David Brown President of The Edge Retail Academy

Numbers Show a Merry Christmas for Most Jewelers

Retailers across our sample data of stores capped a fine year with a strong Christmas performance. December results were significantly up on December 2011 across the board with an increase in average storewide sales from $259,343 to $297,092, an improvement of nearly 14 percent on last year’s results. (Please note these results include new stores added in the last year as the database continues to grow however they are reflective of the average store performance for the sample.)

As the data show, this continues the rise in sales performance over the last two Decembers with an increase from $233,201 in 2010 to $297,092 for December 2012, or an improvement of over 27 percent in two years.

An increase in the average value of items sold has been the most significant factor. Volume of sales is slightly lower than 2010, having dropped from 1,508 units to 1,458 this year. However, the average has increased from $169 to $223, an impressive rise of nearly 32 percent, showing an increased willingness of the public to splash out again during the festive season.

Jewelers have largely maintained good margins over these two comparison periods, meaning the gross profit figure has increased in line with sales from $12,1847 in 2010 to $152,481 in 2012, a rise of 25 percent. The contribution of December trading to overall results has now increased to 22 percent of total store annual sales, up from 20 percent in each of the last two Decembers. It means that more than 1 in every 5 dollars of annual sales revenue taken in by a retail jeweler is now being generated in December. Changing consumer habits certainly don’t seem to be reducing the tradition of festive spending.

Diving into the numbers further, there are a couple of areas of interest from these results. One is colored stones, which have been on something of a decline in recent years but have shown a noticeable upturn recently, particularly in December.

Colored stones represented over 10 percent of storewide sales in December, replicating the spike that this area seems to show every December.

Also of note was repair dollars earned, which seemed to increase significantly for both larger and smaller stores but particularly for our stores with sales less than $600,000 per annum. These smaller stores experienced an increase in average store repairs from $12,515 to $21,308 between November and December; an increase of more than 70 percent between the two months.

It is fairly typical to see an increase in repair business during December for most stores. Customers will often dig out items or get around to taking in batteries or broken chains that had sat around for a few months, since they are visiting their jeweler anyway. The question is, could repairs be a means of driving more sales during December? If visiting the jeweler for a gift can encourage customers to bring in repairs, perhaps an incentive to bring in repairs during December could act as a catalyst for stimulating more December gift sales. After all most people are looking for presents at this time, and every customer who walks through the door, whether for a purchase or repair, represents an opportunity.

A well thought-out repair promotion to a customer database could offer a great opportunity during this time provided the business can be handled. The deal may include the proviso that the repairs are collected in January and, if the item is non-urgent, this would work well for most people if the incentive is appealing (after all, we are talking about items they’ve done nothing with for several months). This has the added benefit of not only improving December store sales from the increased foot traffic , but setting up January cashflow from the extra repairs, and providing you with another selling opportunity to get theses customers back into your store during January when they call to collect the item.

David Brown is president of the Edge Retail Academy, an organization devoted to the ongoing measurement and growth of jewelry store performance and profitability. For further information about the Academy’s management mentoring and industry benchmarking reports contact inquiries@edgeretailacademy.com or Phone toll free (877) 5698657