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3 Things To Do When Business Is Down

Each of these tips could save you substantial expense.

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WE ARE EXPERIENCING a period of unprecedented contraction in the retail jewelry business. In 1997, we had almost 28,000 retail jewelers; in 2017, it was down to 21,000 and by the end of 2018 was likely below 20,000. You could make the argument that the strongest will survive and become even stronger, but the big question looms, what do I do now that business is down? Here are three tips that may help.

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1. RENEGOTIATE EVERYTHING. You know the old saying that everything is negotiable? Well, everything can be renegotiable, if you try hard enough. The above-market lease that you signed years ago may be ripe for renegotiation at a lower, more realistic rent if you sign a new longer-term lease. The last thing your landlord wants is another empty space in his strip mall, especially when you’ve been a good long-term tenant. I’ve had great success in lowering my fixed monthly expenses for basic things like Internet, cable, phone, even garbage pick-up and window washing. In most cases, all I had to do was ask. Look at lowering all your fixed expenses and you’ll be amazed how much money you can save.

2. TRIM THE FAT. Take a hard look at your variable expenses. There are so many useless things jewelers spend money on. $300 a month for fresh flowers is a great example. I’m sure you won’t lose that bridal sale by displaying silk roses. One store I know used to spend $500 a month on ice cream and snacks for their employees, a nice gesture but not necessary. You can always cut back without cutting things out entirely. When you look at what you spend money on, you’ll be amazed at what just doesn’t make financial sense anymore in our current business climate.

3. ANALYZE YOUR STAFFING. When your gross sales are down, you must adjust your staffing levels accordingly. When you analyze your sales hourly, you may find it doesn’t make sense to have three people on in the final half-hour if you don’t do very much business then. You may even want to consider closing a half-hour earlier. Your staff probably won’t mind, and you will save thousands of dollars a year with just this small adjustment. If your customers aren’t shopping in the evenings anymore, perhaps a total overhaul of your hours are in order.

All of these suggestions may not work for everyone, but the goal is to get you to think about how you can save money and remain profitable. “Business as usual” just doesn’t work in today’s business climate.

Evan James Deutsch is founder and president of Evan James Limited, a 30-year-old AGS Fine Jeweler located in Brattleboro, VT.

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Sophomore Edition of Watches & Wonders Miami Draws 28,000

Attendance was up 40% at the free event.

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IF I SAID YOU could spend a weekend in February surrounded by blue skies, palm trees, dozens of luxury cars, the finest champagne, extremely large yachts, huge jewels, extraordinary works of art, and the latest releases by some of the world’s most respected Swiss watch brands (whew!), would you do it?

Well, you can, and next year, you should. The sophomore edition of Watches & Wonders Miami this past weekend had all of those magnificent things, J-Lo and A-Rod sightings, and oh, so much more.

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Visited by nearly 28,000 people over three days, according to the event organizers, Watches & Wonders Miami – a joint effort between the Fondation Haute Horlogerie (FHH) and the Miami Design District Associates – is already being hailed as a success with a 40 percent increase in attendance from its first edition in 2018. What makes this event different from watch-oriented fairs such as Baselworld, however, is that the event is open to the public for its duration and doesn’t charge an entry fee. Oh, and the fact that the event is held outside in 80-degree weather rather than in the middle of a Switzerland winter doesn’t hurt, either.

Another plus to Watches & Wonders Miami is that guests are invited to visit many of the brands and see their latest novelties in their pre-existing boutiques located in the Miami Design District in lieu of booths at a traditional trade fair. This makes for an intimate environment for those in attendance, and in some cases, buyers are treated to additional perks like visiting Cartier’s rooftop VIP lounge (I may or may not have had a glass of wine or two up there. I’ll never tell.) Attendees also have a variety of opportunities to learn more about the watchmaking world through the classes, seminars, lectures and panels set up at varying times throughout each day. For example, if independent watchmaking is your thing and brands like H. Moser & Cie or F.P. Journe are what you covet, then you likely would have wanted to hang around the independents tent where many pop-up shops were located and where several panels on collecting independent watches were held.

As a first-time attendee of the three-day event, what I probably liked most about it was that there wasn’t this separation of Richemont brands versus LVMH brands versus Swatch Group brands versus independent brands. I was running from Zenith to Romain Gauthier, then from Omega to Girard-Perregaux for appointments, which is something I could never do at one of the other watch fairs.

Watches & Wonders Miami offers an opportunity for those who may not be able to attend the SIHH in Geneva or fork out the thousands of bucks it often costs to get to Baselworld.

Those who are members of the press, or who are collectors, or who are just your everyday watch enthusiasts can come and see the latest releases, and in some cases, releases specific to W&WM. And as a bonus, there is jewelry, too, including pieces by master craftsman Sevan Biçakçi, who was at the event to showcase his line of incredible one-of-a-kind watches nine (nine!) years in the making.

