CHICAGO, IL

10%
2008

Jim Sunderland did what many second- or third-generation jewelers of his age did upon completing college. He headed off to the GIA to polish his jewelry credentials, obtaining a graduate gemologist degree so he could do a better job back at the family store, James & Sons in Chicago, IL.

    Today, in the same position, the 50-year-old jeweler says he’d probably go back to school and get an MBA first. "The business has changed. There are new challenges, people have got all kinds of places they can go to spend their luxury dollars," Sunderland says, adding that jewelers now need a much a broader range of skills to survive, including marketing, tech and financial know-how.

    As one of the leaders of a four-store chain that did $16 million in sales in 2008 — up 10 percent in the worst year for retailers in decades — it’s clear Sunderland now has a good grip on the business. But it wasn’t always that way. The CEO of James & Sons admits he and his siblings and co-owners, John and Anne, learned the hard way, with a business model that for many years maximized effort rather than return. "The key point was realizing that you need to make a fair margin to build a business with lasting value," he says.

GREAT ASPIRATIONS

    James & Sons was opened for business in south suburban Chicago in 1964 by Jim’s father, James Sr., who had little more grounding in the industry than a hobbyist’s love of coins, diamonds and watches. The store grew steadily under his control and then as the children joined the business. From 1986 to 1998, the family ramped up the growth, adding three stores in 10 years.

    While the siblings were aggressive in expanding sales, margins were lean. "It was a case of getting the deal done at any price," Sunderland says.

    The result was some tough times when the economy faltered in 2001. As the financial pressures mounted, the family realized they needed to change the way they did business.

    They responded by closing two stores in 2003/4 and re-opening in more upscale, growing communities, building up a tight selection of brands (led by Hearts On Fire and Rolex) to go after the "aspirational customer," becoming more image conscious and getting fastidious about margins by introducing measures such as tying commission to markup. "I really focus on margin, because a small improvement can have a huge impact on profitability," Sunderland says.

    The changes paid off. Growth averaged 13 percent between 2003 and 2007 and new stores were opened in Chicago’s fashionable Lincoln Park neighborhood and in rapidly growing Schererville, IN. The brands did particularly well, most noticeably Hearts on Fire. Last year, James & Sons sold close to $4 million of HOF jewelry, up 25 percent from 2007, and earning it its second HOF "Retailer of the Year" honor for the Midwest.

    As the economy slowed in 2008, James & Sons embarked on an extensive program of gold buying, which helped support the bottom line and ensured another successful year. Earlier this year,  the decision was made to close the chain’s least profitable store. "We now have the flexibility to react to the changes in our marketplace," says Sunderland, adding that he is confident the business can be profitable again this year if expenses are kept under control.

    Sunderland says the skills he’s learned in his retailing journey have allowed him to begin thinking about the transition to the third generation should any of his or his siblings’ children want to enter the business. Not surprisingly, the succession plan is a lot more involved than a GIA course.