YOUR MISSION: to improve your store’s financial picture in the next 60 days.
You’ve bought what you think are the right items and price points. Packaging is ready, part-timers are hired, and advertising is in place. You’re as ready as you can be for the crowds to come in and buy all your stuff.
And what’s the goal of all this activity? Is it to make some serious money … enough to buy that boat you’ve been dreaming about, or put that new extension on your house?
I doubt it. I’m betting the farm that you’re hoping for a good season so you can …
Pay off all of the vendors who you overbought from this year — you know, the ones who have been bugging you these past few months for payment — and, after that, simply pray to that there’s a few shekels left over in the checkbook in January.
The paragraph in bold applies to many of you — too many of you! — I’m sure. If it does, ask yourself: sometimes doesn’t it feel like the person making the most money from all of your sweat is your vendors?
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And you know what? You’re right! And it’s all your fault, because you buy too much.
Now it’s time for another bold-faced paragraph, because I’m about to provide you with the secret that will help your business the most and make your whole life better:
Do everything in your power to unload any and all items you have in your store that are over one year old.
And by “everything in your power,” I mean everything. At almost any cost. The thing that kills more jewelry stores than any other is the fact that they have on hand more items than they can physically sell in one calendar year. I call it “arteriosclerosis of the inventory.” Correct that problem and your store will have a long, healthy life.
I visited a store doing almost $3 million in sales, which had to hold a going-out-of-business sale this year. But a funny thing happened on their way out of business – after holding the sale, and getting rid of tons of old stock, they found out they were profitable. Now they’re back in business and stronger than ever.
You can do the same — without anything so dramatic as holding a going-out-of-business sale. Here are some ideas to help you start getting rid of items in your store over one year old:
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Discount them. Have a “Saying good-bye to our old friends” case. Discount items from 20-65% depending upon their age.
Increase commissions. Double or even triple the sales person’s commission on old stuff. This will help the staff to pull that “doggie” out of the case and re-romance it all over again. If you usually pay 5% commission, it would costs you $5 to sell a $100 dog. But wouldn’t it be worth it to pay $10 or even $15 to make sure that dog goes away?
Show it off. Have the sale staff show every customer the old stuff during any presentation. Incentivize staff to add on old items to any sales of new items this holiday season. (Again, double or triple commissions will help with the motivation factor.)
Package old with new. Group things together in the case: take a three-year-old emerald diamond ring and place it next to that brand-new emerald bracelet with a sign: “Buy the emerald bracelet, get the matching emerald ring at 50% off!” You’ll only get your cost back on the ring … but you just used it as bait to sell a $395 bracelet. And your total sale is now $640, rather than the $395 you would have gotten for the bracelet alone. Plus, you just exterminated an old dog.
Package old with old. Go buy some straw baskets. Line with colored paper, and fill the basket with a half-dozen or so old items in their boxes. Wrap the whole shebang in cellophane and put a sign on the basket. It might read like this:
“Christmas Treasure Basket. Shop now for your daughters, nieces, your secretary, everyone. Basket contains: gold chain; Seiko leather strap watch; silver necklace with amethyst; 14K hoop earrings. Separately: $487; Basket price: $388.”
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You can create baskets at different prices points – $99, $199, $299, $499, and $799. I had others do this and they all sold during Christmas. You can use old items exclusively, but to make the baskets more attractive, you can also mix old items with newer stuff.
Reprice them. If you’re one of those people who doesn’t like big “Sale!” or “X% Off!” signs all over the place, simply lower the prices of your old items. Take a $1,400 item, retag it at $899 and maybe put a small tag on it which reads “Special Price!”
Break them up. After the season is over, have another sale in January of old items. If they don’t sell by the end of January, take your licking and take them apart. Keep melee for repairs and send the gold to either Roseco in Texas of Hoover & Strong in New York and have the gold refined. Tell them to hold the credit for you. Then, for the next several months, buy your findings from them, using your credit. Same findings – but now, you won’t be writing checks for them and your cash flow will improve.
Once you’ve done all these things, the dogs should be gone and your store’s inventory should be 100-percent fat-free.
After that, your major challenge is to never make the same mistake again. Buy smart!
I met a terrific jewelry retailer. He has two marvelous homes, works only seven months a year … and, even then, only four days a week. His secret? More than I can fit in a column … but his biggest secret is once an item reaches its first birthday, you can bet your bippy it won’t be there when it turns 15 months old! It’s “outtahere”.
Make it your new life mission, at almost any price, to get rid of old merchandise constantly! All year long. Every month.
Then, January 1st, 2006 just might be the first day of the rest of your richer life!
Brainstorm
New Ideas for Your Store
If you’re hampered by an out-of-the-way location, why not bring your business to your customers?
Open a temporary store.
Rent a kiosk, or an unused location, in the local mall. Open a stand outside a local theater on the nights of shows. Try a mini-store in the lobby of a busy local fitness center. This approach works with any important holiday — Valentine’s Day, Mother’s Day, etc.
This story is from the November 2005 edition of INSTORE.
