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The Big Story: Numerology

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BY EILEEN MCLELLAND

Key Numbers To Watch

Peggy Seitzinger, general manager of Roper’s Jewelers in Auburn, CA, says that in the 21 years she has worked at the store, she has been in the habit of trusting her gut when it comes to inventory, marketing and merchandising.

But in recent years, working with mentor Lynn Baldwin from the Edge Retail Academy and using the Edge software to track key performance indicators, or KPIs, made her realize how important it is to pay attention to the numbers.

“You run a business for a while, do the buying and the marketing, and think you have a good idea of what is going on,” Seitzinger says. “Maybe you do and maybe you don’t. But with reports, you aren’t just guessing. “

Initially, though, she resisted the change. It felt counterintuitive, for example, to reorder everything that sold within 90 days. Being in a relatively small market, she believed “Mrs. Smith” might not appreciate running into “Mrs. Brown” at the grocery store, wearing the same Roper’s ring.

“At the beginning, it was difficult just because it was a change. But to heed those words and put them in action and see them work is just incredible,” she concedes. And to her surprise, none of her customers who has bought a fast seller has complained.

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Tracking KPIs saved Hoppe Jewelers in Richmond, IN, from what would have been a gradual, inevitable slide into bankruptcy for the 50-year-old company, says Lyn Hoppe. “Watching the numbers has helped control the inventory, which has brought profitability. Now, I sit and watch these numbers like a hawk all the time because it’s been such a godsend to me. We have money in the bank. We’re healthy again.”

While the industry offers guidelines, averages and benchmarks, goals largely depend on individual retailers, the nature of their business and the margins they are able to produce.


THE GOAL
ISN’t
to hit someone’s ideal, but to be constantly
studying and
improving.”

ABE SHERMAN

“Because each business is comprised of a different merchandise mix and different fixed costs specific to their business, the KPI goals for each will vary significantly,” says Abe Sherman of Buyers Intelligence Group.

“There are very successful retailers who generate 30 percent gross profit, and others who cannot pay their bills even though they may have a gross profit in excess of 50 percent. The goal isn’t to hit someone’s idea of what ideal is, but to be constantly studying and improving all aspects of the business while monitoring KPIs.”

Dan Levinson, owner of Ellis Jewelers in Concord, NC, says that constant tracking helps him stay profitable.

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“Over 90 days, 180 days, a year, you start seeing incremental differences and changes, and you start to see the power of these numbers,” Levinson says. “Results start multiplying and compounding. It works, but you’ve got to work it.”

And for you to work at it, you have to know what those numbers are, how to calculate them and how to use them. In the following pages are 15 of the most important numbers — and the specific numbers many experts consider the target. Begin tracking your KPIs today.

The Vital 15

THE NUMBER
Sales Conversion

The Percentage of Shoppers Who Visit the Store and Make a Purchase
IMPORTANCE:
Determine the effectiveness of each salesperson — and yourself.
YOUR TARGET: 60% OR BETTER

THE EXPERTS SAY: Sales trainer Jim Douglass believes most store owners have no idea of either the store’s or the individual sales associates’ conversion rates, and if they guess or rely on devices like traffic counters, they are flying blind or nearly so.

To track conversion rates, you’ll need to know how many opportunities there are for sales for both the store and for each salesperson. This needs to be tracked manually, ideally by a sales manager on the floor, even if the storeowner also uses an electronic traffic counter. “There is no way to get this without human interaction,” insists Douglass, who believes destination stores should expect and train for an 80 percent conversion rate.

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“If a freestanding store is doing less than 60 percent they are in desperate need of help,” he says. “People are going out of their way to go there because their intention is to purchase.

“If you’re in a mall, you get a lot of residual traffic. I will tell mall stores that if their numbers are below 40 percent, then they are hemorrhaging. I expect any mall location to be 60 percent.”
Total sales won’t present an accurate picture of how effective your sales staff is. “It is not uncommon for the salesperson with the highest numbers to also be the salesperson walking the most opportunities back out the door,” Douglass says.

