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Real Deal

When A Competitor’s Going-Out-Of-Business Sale Lasts Four Months, A Jeweler Takes Action

For this retailer, the question is … to sue, or not to sue?

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It came as no surprise to local competitors last Nov. 15 when the signs went up at Glenwood Jewelers announcing their going out of business sale. Charles Glenwood had run the city’s oldest and most prominent fine jewelry store for nearly 40 years after taking it over from his father. His friends knew that he had been ready for retirement for some time, but just the thought of closing the fourth generation Southern store had him putting the decision off as long as possible. With their only child a pediatrician up north, no other family members interested and no outside buyers on the horizon, Charles and his wife had finally chosen to engage the transition sale company with whom they’d been talking since the beginning of the year. 

ABOUT REAL DEAL

Real Deal is a fictional scenario designed to read like real-life business events. The businesses and people mentioned in this story should not be confused with actual jewelry businesses and people.

ABOUT THE AUTHOR

Kate Peterson is president and CEO of Performance Concepts, a management consultancy for jewelers. Email her at kate@performanceconcepts.net

Dale Van Ander was not particularly happy with the timing of the sale. Only one strip center separated his store, Van Ander Diamonds, from Glenwood’s. He knew that it was smart of Charles to run his GOB sale over Christmas, but he hated that his sales would surely take a hit — with his store possibly finishing behind the previous year for only the second time since they opened in 1999. 

In fact, Van Ander Diamonds had long been a thorn in Charles Glenwood’s side. Though Glenwood’s was the “traditional” store and Van Ander’s the more contemporary and modern, Charles still saw them as fierce competitors. Rapid growth, numerous awards and a steady rise to local, state and even national prominence did little to change Charles’ perception of Dale and his company. He still considered them “tawdry newcomers” — a sentiment he was fond of sharing with both vendors and customers.

Despite their challenges over the years, Dale decided to take a philosophical approach to Glenwood’s sale. He and his team set what they believed to be reasonable goals for the season, and worked hard to put their best game forward, relying on their strong client relationships, unique designs, and (in his opinion) superior service and sales ability.

Glenwood’s transition company had done a great job getting the word out for the event, playing up the store’s long reputation for quality while advertising deep discounts, contests and other promotional efforts. Dale couldn’t begin to imagine what they must have spent on online and traditional marketing, banners, billboards, mass media and direct mail. At the end of December, despite their best efforts, Van Ander’s was off nearly 50 percent for the six-week season, and although they’d gone into November up six percent for the year, they finished 2017 two percent behind 2016.

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Dale and his team were not happy, but they knew that with Glenwood’s closing, they would get back everything they had lost during the sale and then some. Except that Glenwood’s didn’t close. The sale was originally advertised as “through Dec. 31 only.” In early January, however, they began promoting that the sale was being extended “by popular demand.” Shortly after Valentine’s Day, with the sale still running and his sales off nearly 40 percent year to date, Dale decided to take action.

He learned that city and state laws governing Going Out of Business sales contained very specific regulations designed to protect both consumers and other local businesses. According to the rules, businesses running GOB sales must secure a permit from the city. By state law, GOB events could not last more than 60 days (unless the merchant applied for a maximum 30 day extension), and could not offer new or supplemental inventory brought in specifically for the sale. In fact, businesses are required to post an inventory list with the state prior to the start of the sale. By Dale’s calculation, even if all of the other requirements had been met (and he was sure they hadn’t), the last possible day for their sale would have been Feb. 13. At the end of February, they were still advertising.

A call to the city’s records department confirmed that neither Glenwood’s nor the sale company had gotten a permit for the event and it seemed nothing was on file with the state either. Unfortunately, subsequent calls to the city solicitor, state’s attorney, attorney general, city police and sheriff’s departments proved to be nothing but a game of “pass the buck,” with no one wanting to take responsibility for the situation, even though Glenwood’s was clearly breaking the law.

On March 5, Dale took the city and Charles Glenwood to court, seeking a restraining order and cessation of the sale. Rather than shut the sale down, the city granted Glenwood’s the permit they were missing for the price of a small fine. Threatened with continuation of the lawsuit, Charles agreed to shut the sale down on March 15, remaining open “only for pick-ups and repairs.”

Glenwood’s did close, and since mid-March, Van Ander’s has seen somewhat of a rebound in their sales. The uptick, though, has not been enough to help Dale cover the nearly $300,000 in gross profit he lost during the four months of the sale. The loss has put Dale in a tenuous financial position for the first time in his company’s history.

