What should my cost of labor be?

David Geller, author of The Geller Blue Book, says at many of the stores he consults, the staff typically cost between 8 to 13 percent of their sales. “If they cost you 8 percent, the staff is very efficient. At 13 percent, they are inefficient,” he says. A high labor cost doesn’t necessarily mean you’re paying too much (and to compare, you can see our latest salary review in our 2017 Big Survey), although it does suggest you need to do something to boost productivity. Scrimping on salaries usually has dire effects. In no other retail industry is staff so important. Jewelers only get one or at most two chances to make a good impression and help a shopper find what they’re looking for. And you need the best people to do this. 

A high turnover is also expensive (the Society for Human Resource Management estimates that it costs $3,500 to replace one $8.00 per hour employee when all expenses — recruiting, interviewing, hiring, training, reduced productivity, etc. — are considered). The ideal situation is actually to be paying very high compensation and enjoying very high sales in return. And the two are connected. A 2012 study by a team of Wharton School researchers examined sales information from retailers with more than 500 stores and found that every dollar in additional payroll added between $4 and $28 in new sales. 

So, how to get more productivity from your staff? Geller is a big advocate of a high commission system to motivate salespeople, accompanied by more training. There are also all those other basics to cover. The correct hiring in the first place, professional business systems in place, a data-driven management approach, and so on. To be sure, cost of labor is an important indicator to know (and gross profit per labor dollar — the amount of profit you get for every dollar spent on staff wages — maybe even be a better one), but employees need the right environment to perform, and it’s up to you to provide that.

I just found out my cousin bought his engagement ring at Zales. How do I convince my social circle that I am the best place for their jewelry needs?

There could be any number of reasons your cousin chose a chain, from being embarrassed about needing financing to being worried about imposing on a relative to the jewelry taste of his fiancée — maybe she was the one who insisted on a ring she’d seen. Where family, friends and business mix is often a vexing area for jewelers, although it’s usually the opposite complaint — the hassles of dealing with relatives wanting big discounts or friendships strained by a diamond that cracked — that we hear more often. In terms of family and close friends, it’s always best that they know clearly up front what kind of breaks and special service they can expect (meaning a discount that doesn’t deliver a hit to your bottom line). Marc Majors, co-owner of Sam L. Majors in Midland, TX, says one of the things he’s learned from his fifth-generation business is that a little distance from your customers is often a good thing: “Your best customers will be people you don’t know very well socially.”

Is humor necessarily a mismatch with high-end jewelry? 

Not at all. In fact, there’s a good argument that the bigger the sale, the more it’s needed. “When it’s a big, big sale, you need to keep the purchasing experience fun so that the customer is as comfortable as possible in the process,” says Denis Boulle, owner of deBoulle in Dallas, which is no stranger to big-ticket deals. But it should be good-natured humor, not the bada-boom punch line type or anything snarky. “Laughter leads to bonding and listening. And if they’re listening, there’s a far greater chance they will be buying,” notes sales expert Jeffrey Gitomer, who recommends his clients make a serious effort to becoming funny by studying comedians’ speech patterns, collecting self-deprecating stories and by practicing in non-threatening environments, “such as during your divorce proceedings.” Bada-boom.

What do you do with a customer who claims their rings are turning their finger black?

Ask her if she’s recently changed her choice of hand lotion or make-up. This is the most common cause of such smudging, as cosmetics often contain chemical compounds, which — astonishingly — are harder than the jewelry itself. When these hard compounds come in contact with jewelry metals, abrasion occurs, causing tiny particles of metal to break off as a black dust. When mixed with perspiration or other liquids, it results in the alarming black stain. It’s also possible that a change in diet or even a new course of medication is resulting in a chemical reaction where perspiration and metal meet. If she is going swimming with her jewelry on, chlorine is another possible suspect. To prevent the smudging, suggest she avoid cosmetics that contain zinc oxide, titanium dioxide, ferric oxide and calamine. Also, tell her to try removing the rings while applying cosmetics and cleaning her fingers with soap and water in areas that will be in contact with her jewelry. Finally, if the problem persists, suggest she consider having the inside of the bands coated with rhodium to prevent such a reaction.


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This article originally appeared in the April 2018 edition of INSTORE. 

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