David Brown President of The Edge Retail Academy

Jewelers See Sales Slump in April

April showed a slowdown in store sales in comparative data for the first time in seven months. Monthly average sales across our sample data showed a decline of 0.66 percent in annual sales caused by a drop in April comparative sales from $93,391 to $84,260, a drop of $,9131, or 9.7 percent for the month.

This is a change in what has been a steady stream of increases in recent months but does show a significant falling off. Whether it is isolated or not remains to be seen.

Sales are only slightly below the level of April 2011 when average store sales for the month stood at $86,084. The most recent figure is only 2.1 percent below the figure of two years ago. Of more significance, however, has been the change in the quantity of items sold. The 533 items sold in 2011 increased to 589 in 2012 but then dropped sharply this year with only 304 items being sold. This is a major change in the way jewelry stores are achieving results and harks back to the higher average retail and lower unit sales we saw before the bead market explosion, representing a drop in unit sales of nearly 50 percent, an impact that must be getting noticed by most stores. Fortunately, average retail selling price per item has increased to help offset this with the average sale climbing 71 percent from $151 to $259 during this time on the back of stronger diamond demand (the typical store has seen diamond sales increase from around 37 percent of total store sales to over 50 percent.

So what to do with the extra staff? After all, it takes fewer people to sell a $2,000 diamond than 10 $200 items. Most stores operate at around 15-18 percent payroll as a percentage of sales (that means around $150,000 to $180,000 of wages for every $1 million of sales). The increased average gives stores the chance to reduce this percentage with lower staffing levels — a saving of $30,000 for every $1 million of sales is not to be sniffed at, but it also opens up opportunities that have not been fully exploited.

What can you do if staff members are twiddling their thumbs and you don’t want to reduce your numbers? Make more sales, of course! It sounds a little simplistic but most businesses miss opportunities because they are overwhelmed with work. What if you used the quiet period as a chance to mine some future sales?

Here are some suggestions on what your staff could be doing other than cleaning the silver for the third time this week:

Ring your customers for a complementary clean and check. What better way to create future sales than to get previous customers back in the store. Are you offering a six-month service? Having a guarantee on every ring sale (which can only be valid if the six-month check is done) is a great way of offering a point of difference when you make a sale and of getting your customers to return once they’ve bought … and what better time to show them the matching earrings or pendant that would go beautifully with that ring. You can get even smarter and coincide the warranty with their impending anniversary or birthday so the hint becomes more obvious.

Contact any repairs that have had to be redone. I know one jewelry-store owner who used to call everyone to have their watch service rechecked or their ring claw smoothed off after the initial repair “just to make sure everything was alright.” It would take him around 30 minutes per month to do but he estimates that over a period of 10 years he rang several thousand customers and re-engaged them. He eventually passed the job onto the store manager. Never once did they have a customer who was anything less than grateful that they had bothered to call.

Create some sales opportunities. Review the purchase records of your best 50 customers. Do you have anything in store that would be a perfect match for something they already own? Then why not make the suggestion? If calling doesn’t make you feel comfortable, a sales letter drawing their attention to the particular item (with perhaps a voucher enclosed towards the purchase) might draw a response.

Get regular staff training up and running. Most business owners complain they have no time for sales training, but when things are quiet it never seems to become a priority. Yet it can be one of the best uses of your staff’s time when the clock is ticking slowly and the customers aren’t venturing in.

Chase up the repair and layaway draws. Most jewelers have a few thousand dollars worth of repairs and layaways that are in need of collection. Wouldn’t you rather have that money in the bank? One day of phoning can often recover as much as 50 percent or more of this overdue money.

No one likes having staff sitting idle, but you need to see it as an opportunity to concentrate your resources where business growth can happen.