IN REAL LIFE: Jim Mead, owner of freestanding Mead Jewelers in Woodward, OK, believes those numbers are within reach. “If they park in our parking lot and pull our door, they are here to buy,” Mead says. “It’s not like they are browsing in the mall.”

Mead has begun tracking his diamond sales, bringing his conversion rate for diamond sales close to 80 percent with five full-time and three part-time sales associates.

“Each salesperson records whether they sell or not when they have a diamond-selling opportunity. They were a little hesitant at first, but it has become standard procedure.”

Mead reinforces the effort with sales training. “If the customer says they will be back, and leaves, we discuss what closing the sales person did try and offer suggestions that might have been able to convert them. It’s not a critical thing but more of a team effort.” The attention to conversion has paid off, says Mead, who had his biggest year ever in 2014, as well as his biggest December. Mead was also surprised to learn from tracking that many customers who say they will be back, actually return.

Recording the number of visitors to your store is important for other reasons, too. “Once you know what your footfalls are, then you can focus on how to improve them,” says retail business consultant Andrea Hill of StrategyWerx. One way to improve this number, if you’re in a high-traffic area, is to change your window design often, like an apparel store would.


THE NUMBER
Stock Turn Rate

The Number of Times Inventory Sells in One Year
IMPORTANCE:
An item in your case represents cash that’s tied up or debt. The slower the turn, the less cash your business has for everything else.
YOUR TARGET: 1.1 OR HIGHER

THE EXPERTS SAY: Analysts agree this is a crucial number, yet jewelers are often surprised by how much impact improving stock turn can have on their businesses, says Don Greig, president of Focus Business Management.

“The biggest thing that’s wrong with American jewelers is they have debt that keeps them under stress all the time, and cash flow problems that keep them under stress all the time,” says Greig, who attributes the problem to aged inventory. “Seventy percent of their stock is old — if it’s six months old, it’s old — and all the debt is tied up in the stock that doesn’t sell. When you try to tell them that, they still feel that their stock is beautiful; that the only thing wrong with it is it doesn’t sell.”

The fact it doesn’t sell is the point.

The average store has a stock turn of about 0.7, which means it’s taking about 17 months to sell through the product, which David Brown, president of the Edge Retail Academy, considers “pretty horrible.” The aim should be to get to at least 1 stock turn, selling through in 12 months. In his opinion, best practice would be more like 1.1, which would mean 10 months.

Other analysts advocate even more frequent turn.

“If I could have only one measure, this would be it, for jewelers,” says industry analyst Ken Gassman. “As inventory turn improves, cash usually increases and gross profit rises. But for most jewelers, inventory turns less than one time annually. It’s not good use of your cash, not good use of your financial assets to have such a low inventory turn. Jewelers ought to strive for at least 1.5 inventory turn and anything above that they should be jubilant about. Even furniture turns two times or more. Why aren’t jewelers getting better inventory turn? It comes down to the fact they don’t get rid of the bad inventory — their losers. They think somebody’s going to come in here and buy it, but after six months to a year, melt it down and think about doing something different.”

IN REAL LIFE: When Mark Goodman of Goodman Jewelers in Abingdon, VA, began taking a hard look at his inventory about 10 years ago, he realized that his business was cash poor, and his return on investment discouraging.

An inventory glut was causing the problem.


If I could
have only
one measure, (inventory turn) would be it for jewelers.”

ken Gassman

After tracking inventory with software for 11 years, Goodman’s turn is now on average 1, while lower cost items might turn two or three times per year. “I’ll give a vendor two or three years, and if it doesn’t perform, then we’ll look at eliminating that category or line,” he says. “That keeps the cash flow much better. I have a larger bank balance and haven’t had to take on any debt for the business in over 10 years.”

He’s eliminated several vendors and categories in the past six years because of slow turn, and he now realizes that more inventory does not equal more sales.

