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David Brown

So What Does a $3M Jewelry Store Look Like?

There’s a key factor that sets it apart.

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With growth in the number of stores whose data is being collected, we have updated our reporting system to further differentiate between the levels of store information we have. Our previous breakdown into stores over and under $1 million has now been further split to reflect stores that are doing in excess of $3 million in sales per year.

With growth in the number of stores whose data is being collected, we have updated our reporting system to further differentiate between the levels of store information we have. Our previous breakdown into stores over and under $1 million has now been further split to reflect stores that are doing in excess of $3 million in sales per year. With over 100 stores now fitting into this category, we have our first in-depth breakdown of the performance of large stores on their own, and how their results compare to smaller stores.

First, let’s look at the results for February. Same-store rolling 12-month data shows a decline insales achieved to $1.616 million from $1.629 million. However, this difference can be partially attributable to a change in the weighting of the data being reported thanks to the new category.

Average sale for the month of February remained similar at $329 on an average margin of 46 percent with unit sales down from 328 to 279 for the month (again allowing for an adjustment in data gathering). These numbers will no doubt continue to show a variation over the next 12 months until the new data-gathering works its way through.

Now that we have an additional split of stores doing in excess of $3 million it is interesting to compare the sales makeup of each type of store.

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Looking at the percentage contribution of each department across the categories, it’s interesting to see how larger stores make up their sales mix. Contrary to expectation, it’s not all coming from diamond rings, with larger stores showing the lowest sales percentage contribution from diamond rings at just 7 percent compared with smaller stores at 10.9 percent. Obviously this converts to a higher dollar value but is not the main driver of the extras sales.

Diamonds overall contribute just over 52 percent of $3 million store sales compared to 53.7 percent and 57.3 percent for under $1 million and over $1 million, respectively. In fact, the largest stores also receive a lower percentage of their sales from colored stone, gold and silver departments than the small and medium store performance.

It’s in the area of watches that the large stores make up the difference. Based on a sales percentage of over 16 percent, the average $3 million-plus store is doing a minimum of just under $500,000 per year in watch sales – a relatively significant sum. In fact, these larger stores can be doing as much from watch sales as a smaller store is achieving from all categories put together. Margins may be lower in this department, and the return rate of warranties will be higher than jewelry, but there is still obviously money being made in this area despite the arrival of cell phones, Fitbits and other time-measuring devices that will supposedly spell the end for the watch industry.

So are watches a big part of your business? Do you neglect them in favor of other areas that you feel warrant more attention?

We’ve highlighted the difference in watch sales between larger and smaller stores before, but never has it been more apparent than in the data we have here. The further split of the data shows that the larger the store, the more significant it seems watch sales become. Compare nearly $500,000 of sales versus $30,000 being achieved by the average $1 million store and you’ve accounted for almost 25 percent of the sales difference between the two types of entities.

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It certainly provides food for thought.

David Brown is president of the Edge Retail Academy, a force in jewelry industry business consulting, sell-through data and vendor solutions. David and his team are dedicated to providing business owners with information and strategies to improve sales and profits. Reach him at david@edgeretailacademy.com

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David Brown

What Business Owners Can Learn from Abraham Lincoln’s Failures

He would never have been in position to succeed if he hadn’t failed first.

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WE ARE CONDITIONED BY society to fear failure. Our education system defines performance as “getting the answer correct.” This result-based measurement is an effective method for assessing a level of knowledge, but it doesn’t encourage the hands-on learning process so necessary to develop true understanding and retaining of information — nor encourage the discovery of new knowledge.

Sadly, this aversion to getting things wrong starts at an early age and continues our whole life. Despite the copious number of successful people who have failed spectacularly before achieving success, we still attempt to follow a path that has more to do with avoiding ignominy than with enjoying the benefits of stretching ourselves into uncharted territory.

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Abraham Lincoln never feared failure — he could little afford to. His list of unsuccessful endeavors in both business and politics would have forced a lesser man to give up. Here are just some of his “failures.”

1831: Failed in business.
1832: Ran for state legislature — lost.
1832: Also lost his job — wanted to go to law school but couldn’t get in.
1833: Borrowed some money from a friend to begin a business, and by the end of the year was bankrupt. He spent the next 17 years paying off this debt.
1838: Sought to become speaker of the state legislature — defeated.
1840: Sought to become elector — defeated.
1843: Ran for Congress — lost.
1846: Ran for Congress again — this time he won — went to Washington and did a good job.
1848: Ran for re-election to Congress — lost.
1849: Sought the job of land officer in his home state — rejected.
1854: Ran for Senate of the United States — lost.
1856: Sought the vice-presidential nomination at his party’s national convention — got less than 100 votes.
1858: Ran for U.S. Senate again — again he lost.
1860: Elected president of the United States.

