be more appealing for them at present with the surge in prices as your old item can be more affordable for them than buying direct from the vendor at current prices)
- Incentivize the staff. Want to see your sales staff move a piece on? Then give them a good reason to. One of the best ways is to make sure the discount you would normally offer the customer gets offered first to the staff. Determine the minimum you would accept for the item then tell the staff that if they sell it above this price they keep the difference. It’s amazing how offering $300 or $400 to the staff can be more motivating for a sale than offering it to a customer. If you aren’t comfortable with creating an environment where team members may fight over the sale then have this as a collective fund which all staff can share equally based on the hours they work
- Move it to a new location. When was the last time these old items sat anywhere in the store other than their current showcase? All stores have spots that are better for selling than others, and maybe this item just needs a chance to shine in a different location within the store. It’s surprising how often an item gets moved and then promptly sells within a day or two. If your displays tend to be fairly static then get things moving.