“The more we stock, the more of a hindrance it becomes.”

Unloading slow sellers became more important to Roper’s Peggy Seitzinger, too, once she started tracking them. “It seems to be the plight of independent jewelry stores that we buy these pieces and we get stuck with them forever because we don’t have the heart to break them up,” she says. “Now, I actively work with my vendors, to see if I can trade them back. I have the numbers to prove they aren’t selling. That’s markedly different than before.”


THE NUMBER
Vendors Carried

The Number of Times Inventory Sells in One Year
IMPORTANCE:
Fewer suppliers means
more leverage and better relationships
with the companies you work with.

YOUR TARGET: 11 OR FEWER

THE EXPERTS SAY: Most stores have 10 or 12 vendors who produce as much as 80 percent of sales. Identify which vendors are working best for you, as well as which vendors your competitors are having success with. Some jewelers who are carrying a lot of vendors may be better served by being more selective, Gassman says.

“It’s better to have fewer than more,” he says. “You can become real partners with your selected vendors. Let them know that they were hand-picked and that you will be loyal, but only if they are loyal to you.”

Greig says it may come down to as few as eight good suppliers producing 80 percent of sales. But jewelers may be slow to realize this. “They’ll deal with 20 or 30 suppliers, or 100 suppliers, so they don’t mean anything to anybody. If you deal with eight suppliers and you’ve got a good store, then you are very important to the people you deal with.”

All this does not mean, however, you should not be looking for new vendors and new lines. Instead, it means that if a new vendor works well for you, you should look to deepen the relationship.

IN REAL LIFE: Jay Klos, owner of Grogan Jewelers in Florence, AL, agrees. “We have 12 of our vendors giving us 80 percent of our business. When you become important to a vendor, they’re going to do things for you that they wouldn’t do before. If they have a 3-to-1 stock return policy, maybe they’ll go to a 2-to-1 return for you; they’ll put you ahead of other people, they’ll send in pieces on memo at Christmas. They bend over backwards when you become important to them. So many people try to buy from everybody — and that’s ridiculous. You’re important to nobody if you’re using too many vendors.”


THE NUMBER
Gross Margin

(Total Sales $ – Cost of Goods Sold) ÷ Total Sales $
IMPORTANCE:
Knowing your gross profit margin is the first step on the road to breakeven and profitability. It signals how much flexibility you have on pricing, how much cash will flow straight to the bottom line, and how much money you will have to re-invest in the business.
YOUR TARGET: 55% OR BETTER

THE EXPERTS SAY: Keystone refers to a 50 percent gross margin, which is considered average. Shooting for 55 percent will benefit your business exponentially.

“If you have anything less than 50 percent you have some serious work to do,” says David Brown. Concentrating on margin can be very lucrative.

Just a 1 percent improvement in margin in a $1 million dollar business drives $10,000 to the bottom line. “That’s pretty significant,” Brown says. “The average store would have to increase sales close to $100,000 to deliver a $10,000 net profit. Which one is easier?”

And of course, custom design often commands a higher margin. David Geller says profit margins from custom design sales are in the range of 50 to 65 percent compared to 44 to 55 percent for case sales. Typically, a custom design ticket runs from $1,500 to $3,000.

IN REAL LIFE: Grogan’s Jay Klos shoots for a 55 percent gross profit margin. “Some people are going to laugh and say that’s ridiculously high because of the price of diamonds,” he says. “But that depends on your market. In a much more competitive market, it might be 33 to 35 percent, but you better have high turnover. If you’re not over 50 percent, you’re not making any money. Expenses will tear you up. We’re getting over 50 percent but we work very hard to achieve it. We look at that number every day.”