What sort of president would Lincoln have become if he had not had his failures? Had his life been a succession of unbridled achievements, would he have had the fortitude or fighting qualities to drag the country through its toughest challenge ever? Or would he have been ill-prepared for the physical and mental battle the presidency required? I believe his history of failing provided him with the steel and determination he needed to see the job through. Had he not “failed” so many times, he would not have become the man he was — and the history of the United States may have looked sharply different.

Learning to fail helps you overcome the fear of testing your boundaries and ultimately helps you grow and succeed. When it happens, embrace it for the lessons it can teach.

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David Brown

9 Ways to Unload Dead Inventory

When old inventory clogs the cash-flow arteries of your store, here’s how to clean it out.

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LAST MONTH, WE talked about the process of controlling what you buy and what you consume with your inventory. Much like dieting — where your buying and consumption dictate how many pounds you put on — the process of clearing extra inventory is much like shedding that extra weight that works its way onto your hips and stomach. You have to hit the exercise gear when the weight goes up, and the same is true with your surplus inventory. If you don’t move it on, that inventory will sit around your business waistline, clogging up your cash-flow arteries and damaging the health of your business.

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Here are some of our best suggestions for shedding those surplus items that are no longer helping your business health:

1. Run a sale. The obvious answer is to have a major clearance, but care needs to be shown here. Some businesses live constantly in sale mode to the extent that it harms the ability to generate sales at any other time. Use this sparingly and be creative in how you promote it.

2. Have a clearance area. Less harmful than a full-on sale to your bottom line, this can allow you to drip out items that are not going anywhere at full price.

3. Talk to your vendors. In some circumstances, vendors will be happy to exchange items that are not moving for you. This, however, will depend on the item and their ability to sell it elsewhere. Don’t expect this as a right. This needs to be done in a way that is a win/win for both parties involved.

4. Talk to your fellow retailers. As the old saying goes, “One man’s trash is another man’s treasure.” Product that may not sell in your store can be fast-selling items for other retailers.

5. Try online. Giving your product a different exposure via your web store may help it move.

6. Reposition the product. It may be good product that’s in a bad location. Have you rearranged your store displays so the product is in a more prominent place? It may be in a spot that customers don’t access easily.

7. Melt it down, make it back up and move it on.

8. Bundle it up. Often, those slow-moving items will benefit by being combined with other pieces. Maybe slow items could be put together as a special, or you could combine a slow item as a deal to go with a full-priced fast seller.

9. Use as a contest giveaway. Of course, if it’s particularly bad, it won’t encourage contest entries!

Managing dead inventory is a fact of business. You can never eliminate it completely, but regular “inventory exercise” is needed to make sure the fat in the system isn’t causing trouble to your business health.

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David Brown

How Eating Right Is Like Managing Your Inventory

The right items and advance planning can make your business fit.

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KEEPING YOUR INVENTORY in order is a little like painting the Eiffel Tower … you no sooner get to one end than you feel you have to repeat the process all over again!

Inventory is a dynamic part of your business. It is constantly in flux, and as such, difficult to manage. However, having a good system will go a long way toward helping you keep your inventory under control.

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There are two aspects to your inventory: what you buy and what you keep. It’s the buying part that contributes most to what is left after the customers don’t want it, so let’s start with that first.

Food dieting consists of what you eat and how much of it you consume. Buying inventory is the same. There is what you buy, and then there is how much you are spending. If your diet consists of eating healthy greens, vegetables and fresh fruits, then part of your food diet will take care of itself. The same is true of ordering fast sellers — make these the mainstay of your inventory diet, and you will take care of a good 70-80 percent of the inventory you will need to consume. That leaves the remainder — the combination of poor choices and overconsumption that can cause the most problems (I’m still talking inventory here!).

In the same way that meal planning can reduce overeating or making poor food choices, planning your purchasing will work the same way. We recommend an open-to-buy budget as the most effective way to do this. An open-to-buy will balance what you are selling with what you are buying. Think of it like a calorie checker that enables you to eat once you have burned enough fat. The open-to-buy will track the money released from outgoing inventory that is then freed up to spend on new product and let you know how much this is so you don’t over-buy. This will help you to keep your inventory situation from becoming any more bloated.

So what about the surplus inventory that is aged and isn’t going anywhere now? This is the same as the few extra pounds that might be sitting around your hips — it’s one thing to stop the increase, but it’s another thing entirely to get rid of that unwanted fat.

Much like systemizing your buying with an open-to-buy program, you can systemize the aged inventory with a series of means to move it on. This can consist of a variety of options that work well for you on a regular basis to keep that aged inventory from clogging up your store arteries. I’ll talk more about these options in the next article.

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