Connect with us

David Geller

Here Are the New Inventory Rules of Jewelry Retailing

In today’s business climate, doing things the old way will kill your store.

mm

Published

on

Did you previously work for your parents or a long-time jeweler? Because it’s not your grandfather’s Buick anymore!

When your parents or your old boss were younger, they enjoyed the luxury of “blowing money to the wind” on excessive inventory. Then they taught you how to manage a business, but now your livelihood is not as good as theirs was.

Back in the day, your parents or boss didn’t have to compete with Internet pricing and maybe didn’t have to worry about a “Rap list.” 

Back in the day, a store’s gross profit was 55-70 percent! Yes, stores got keystone on diamonds and four-time markup on color and gold. In the 1970s, I worked at Neiman Marcus as their jeweler, and I remember them selling a $100,000 diamond at triple key. Your parents or old boss may have told you, “Keep old inventory; it’ll sell.” And they may have said, “No one will pay higher prices for repairs; it will only hurt diamond sales.”

Not only are these things not true, but in today’s business climate, they will kill your store. Overall store gross profit margin percentage today is about 43-48 percent, and margins on diamonds continue to shrink. 

With that in mind, you can’t keep inventory for more than 12 months. Stock balance with vendors anything not selling within a year, or clear it out yourself. Additionally, you must increase your turn to compensate for low margins. Reorder anything sold within six months of stocking it. 

Advertisement

Lower gross profit margins on products means every department has to stand alone as an income and profit source. That means the shop is no longer a giveaway department; it must make its own money and it should be a 50 percent gross profit margin department.

Back in the day, high markups saved the day and you could be fat and lazy. Today, you have to be a lean, mean fighting machine. Your overall stock inventory amount at these lower margins needs to be about equal to a year’s gross profit dollars from selling this stock.

Be lean and mean and have more money and lower debt.

David Geller is a 14th-generation bench jeweler who produces The Geller Blue Book To Jewelry Repair Pricing. David is the “go-to guy” for setting up QuickBooks for a jewelry store. Reach him at [email protected].

Continue Reading
Advertisement

SPONSORED VIDEO

Wilkerson Testimonials

Downsizing? Wilkerson Is Here to Help

Orin Mazzoni, Jr., the owner of Orin Jewelers in Garden City and Northville, Michigan, decided it was time to downsize. With two locations and an eye on the future, Mazzoni asked Wilkerson to take the lead on closing the Garden City store. Mazzoni met Wilkerson’s Rick Hayes some years back, he says, and once he made up his mind to consolidate, he and Hayes “set up a timeline” for the sale. Despite the pandemic, Mazzoni says the everything went smoothly. “Many days, we had lines of people waiting to get in,” he says, adding that Wilkerson’s professionalism made it all worthwhile. “Whenever you do an event like this, you think, ‘I’ve been doing this my whole life. Do I really need to pay someone to do it for me?’ But then I realized, these guys are the pros and we need to move forward with them.”

Promoted Headlines

Advertisement

Advertisement

Advertisement

Subscribe


BULLETINS

INSTORE helps you become a better jeweler
with the biggest daily news headlines and useful tips.
(Mailed 5x per week.)

Facebook

Latest Comments

Most Popular