THE NUMBER
Profit Margin

Net Profit ÷ Total Sales $
IMPORTANCE:
Do we really need to tell you?
YOUR TARGET: 11% OR BETTER

THE EXPERTS SAY: The 2014 Jewelers of America Cost of Doing Business Report indicates that high-profit jewelers manage their profit margins and operating expenses more effectively than low-profit jewelers. In 2013, high-profit jewelers had an 11.9 percent profit margin, three times more than the median for all jewelry stores (3.6 percent). High-profit jewelers also better managed their operating expenses, which accounted for 33.1 percent of their total expenses versus 42.6 percent for all firms. The report demonstrates that greater net sales do not equal high profit (high-profit firms had $1,170,512 net sales compared with $1,771,773 for all firms.)


THE NUMBER
Items Per Receipt

Number of Items Sold
÷ Number of Tickets

IMPORTANCE:
“If 50 percent of your sales slips in one year have an add-on sale, your store’s overall sales increase will be approximately 20 percent,” says Shane Decker.
YOUR TARGET: 1.5 OR MORE

THE EXPERTS SAY: “Clients quit buying when you quit selling,” says Shane Decker, president of Ex-Sellence. “When I started in the industry, 40 percent of all sales included an add-on sale. Today, if you don’t count beads, less than 5 percent of tickets include an add-on. “It’s your job to keep selling until the client indicates that she’s done, and not before. So never turn and walk away from the client.” Say, “Wait till you see what goes with this!” or “How many others are on your Christmas shopping list?”

Especially at holiday time, expect a minimum of two items per receipt, since the average person has 10 people they need to buy gifts for.
“It’s a matter of realizing you don’t necessarily need more customers. You’ve got to get more out of the customers you’ve already got,” says David Brown, who says there’s no reason not to try for two items per receipt.


If you’re not over 50 percent with gross margin, you’re not making any money. Expenses will tear you up.”

Jay Klos, grogan jewelers, Florence, AL

IN REAL LIFE: Steve Doubleday of Amidon Jewelers has three locations in New Hampshire and he makes add-on sales a priority in his training. Having the numbers convinces sales staff that they need to do more.

“If you asked the average salesperson, they’d think they would sell every third person a second item, but the numbers don’t say that,” Doubleday says. “When we started tracking it, our average was 1.1 items per sale. “When you show your staff those numbers, they’re surprised; they say, ‘Oh, really?’ We got that up to 1.3 items, which is a big difference.” While some add-on opportunities are natural — the wedding band with the engagement ring, or the groom’s band with the bride’s band, Doubleday works with staff to come up with creative ideas for add-ons that aren’t quite so obvious.


THE NUMBER
Total Sales

Combined Sales of Products
and Services for One Year

IMPORTANCE:
$1 million in sales is often cited as the point of critical mass for an
independent jeweler if they are to survive
in an increasingly competitive future.

YOUR TARGET: $1.5 MILLION OR MORE

THE EXPERTS SAY: In big urban markets, the $1 million level currently marks a midpoint, with 51 percent of stores generating sales of less than $1 million and 49 percent more. But industry analyst Ken Gassman suggests store owners aim a little higher. “With your typical specialty independent, typical sales are $1.2 million, while chains are doing $1.5 to $2 million per store,” Gassman says. “Specialty independents ought to strive to hit the sales level of the chains, $1.5 to $2 million in sales — in that range.”

Most jewelers should expect at least 4 to 5 percent annual growth in total sales. Keep track of daily, monthly year to date versus the same periods last year. “To stay ahead of inflation and to be average or slightly better than average in the industry, sales are going to have to grow by 4 or 5 percent annually,” Gassman says.


THE NUMBER
Average Ticket

(Total Sales $) ÷ (Transactions)
IMPORTANCE:
Understand where your business is (high-end or fashion?) and how much staff you need — it takes more staff to sell low priced goods.
YOUR TARGET: Varies by store type

THE EXPERTS SAY: As the impact of the recession fades, jewelers’ sales are being driven by more big-ticket items. Jewelers in the Edge survey group reported a 47 percent increase in average sale in December 2014 over December 2013, rising from $151 to $222.

