Stores growing rapidly
HOUSTON, TX
82%
ON-YEAR
DOING RIGHT BY PEOPLE has done pretty well for Marc Foster.
In one of his first jobs, sorting loose stones at Gordon Importing in New York, he a came to the rescue of a young French colleague who’d made a “grave mistake” with his pouch. Years on, the Frenchman, now a highly successful jeweler, returned the favor by supplying Foster with diamonds at sightholder prices. In another instance, as a sales rep, he invested a large amount of time tutoring New Orleans-based Heller Jewelers on the benefits of increasing their turnover of Bulova watches. “They eventually made millions from the line,” Foster says. In exchange, Heller essentially gave him a store it was exiting in Houston’s Greenway Plaza (Foster pays just $1 a sq. ft in rent on a fixed 99-year lease.)
If there was one place where his munificence wasn’t rewarded, it was the repair operation he established at the Houston store. “People would come in with a chain to be fixed and then they’d see how easy it was and so when they’d ask how much, I’d say ‘Oh, no charge. Hope to see you around Christmas.’” But they often never returned.
Consultant David Geller’s training program and strict repair price book set Foster straight. “It’s like David says, everything has a value and when you don’t charge for something you change people’s perceptions of what it’s worth,” explains Foster, who now charges $25 to do a simple solder on an 18K gold chain.
The higher repair prices, and a move into selling jewelry on consignment, have had a powerful impact on M. Foster Jeweler’s bottom line. Sales revenue at the store almost doubled from $141,000 in 2006 to $257,000 in 2007. Given his low overheads — Foster estimates he needs to sell just $110 a day at his 630-square-foot store to break even — M. Foster’s has an enviable profit margin of 33 percent.
Another hard-learned lesson that’s helped swell his bank account: Work smart, not hard. Foster says that when he studied metalworking in the early ’90s, his teachers told him customers liked to see the jeweler who was working on their piece in the store. But that leaves you with little time to do anything else. “I have sub-contractors that I hire out for repair and I special order specific work. I use a modeling agency for in-store help,” he says, boasting — a little mischievously — that he now works only 15 hours a week.
While it’s true the store is open only three hours a day (12 to 3p.m.), Foster is often up at 5 a.m., taking digital photos, doing appraisals and working on his websites and the e-mail bulletins that support the consignment sales. “It’s by far the most profitable (part of my business). No cost of goods, high commissions, it gets money going and coming.”
Last year, Foster opened a second store in New Braunfels, about 180 miles west of Houston. The store is on track, he said, to return a profit in five years, although Foster, who is 51, is toying with the idea of retiring in the next two. While his stores are doing well, the best return from his more than 30 years in the business will come from the sale of his golden lease. Good deeds, it seems, do pay.
[span class=note]This story is from the March 2008 edition of INSTORE[/span]