For now, Watches & Wonders Miami is one of the few watch events held in the U.S. that brings together brands as established and recognized as those exhibiting there. And with some of the international watch shows falling apart at the seams, it looks like it could be around for a long time to come.

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David Geller

Here’s Why Coin Dealers Make More Profit Than Jewelers

It has a lot to do with a willingness to move quickly.

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WHO’S BETTER AT BUSINESS: a coin/bullion dealer or a jewelry store owner?

Odd question, right?

I recently had a conversation with a store owner whose operation did $3 million in total sales, which were divided into two income streams: $1.4 million in fine jewelry sales, and $1.6 million in coin and bullion sales.

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I asked this store owner a few questions, and his answers were intriguing.

“What’s your margin in jewelry sales?”

“About 45 percent.”

“What’s the margin selling bullion and coins?”

“Anywhere from 8 to 12 percent.”

“OMG, really? That low?”

“Yep, you buy it, turn it fast and make a quick 8 to 12 percent profit.”

“When it comes to coins and bullion, when do you consider them old?”

“Two weeks. At such low margins, we can’t hang onto them. If a Canadian Maple Leaf coin stays here for two weeks, we’ll melt the sucker!”

I did not ask what percent of inventory is scrapped versus sold. But let’s assume one-third is sold a tad above cost and the rest at break even, and see what kind of money we could make if that’s all we did.

Let’s average the profit to an even 10 percent. Calculating one-third of 52 weeks means we will make a 10 percent profit 17 times a year. So say we buy a one-ounce coin for $1,300 and make 10 percent profit ($130). $130 made 17 times a year means we make $2,210 in gross profit.

Jewelry has its own “numbers” like coins/bullion do, just different ways of counting. So, similar to the coin example, let’s start with a ring that costs $1,300. Let’s say that $1,300 ring after a year sells for $2,600 and we make a gross profit of $1,300.

The coin dealer is doing better by almost twice as much, even though he only made 10 percent per sale and the jeweler made 50 percent.

Most jewelers look at the gross margin only. “Yeah, I made keystone.” But they’re not considering the turn ratio. And what if it took more time — like, say, two years? When you wait that long, the bad stuff starts showing up as debt. Your accounts payable go way up, as does credit card debt.

A coin dealer is better in business because he is forced to liquidate quickly. They think in terms of money, whereas jewelers think in terms of “it’s gold and diamonds; it will be in good shape and salable long after I’m in the ground.”

Jewelry is old in 12 months. Coins are old in two weeks.

Jewelers just shove their old crap to the left side of the case and stuff more crap in the case. I had a jeweler friend to whom I explained this, and he said he had a buddy who owned a furniture store. The furniture store guy said he never had a problem with old inventory. He said, “Where in the hell am I going to put extra beds???”

Learn something from the coin/bullion dealer. The faster you turn the item, the better for your cash flow.

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Editor's Note

Our Editor-In-Chief Admits He Didn’t Know What WhatsApp Was … Do You?

Like other tech, it has the potential to make clients way happier with business owners.

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WHEN I SAW this issue’s “Do You or Don’t You” question, I was just as baffled as many of our readers.

The question, posed by our group managing editor, Chris Burslem, through our Brain Squad survey was this: “Do you use WhatsApp or another messaging service in your marketing or to otherwise communicate with customers?”

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I admit it: I wasn’t 100 percent sure what WhatsApp actually was.

So, I looked it up, and it’s a messaging app that sends text messages for free through an Internet connection. But its advantage is that you can create a business profile so users can see your address, website and contact info. It also allows businesses to save and reuse messages that you frequently send (e.g., “Your repair is ready!”), as well as sort your contacts by labels (e.g., “Frequent client,” “Engagement client only,” “Repair client only,” etc.).

In other words, I quickly learned that WhatsApp has some really cool features for small business owners.

Unfortunately, I think a lot of jewelry retailers are burned out on new tech. And yet, technology like WhatsApp, social media and review-management services like Podium can allow you to connect with clients in ways that they prefer and provide more efficient customer service.

If you’d be willing to walk uphill both ways through snow and sleet to serve your customers, are you also willing to delve into the latest technology to do the same?

Trace Shelton

Editor-in-Chief, INSTORE
trace@smartworkmedia.com

Five Smart Tips You’ll Find in This Issue

  • Geofence your competitor’s store. (Manager’s To-Do, p. 26)
  • When working with a female engagement ring client, ask her to close her eyes and describe the perfect ring. (The Big Story, p. 39)
  • When dealing with a customer complaint, say “Tell me more” in order to put them at ease. (The Big Story, p. 40)
  • Ask job candidates, “Tell me how you prepared for this interview.” (Tip Sheet, p. 47)
  • Bundle slow-moving product with a fast seller in order to clear it out. (David Brown, p. 52)
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