IN REAL LIFE: Since Dan Levinson of Ellis Jewelers has been using the Edge’s KPI reports, he has watched his store’s average sale rise steadily. For example, the average sale between Dec. 20, 2013 and Dec. 20, 2014, rose 13 percent for Levinson, from $487 to $549.

It was a concerted effort on several fronts:

1. He worked hard to discount less. “Discounting is just like shooting myself in the foot,” Levinson says.

2. On many items, he took a higher markup. “You’ve got to believe that you’re worth it, for all of the service you offer,” Levinson says.

3. “We’re reordering on a regular basis, constantly watching our fast sellers,” he says. “Everything that sells between 0 and 120 days gets reordered automatically. We don’t wait for jewelry shows to buy anymore. We use them to look at new things and find new trends, but during the year we’re reordering weekly and daily.”

As he has learned to do more with less inventory, gross profit has improved nicely.


You’ve got to believe that you’re worth the higher markup, for all of the service you offer.”

dan levinson, ellis jewelers, concord, NC

“You have to be stocked properly, but you find that there’s a sweet spot where you know if you carry a certain amount of the right items, you’re going to get the best profit and the best cash flow,” Levinson says. “Some years my sales may be down, but because I’m controlling my inventory we remain profitable and our cash flow remains steady. We have great vendors and we’re going to keep buying from them, but we are learning better how to not choke ourselves on inventory.”

As a result of paying attention to KPI reports, Roper’s Seitzinger also watched the average sale in her downtown store jump from $100.43 in 2010 to $328.33 in 2014, due to a combination of stronger buying, and pricing based on what the item should reasonably sell for (not necessarily a markup based on cost). Training staff to offer top of the line in any category, first, and working from there, helped.

Another way to boost that average ticket is to focus on diamonds. Historically, diamond ring sales account for 8 percent of total store sales, according to David Brown. In July 2014, they rose to more than 9 percent as monthly store revenue increased from an average of $90,145 to $101,901, up 13 percent on a year-on-year basis. If your diamond ring sales are stagnant, take a good look at your selection. Run a price-point report, which will allow you to see any holes in your inventory. Or, if your rings are all old, move out that aged inventory quickly, and bring in new stock, Brown advises. Diamond jewelry of all types represents almost 43 percent of a typical specialty jeweler’s sales. If the category “other loose gemstones,” which is mostly diamonds, is included diamonds and diamond jewelry generate nearly half of all sales, according to Gassman and the 2014 Jewelers of America Cost of Doing Business Survey.


THE NUMBER
Cash Flow

Cash Receipts – Cash Payments over a Given Period of Time
IMPORTANCE:
The more cash you have, the less debt you have, the better off you are.
YOUR TARGET: Positive

THE EXPERTS SAY: Are your balances up or down? And why? “You always want to have some cash in your account,” says Ken Gassman. “I like to see positive cash balances and the fewer loans, the lower your loan balance, the better off you are. It’s a financial formula you have to sit down and play around with — margin, cash levels and inventory turn. The whole idea is to maximize turn, minimize loan balances, and maximize cash levels.”
While you’re looking at cash, look at trade payables, too. How much do you owe your vendors? Gassman says there are two schools of thought here. One is that you pay your vendors promptly and they will service you more readily and let you trade in a piece of “bad” inventory. The other argument says, use your vendors as your bank and get as much stuff as you can on memo. “Right now I’m on the fence about it,” Gassman says.

IN REAL LIFE: Lyn Hoppe of Hoppe Jewelers in Richmond, IN, says she has cash in the bank now because she has cut her inventory by two-thirds while doing the same volume of business she did before, with aged inventory dragging her down. “I don’t just buy a lot of stuff and let it sit there,” she says.


