WE CONSISTENTLY CHECK in with our Brain Squad (a survey group comprised of retail jewelry store owners and managers) about a variety of issues in a featured called “Do You or Don’t You?” This year, we asked two related questions about inventory management, and the results caught our attention.
The first question was, “Does your store do better than a 1.0 average inventory turn across the board?” The results were:
YES: 50%
NO: 50%
According to various sources, the average yearly inventory turn for the American retail jewelry store is somewhere between 0.7 – 1.2. As such, perhaps it’s not so surprising that half our survey group falls below the median of 1.0 and half is above it. At the same time, most industry experts, including those who regularly contribute to INSTORE, preach tight inventory control with an emphasis on high-turnover products.
As Kyle Bullock of Bullock’s Jewelry in Roswell, NM, wrote, “Our average turn usually does over 2.0 every year, and that’s due to years of disciplined work on our inventory, taking the advice of experts and consultants to keep things turning smoothly.”
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Other owners who stated they achieve a turn rate of greater than 1.0 also emphasized their strict adherence to policies that prioritize inventory turn and limit aged inventory. Lou’s Jewelry co-owner Tim Sherrer of Mobile, AL, said that his store does whatever it can to move stock that’s over four months old, including discounting. Likewise, Alan Perry of Perry’s Emporium (Wilmington, NC) said, “We are always training our staff to reach out and touch the customers every day and we have tons of traffic in the store every day. Over 880 repairs taken in last month, and we try to touch every one of them with a store tour and then a WOW, and sales show it. Also, keep a 20 percent or less aged stock in store so goods are fresh and we reorder fast sellers weekly so goods move!”
On the other side of the equation, some owners said they are working to get above the 1.0 threshold but have struggled to move old inventory. As Mark Clodius of Clodius & Co. Jewelers in Rockford, IL, wrote, “We ‘invested’ heavily and now own too much value in loose natural diamonds, both white and fancy color. This is dragging our numbers down. In core merchandise, we sell and replace with excellent turn and good profits. We are working on divesting ourselves of the excess value but we prefer to not sell them quickly at a loss.”
However, others stated that their business model is such that less than a 1.0 turn ratio is not necessarily a bad thing — particularly those who do strong business in jewelry bought “off the street.” Rex Solomon of Houston Jewelry in Houston, TX, said that “street buys” produce a much higher margin than newly manufactured inventory, which means a fast turnover is not necessary. His statement was echoed by Medford Chason of Treasure Hut (North Charleston, SC): “We are 90 percent estate, and items date from 20-plus years to yesterday in our inventory. Eventually, they all sell. We like it this way, it is part of our plan and niche.”
Additionally, stores that focus on custom design often use certain inventory as models from which they base their new designs, and those models may often sit in the showcase much longer than in a typical jewelry retailer as a result.
The second question we asked about inventory management was, “Do you have a dedicated showcase for inventory clearance?” The results were:
YES: 43%
NO: 57%
Given that the previous question was a 50/50 split, it’s again not too surprising that slightly more than half of our surveyed jewelers don’t use a dedicated showcase for discounting aged inventory. But it is revealing, as the results are likely linked, at least in part.
Those who use one described positive results. Rick Weadock of Jewelry-By-You in South Jordan, UT, said that it was “the number one showcase viewed by our repeat customers; a must-have showcase to keep on top of dated goods.” Likewise, Bob Richards of Bob Richards Jewelers in Germantown, TN, stated that his clearance showcase resides next to the store’s checkout counter so that the discounted pieces get more notice, and that it works.
Joel Wiland of J. David’s Jewelry in Broken Arrow, OK, had only recently installed such a showcase and said the results were eye-opening: “We implemented this the second half of 2021 and in six months did $75,000 in 18 inches of showcase. This is the only place in the store where we offer a discount. It has been a great addition as well as a new profit center.”
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Some store owners took the dedicated showcase concept to another level. Katrina Sustachek of Rasmussen Diamonds in Racine, WI, said that pieces do not go into the clearance case until after the store has tried to move the products by offering incentives to sales staff. Dorothy Vodicka of The Gem Collection in Tallahassee, FL, said that her store has two clearance cases: one at 25% off and one at 40% off.
On the other hand, the owners who said they did not have such a dedicated showcase often had strong alternatives. For example, William Nordstrom of William Nordstrom Jewelers in Menomonee Falls, WI, said that he doesn’t want customers to look only at clearance merchandise, and as such, his old inventory is “specially tagged and sprinkled throughout the store.” Alan Perry uses a similar method of color-coded tagging that tells his staff they can discount the item and earn a cash spiff.
Sherrie Schilling-Devaney of Sherrie’s Jewelry Box in Tigard, OR, said her store doesn’t have room for such a showcase, but that she places clearance merchandise online at discounted prices. Others, like Natasha Henderson of Saxon’s Fine Jewelers (Bend, OR) and Lucy Conklin of Toner Jewelers (Overland Park, KS), hold one big annual sale with deep discounts to turn over old merchandise.