Stores growing rapidly
ST. LOUIS, MO
500%
1997-2007
AS A JEWELRY RETAILING CENTER, St. Louis, MO, was just a “big small town” in the ’90s, says Joe Genovese. Its fine jewelry community consisted of a handful of family-owned businesses doing half a million to $2 million a year in sales. Now, many of those stores are struggling to survive in the shadows of two newly arrived chain stores (Shane Co. and Jared) and an independent that was formerly one of their own — Michael Genovese Jewelers.
At 21,000 square feet, Genovese is easily the biggest jewelry store in the Gateway City by size if not sales volume. Last year, it posted sales of more than $12 million, up from $10 million in 2006, and up almost fivefold from the $2.4 million it did in 1997 when Joe took over day-to-day operations from his father, Michael.
“We had it upside down,” says Joe, noting the store back then was struggling with a “significant” debt load and a limited inventory.
Genovese, then still only in his mid-20s, set about restructuring the store’s finances, boosting its product mix, taking in more shop work and launching an expansion project that would culminate in the opening of the huge new store five years later.
Two of his first steps were to stop doing business with vendors who charged interest and to cut back on memo goods. “We get way better pricing (when we pay cash),” he says, adding that the partnerships and terms he has been able to get from his suppliers have been key to the store’s success. The other factor was the broader product mix.
“It’s as simple as you get: Increased inventory equals increased growth. We have a 7,000-square-foot showroom with $5 million at cost of jewelry. Other stores have half a million in inventory. They can show a customer 10 diamonds. We can show them 10 boxes of diamonds. It’s a no-brainer where people want to shop.”
A new computerized re-ordering system that identifies fast sellers will be introduced this year to further refine the buying process. Genovese expects it will add 5-10 percent to the bottom line.
While rapid, the business’s growth hasn’t been all clear sailing, and Genovese says the five-year battle to build the new store and develop an adjacent property for commercial use is not one he’d repeat. To top it off, the store’s weak opening, just weeks after 9/11 had him thinking he was in “real trouble.”
Consumers, however, quickly recovered their nerve. “By November it was like a faucet turned on. People came pouring in,” Genovese recalls. And ultimately 9/11 proved to be a blessing for the store as other retailers froze their buying, allowing Genovese to get what he calls “unbelievable terms.”
The introduction of a new non-commission bonus system two years ago ignited another surge in sales. “All the targets are set low, so we know we have an issue if they’re not being met,” he explains.
Despite a mixed start to 2008, Genovese says he is aiming for double-digit growth this year and will continue to invest in the store despite “getting scared” every time he reaches for his checkbook.
“It doesn’t seem to matter whether it’s inventory or a $32,000 laser welder or the $250,000 at cost in donations we made to charities last year; it just keeps coming back to us,” he says.
[span class=note]This story is from the May 2008 edition of INSTORE[/span]