THE NUMBER
Advertising Cost as a Percentage of Sales

Determines How Much You Should Spend on Advertising
IMPORTANCE:
If you don’t spend a sufficient amount on advertising, you limit your growth opportunities.
YOUR TARGET: 5%-12%

THE EXPERTS SAY: “If you are paying top dollar for a location in a town center but you have walk-by traffic, your advertising expense is directly tied to the cost of occupancy, and you’re not having to spend so much to put the word out there,” says Kate Peterson. “Everybody looks for that magic number, and there isn’t one. We have clients look at occupancy and advertising together, and based on the level of business, put a reasonable percentage on it that could range from 5 to 12 percent of sales. If you’re adding in anything from occupancy costs to charity donations, that’s another thing. If you’re doing it right, it’s all advertising.”

IN REAL LIFE: Karen Fonger of 58 Facets Jewelry keeps tabs on the ratio of marketing dollars to sales for the month and the quarter. “This helps me determine if we are putting our marketing money in the right places to get the most benefit,” she says. “It really all goes to some type of mobile-enabled entity. But we switch it around to try and capture the most eyes. It is always changing.”


THE NUMBER
GMROI (Pronounced “Jim-Roy”)

Indicates How Much
Profit Is Generated by Each Dollar of Inventory
IMPORTANCE:
Learn the real story behind performing and non-performing inventory.
YOUR TARGET: 100 OR BETTER

THE EXPERTS SAY: This measure is calculated in a variety of ways, but the basic concept involves the relationship between gross profit dollars and inventory turn, says Ken Gassman. Depending on the method of calculation, some merchants express the answer in dollar terms, while others express it as a percentage.


Everybody looks for that magic number, and there isn’t one. We look at occupancy and advertising together, and that could range from 5 to 12%.”

kate Peterson

To determine GMROI, markup is multiplied by stock turn to indicate how your store is performing. For example, if your markup is 100 percent and your stock turn is 0.8 then your GMROI is 80 (100 x 0.8). What this means in real terms is that for every $100 you have invested in inventory, you are generating $80 of gross profit per year. David Brown says the U.S. average is currently less than 60, which is “appalling.” A goal would be 100 minimum and best practice would be around 120.

However, even the savviest merchants often stumble over GMROI, because it forces them to acknowledge that they probably have bad inventory in their stores. It may be difficult for a merchant to admit that he or she made a mistake, but the sooner that the mistake is rectified, the sooner that merchant will be back on the road to profitability.

IN REAL LIFE: Lyn Hoppe of Hoppe Jewelers was able to improve her GMROI by reducing discounting and by fine-tuning her inventory. “Don’t discount and don’t let merchandise age,” she says. “I don’t buy it and keep it anymore. I buy it and sell it. At the end of the day I have money, I’m able to pay my bills, which is lovely, and I’m able to keep my inventory fresh without having to buy as extensively as I used to.”

Tonia Ulsh of Mountz Jewelers in Pennsylvania says stock balancing with vendors is the key to a healthy GMROI.

Ulsh also uses Abe Sherman’s Balance to Buy program to quickly identify which styles of jewelry are selling at which price points. If the $1,500 to $2,000 price point is hot, but she doesn’t have much inventory in that range, she might consider repricing non-branded pieces in the $2,000 to $3,000 range that are NOT selling. “I can change the price to fill in the price range that I need.” That will allow her to repurpose inventory, rather than restock, keeping her inventory lean.

A LOOK AT GROSS PROFIT: “Specialty jewelers sometimes confuse gross margin and gross profit, thinking they are one and the same, and they really aren’t,” says Ken Gassman. “Gross margin is a percentage and gross profit is really the dollars you generate.” Break down the components in an average $5,000 diamond engagement ring, for example, in which the diamond has a low margin and the setting has the potential for a better margin. “The typical specialty jeweler has been selling a gold semi-mount for the diamond engagement ring with a gross margin of 56 percent,” he says. “A platinum mount for the same diamond carries a gross margin of about 50 percent. And jewelers look at that and say, ‘No, I’m making more profit on a gold mount’ — well, they’re really not. The gold mount will sell for around $1,000 retail. The platinum mount is going to sell for around $2,200. If you sell the gold mount you’ll generate gross profit dollars of $560; if you sell the platinum mount you’ll generate $1,100 of gross profit dollars. Now, when I look in my wallet, $1,100 is a whole lot more than $560, and if I’m a jeweler I want to pick up that difference.”


