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Jewelers’ Gross Sales Are Up, but What About Margins? It’s Time to Take a Closer Look At Bridal

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Our Edge Retail Academy data pool has expanded and now includes just under 1,000 stores.

Our data, which includes stores with at least three years of historical information, continues to show the independent retailer’s gross sales growing, up 4% for the rolling 12 months ending in January.

Units continue to decline year-over-year for independents, coming in at 5% down for the rolling 12 months and 11.5% down from two years ago.

While units continue to decline, the overall average retail sale continues to climb, up 10% for the rolling 12 months at $288, including all product and service sales.

Gross profit is up 4% for the rolling 12 months, and overall margin has held steady at 46 for 36 months.

Bridal sales continue to perform well, with rolling 12-month sales up 2.9%. Units and average retail sale are up ever so slightly, and margin has come up slightly from 44 to 45.

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The bridal department represents approximately 30% of all gross profit.

While it is important to grow your bridal business, it’s equally important to ensure this is a profitable area for you. How do your sales compare to our industry data? Are you achieving sales growth? If so, is it also achieved while growing or at least maintaining margin?

Sales growth is pointless if margins are being sacrificed at a comparable level. Here are a couple of tips to help you improve margins achieved:

1. Review markup on fast-selling items. The 80/20 rule is alive and well when it comes to bridal. Research continues to show that approximately 20% of your bridal inventory is driving 80% of your bridal sales. Are you achieving better margins on your best-selling bridal pieces? More importantly, have you gotten rid of the non-performers? This will allow you to achieve higher stock turns, generating a better return on investment, and the approach better aligns with the evolving retail notion of “less is more.”

2. Look at your discounting policy. First and foremost, you should never discount your fast sellers. This simply makes no sense. Second, revisit your discount policies. Why are you discounting? Is it merely because the customer asked? Have you trained your staff on how to answer questions about discounting? Focus on value and points of differentiation and train, train and train some more. Finally, if you have a customer looking for a deal or you’re set on giving something away, have a tray of non-performers ready that you will happily discount to recoup your investment.

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On these numbers alone, every extra percent of markup will add nearly $20,000 in pure bottom- line profit. It’s worth thinking about.

Sherry Smith is the director of business development for The Edge Retail Academy.

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David Geller

Why David Geller Says You Should Sell Lab-Grown Diamonds

You’re a merchant, so sell the customer what they want.

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ONE OF THE JEWELER pages on Facebook has been discussing whether a store should stock and sell lab-grown diamonds. The dad says no, while the millennial son says, “I think we should try it.” The reader vote is split about 50/50.

Can we talk about making a living here for a moment? And selling consumers what they want?

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Customers want to know their options and make their own decisions. Be their personal shopper.

I started in 1974 as a trade shop. I used to do work for a store at our mall, Wellington Jewels. I sized the gold rings they sold and set stones.

What stones? Strontium titanate. It’s a diamond simulant that has colors like an opal. Hardness on Mohs’ scale? About 5.5! But sparkle, oooh weeee!

The store was mostly black walls and showcases, with bright lights to make the stones pop. They made great money, and these are diamond look-alikes with the hardness of an opal. The mountings were 14K gold with real melee diamonds. They didn’t sell much fashion, which I told them was crazy, because a woman can only buy so many engagement rings.

I became friendly with the store manager and she agreed. So I ordered a dozen at a time in fashion mountings from a catalog, furnished the mountings and diamond melee, and she gave me center stones, which I set. They’d sell most of each dozen I gave them within five weeks.

So let’s talk profits on this product. All merchandise was quadruple markup.

They gave a lifetime warranty on these stones. If the stone scratched or chipped or fell out, they’d replace them for 50 percent of the price (so they still made keystone).

This was junk compared to lab-created diamonds. Remember: a lab-created diamond will last as long as the human does.

What about resale value? Well, they can’t get their money out of what they spent on your natural diamond, so try lab-created, make a better margin and keep that young person from buying it someplace else.

When you quote a price to a customer for anything, you may be thinking, “They aren’t talking. Maybe I should come down on the price. OMG I need to make payroll this Friday.”

They may be thinking: “Darn, my student loan note is due at the end of the month. Maybe I should opt for a lab-created diamond. I can’t tell the difference and we need to save for a house.”

Be their personal shopper, make a customer happy and make some money!

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Editor's Note

These Are The Three Factors Driving Revolution in the Jewelry Industry

All three are technology-based.

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WHEN A BUSINESS REVOLUTION arrives, there’s no stopping it. Your only options are to ignore it and die a slow death, or join it and learn, quickly, how to do business within the new paradigm.

Three powerful pistons are driving revolution in the jewelry industry. The first is e-commerce. Some retailers have complained of manufacturers going direct to consumers, but many are now learning to compete in the online space as well. We just started judging this year’s crop of America’s Coolest Store contestants, and we are impressed not only by how many of the applicants sell online, but also by the quality of their websites. Read about retailers doing e-commerce right in our story, “E-Commerce For Everyone,” beginning on page 74.

The second piston is the lab-grown diamond phenomenon. The category continues to gain traction among consumers, and largely driven by consumer demand, not marketing. Read about Soha Diamond Co., a retailer who sells only lab-grown diamonds and gemstones, in our “Talkin’ ‘Bout a Revolution” story starting on page 63.

The third piston is social media, which offers retailers the opportunity to engage local consumers for very little monetary investment. Social media is where the people are; it’s just a question of how to reach them, and then how to interest them in your jewelry and your store.

A revolution is on your doorstep, whether you like it or not. Will you join it or be left behind?

Trace Shelton

Editor-in-Chief, INSTORE
trace@smartworkmedia.com

Five Smart Tips You’ll Find in This Issue

  • During slow times, take photos of all waxes not already in your CAD library and add them. (Manager’s To-Do List, p. 46)
  • Use an aggressive commission to incentivize salespeople to sell old items. (Ask INSTORE, p. 108)
  • Present customers’ kids with gift-wrapped presents to make them feel special. (Tip Sheet, p. 98)
  • Match the percentage of marketing dollars spent on a department with its store performance. (David Brown, p. 112)
  • Make a list of all verbal buying cues and have staff practice their question closes for each. (Sales Truths, p. 112)
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Dave Richardson

24 Verbal Buying Signals Your Sales Staff May Be Missing

Do this exercise to improve your team’s closing ratio.

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WHY IT IS TRUE: The customer will say things that indicate they are ready to buy, but many salespeople talk right through these cues.

PLAN OF ACTION: During a meeting with your staff, write these verbal buying signals on a flip chart and ask your staff if they can think of any to add to the list.

  • Do you take credit cards?
  • I really like it.
  • I think she’ll like it.
  • Do you have a warranty program?
  • Will you gift-wrap it?
  • You provide an appraisal?
  • What if she doesn’t like it?
  • What time do you close tonight?
  • Do you have it in white gold?
  • Will you be able to size it for me?
  • If I buy it, when can I pick it up?
  • I really like the feel of it.
  • I really like the way it looks on me.
  • Can I put it on my store credit?
  • Can you engrave it for me?
  • You have a layaway plan?
  • Since I can’t take until it is sized, do you deliver?
  • Does it come in a box?
  • How can I care for it?
  • Do you have the matching earrings?
  • Can I borrow a calculator?
  • If I buy the ring, will you pay the tax?
  • What is your return policy?
  • What do you think?

Then, divide your salespeople into groups of two or three and have them write the appropriate closing question to each one of the verbal buying signals. Then you can compare the results.

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