David Geller: Safe Keeping
Less is more when it comes to inventory and displays
BY DAVID GELLER
Published in the September 2013 issue.
Ajeweler recently posted a question to his fellow jewelers asking their opinion on his window display. He’s in a jewelers’ building in a major city and the first-floor gang has many advantages. Fewer people make it up to the upper floors and his thought was “Show ’em what you got! Hit them with a large selection.”
It never works.
As many of you know, I’m a big proponent of having “so much inventory.”
When I speak to jewelers I usually ask, “How much inventory do you own?” I always get a dollar number, like “$750,000.”
This is what a Polygon jeweler once told me when I asked him the same question: “1,500 pieces with 1,200 under stock” I said, “You have 1,200 pieces under the case or in the safe! Why?”
His intention was never to do that but the cases were so chockfull that it was a crowded mish-mash. So he decided to take more than half of them out and spread the rest around the cases.
What happened? The time to sell a customer dropped and the average dollar sale increased. Too much inventory is too confusing for the customer.
If the salesperson needs to show something that’s not in the case, he says: “Hold on, I have something special in the safe. Let me get it for you.”
Everyone likes a special from the back room or safe.
I have a formula for how much inventory you should stock and it’s this:
The total amount of inventory you own should be equal to the dollar amount that you expect to sell in a year at cost. Sell that amount and you’ll have a turn of 1.0. Simplistic but this is the place to start.
Reorder items that sold last week that were here for six months or less, and get rid of 1-year old inventory (it’s dead already). The result? You’ll have less debt, more sales and cash in the bank.
That jeweler with the 2,700 pieces had his own number for selling success: Six pieces in the case per linear foot. A 6-foot-long case should have no more than 60 pieces.
I used to visit one jeweler every January for seven straight years to help him with his QuickBooks and POS system along with his shop organization. Every January I did a projected budget for the year. Now this jeweler loved to buy jewelry. So much so that he’d give vendors post-dated checks to get even more inventory.
His store was beautiful. But the cases were packed. Ring trays had two rings in each slot. Neck displays had three diamond necklaces, each held up in its spot with scotch tape. Many ring trays had drawers under the tray with even more rings.
His cases were like grocery-store shelves. Still, I really didn’t expect him to follow my advice, because he loved to buy. A year later I come back for another budget session and was wowed by the difference. His cases looked awesome! A dramatic drop in quantity in each and every case. Things were spaced out. You could actually focus on one piece at a time.
I said, “What the heck happened here? Where is everything?”
“In the vault,” he said.
“What happened when you reduced the number of pieces in the cases?”
His answer: “Time to sell a customer dropped and average dollar sale increased.”
Imagine that.