THE NUMBER
Customer
Lifetime Value

Customer’s Average
Purchases per Year x 20 Years
IMPORTANCE:
Cultivating a customer throughout his lifetime is cheaper than
finding new customers.

YOUR TARGET: Varies by store type

THE EXPERTS SAY: Create an internal benchmark or goal for your customer’s potential lifetime value, based on your best customers, says Andrea Hill. If your best customers come in twice a year and spend a total of $10,000, and keep up that pattern for seven or eight years, let that be your goal. Think about what kind of marketing you need to reach those customers. “There’s no such thing as a one-size-fits-all marketing strategy. Know what your great customers look like, understand what they read, where they go, where they get their information and what they respond to,” Hill says.


THE NUMBER
Refresh Rate

The Frequency with Which
You Should Update Your
Store Interior
IMPORTANCE:
Keeping your
store decor up to date leads
to more sales and new customers.

YOUR TARGET: 5 Years

THE EXPERTS SAY: In 2012, INSTORE’s Big Survey indicated that 61 percent of jewelers had remodeled their store within the past five years. They’re on the right track. Ruth Mellergaard, principal of GRID/3 International recommends jewelers refresh their stores at least every five years or risk losing sales.

IN REAL LIFE: Jay Klos, who built a freestanding store from the ground up, realized an increase in sales of 30 percent last year. “I agree with five years,” he says. “Most people wait 10 or 20.”


THE NUMBER
Sales Per
Square Foot

Total Sales $ ÷ Sales Floor Area
IMPORTANCE:
Determine how effective your store layout is and your sales staff is.
YOUR TARGET: $415 – $1,203

THE EXPERTS SAY: According to the JA 2014 Cost of Doing Business, this number ranges from $415 for stores with sales of less than $1 million to $1,203 for stores with sales of over $5 million. High profit firms are at $585 per square foot.

Tracking sales per square foot (total net sales divided by total floor area) is revealing. It can show how effective your store layout is and your sales staff is. “It’s an internal benchmark,” says Andrea Hill. “People will move stuff around in their cases a little bit but don’t venture too far from moving trays around within fixed spots. People tend to move the same way through the store all the time. If every time they walk in your store, they beat the same path in your store and you never move things around, they never even know about the other stuff. Test how those layouts work. Consider flexibility as part of your redesign. Benchmark how different types of layouts work. Merchandising and re-merchandising a store is a very important part of being a retailer, particularly in luxury goods.”



high employee turnover is not an age thing; it’s a motivation thing.”

Andrea Hill

THE NUMBER
Employee Satisfaction

Do Your Staff Members Really
Enjoy What They Do?
IMPORTANCE:
Satisfied employees are the first step toward satisfied customers.
YOUR TARGET: 6

THE EXPERTS SAY: Happy, high quality employees lead to happy, loyal customers, says Andrea Hill. “Some stores may experience high turnover or employees who have been there forever, who have passed their shelf life decades ago. It’s not an age thing; it’s a motivation thing,” Hill says. So, monitor their productivity — not just sales, but margin, too. Find out if they are going for the easy sale by offering a discount.

There is a way to put numbers on employee satisfaction levels, as well. Just ask them. Once a year, conduct an employee satisfaction survey. Ask them questions designed to gauge their level of motivation and satisfaction. Rather than 1 to 10, use a scale of 1 to 6, because it forces more of a decision. Avoid a 1 to 5 scale, because in that case 3 would be completely neutral.

Other ideas: Have a manager follow up each sale by conducting a customer-satisfaction survey over the phone.

At the end of any staff meeting, ask employees what management should be doing better. “Any manager or store owner who is genuinely taking that input is going to be contributing to engagement,” Hill says.

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