Leo Hamel’s FIRST STORE was a humble one. In his words: “a 300-square-foot dump” in an “extremely middle class” part of San Diego.
SAN DIEGO, CA
18%
2007 – 2008
Leo Hamel’s FIRST STORE was a humble one. In his words: “a 300-square-foot dump” in an “extremely middle class” part of San Diego.
But there was something about the place and its collections of estate jewelry, Japanese pearls and lines of second-hand Rolexes and Patek Philippe watches that drew a well-heeled crowd of regulars. “Every Saturday there’d be Aston Martins and Jaguars on the street out front,” Hamel recalls.
The store cracked a million dollars in sales by the end of its second year.
Over the next two decades, Leo Hamel Fine Jewelers grew rapidly, eventually expanding to two stores, one in Solana Beach and one in San Diego’s Old Town area, which at 10,000 square feet is the biggest full-service jeweler in the city.
Then about two years ago, the store’s growth — which had seen it named Hearts on Fire World Champion in 2003 and 2005 — began to falter.
Sales flattened as the store moved away from its traditional stock offerings and services. A strict no-discount policy alienated old customers, and there was discord on the sales floor.
Having stepped away from day-to-day management, Hamel returned, re-imposing some of the old ways of doings things, adding new ones and making some tough decisions.
“I never thought I’d let go of a sales associate doing almost $2.2 million a year but it was the right decision. The chaos she was creating was amazing,” he says.
Hamel slashed the watch inventory and restored diamond engagement rings to their position of prominence. There was also a refocusing on a highly profitable sector that had always done well for the store: estate jewelry.
The reinvigorated owner also demanded more accountability for every ad dollar, every salesperson’s hour and every piece of inventory. He halted all image advertising and insisted every ad dollar return $2 to $7 or more in revenue. To ensure management knows what ads are working, every customer is gently quizzed to find out how they learned about the store.
Hamel pored over the stores’ numbers, targeting more underperforming areas. He introduced a bonus for add-on sales, doubling the regular 7 percent commission for the add-on, and told his sales staff he was no longer interested in the size of sales. The only thing he wanted to know was the margin. “Most stores manage by gross sales. I manage everything by profit,” he says.
Many of the store’s financial numbers are posted on a backroom wall so the staff knows exactly how the business — and they — are performing. Salespeople are given weekly goals that must be met by Thursday.
“We run the company week to week. It puts the salespeople on a much shorter timeframe, and becomes a weekly game,” Hamel says.
It’s not only staff who feel the heat. The store studies the return on investment (ROI) of every brand it carries, putting pressure on vendors to perform as well.
The result? Despite a tough year economically, Leo Hamel’s has enjoyed a stunning turnaround. Sales volume is up 18 percent, gross profit up 48 percent, and net profit up a staggering 300 percent. The store is on track to have its best year ever, with total sales of over $14 million.