Smaller Stores Falling Behind With Watch Sales

Smaller Stores Falling Behind With Watch Sales

Big stores generate a greater proportion of sales from watches and diamonds than their smaller peers. The key reason appears to be the selection they can offer. But that doesn’t mean the small guys can’t compete.

Sales continued to increase for most U.S. jewelers during March. Rolling 12-month figures show an increase of 0.64 percent between February and March, which would convert to an increase of just over 7 percent per annum, healthy growth for sure.

This month we will delve into two departments we often don’t discuss: watches and repairs. Within our data we have separate details for smaller stores (those under $1 million in annual sales) and those that are over $1 million. One figure that has recently been noticeable is the percentage of overall sales being achieved in watches between both of these store types.

The overall percentage of sales contributed by watches across all jewelers has been steadily climbing over the last few years. Overall contribution from watches is 5.4 percent, up from 3.1 percent back in June 2008.

The interesting difference is between the smaller and larger stores. The annual percentage contribution from watch sales for the smaller stores is 2.5 percent, whereas the larger stores show a percentage contribution from watch sales of 8.3 percent. Average sale for smaller stores is just over $1,000 whereas for the larger stores it is closer to $1,200. Given the higher percentage of small watchmaking businesses (and watchmakers tend to be more successful at selling watches than stores without a large watch repair business) I would have expected these percentages to be closer together. Given the average retail value of watches in the typical jewelry store, however, it tends to show that when it comes to bigger-ticket items customers will shop where the selection is greater, namely the larger store.

If we analyze the overall data further I’m sure we would find a direct correlation between the size of the store, the average retail sale by department and the percentage of that department’s contribution to overall sales. Departments with higher average retail sales would show a bigger contribution to overall sales in large stores than small stores (e.g. diamonds and watches). Departments with lower average retail sales, such as silver, are a much greater contributor to the overall sales figures for smaller stores than large ones.

Conversely we find that when it comes to repairs the smaller stores have a much greater contribution to overall revenue from repairs than their larger counterparts. The typical small store is achieving 13-15 percent of overall business from repairs, compared to 6.5 percent for the larger stores. The overall results for repairs are as follows:

The contribution from repairs has been reasonably consistent over the last few years but has had a slight drop in the last couple of months. This isn’t necessarily bad; it may be a reflection of strong growth in more profitable areas such as gold and diamonds. Again this is a reflection of a lower-ticket item (repairs) being a bigger percentage contributor to small stores than large ones.

So if you are a small store how can you increase the contribution of bigger-ticket departments to your business?

1. Look at your selection in these departments. If you want to be a player you have to look like one. Do you offer enough selection in these areas? If you want to sell $20,000 diamond rings, do you have some to offer? I’m not suggesting ruining the bank balance with some big ticket purchases but there are plenty of stores that have grown their diamond business by coming to an arrangement with vendors to memo some items they wouldn’t normally carry. Once some sales are made and confidence in selling this product increases it becomes much easier to start stocking this higher-end product.
2. Show bigger-ticket items. Do you have your biggest items front and center in your displays? Do your staff show them or do they feel intimidated by them? You can’t sell it if your customer doesn’t know about it. Make sure you focus on these items and discuss daily with your staff when having your sales meeting (you do have one don’t you?)
3. Look for the sale if the watch doesn’t get repaired. The opportunity to turn a “non repair” (a quote that doesn’t go ahead) into a replacement sale is not often taken by many stores. Do you role play this scenario with your staff? It will be happening on a daily basis. Could you even offer some “Bereavement dollars” maybe $20 store currency towards replacing their dearly departed watch. My colleague Lynn Baldwin runs a very successful promotion in his own store where he offers a voucher towards your replacement watch when the old dead one is brought in. You could be doing something similar.

Opportunities abound everywhere you look. You just need to make sure you take advantage of them.