The Big Questions

  • Is there anything Dale and his team could have done to better prepare for the impact of Glenwood’s sale?
  • Since the sale was illegal, Dale does have an opportunity to sue Charles Glenwood for loss of business, relying on a statute that has been untested in the state — but Dale is concerned about the expense with no assurance of success. Should he move forward and try to recover at least some of his loss?

Expanded Real Deal Responses

Mark R. Seneca Falls, NY

Every business should get to know the “going out of business” laws for the state or locality. If the ads are not correct, call the jeweler and the city to complain right away. File a complaint with the state attorney general. Keep copies of ads or record commercials. We experienced the same thing back in 2011. We opted not to sue and weathered the downturn. 

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Drue S. Albany, NY

I think the best thing that Dale can do is to look forward and never look back. He must stand tall and not discuss what Glenwood did to his clients.

I understand his frustration; in our area, we had a jeweler do the exact same thing, our Christmas sales were impacted slightly and he decided to continue the sale until after Valentine’s Day. It all worked out in the end and we are stronger than ever. I will not work on the pieces that were purchased during the sale for repairs, since once you touch it, you own it.

So Dale, don’t acknowledge any of the jewelry from the sale and put your best foot forward by offering the great service and product that you have had for years. 

Marc F. Houston, TX

I’ve had this experience several times in the last 33 years. The best promotions I used were (and if it didn’t start to work in two days, I would switch them out)

“Going Out For Business,” “We’ll Be Here To Serve You When Others Fail,”

“Sell Us Your LOSING Lottery Tickets Today,” and “Free GIA Graduate Appraisals On Your Diamond Purchased From XYZ Sore Here.” All of these are traffic builders, and when you have traffic, you will have sales.

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Let’s remember it is a free market. If your neighbor fails, be kind to them, wish them well and thank them for the golden opportunity they are giving you! 

Buddy B. Merion, PA

My advice is move on. The store that closed did his best to close the store and perhaps he had more inventory left that he needed to unload. The fact that he did not apply for a license or permit in my opinion is noteworthy but should not be cause for a suit or legal action. There are some vague rules that differ from state to state and city to city, and most of them go unenforced. I would just suck it up, move on and look to the future. 

David B. Calgary, AB

I have had GOB sales around me many times over a 38-year history and they will happen again. They do hurt and they often last far longer than advertised. In some cases, I have seen them last a full year. Our city has no laws anywhere near as detailed as those in the story. One thing I learned from a very protracted litigation I was involved in was that you never want to litigate an issue in a courtroom. It is like rolling dice but far more expensive. Don’t send more money down the drain when you are already feeling the pinch. Now when I hear of a GOB sale, I use a strategy from a book INSTORE recommended: have a big sale of my own.

As an aside, I think one of the nastiest sales I had to deal with was a “Going Out For Business” sale. It lasted a year and was very misleading. 

Allison L. Rock Hill, SC

He should spend the money on advertising rather than paying legal fees. A great header would be, “We will handle it from here,” with a message that anything purchased from the closed store can be brought in for repair and inspections going forward and wish the owners happy retirement!

Never let ‘em see you sweat … and we are all sweating something! 

Kay D. Andover, MA

It is understandable that Van Anders would be unhappy over the impact and timing of the sale, but it is doubtful that it was intended to be intentionally damaging to Van Anders. Glenwood might not have known about strict state guidelines or permit requirements for a GOB sale, but the transition sale company should have known and discussed state regulations with Glenwood. Other factors extending the sale could have also been in play (e.g., staying open through the end of a lease). Even though the GOB sale damaged Van Anders’ bottom line, a lawsuit is risky for multiple reasons. Customers will find out and feel Van Anders is picking on those poor people who didn’t want to close a decades-old family business and may decide to purchase their jewelry somewhere other than the store conveniently located across the street. Van Anders might consider advertising an event welcoming new customers from Glenwood with a special discount; they may well make up all of their losses and then some. Might as well take the high road. 

Elysia D. Spencer, NC

I like to be ahead of the game. As soon as rumors of a sale hit the wind, I would have researched the laws and ordinances and made sure they were followed through from day one. I admire that Dale was insistent enough to follow through legally, but only after the bulk of damage was done. I would have played up repairs — quick turn-around sizings and signage welcoming his customers, maybe with a contest, like bring in your Glenwood’s receipt to win a gift card, spa day, whatever. Get bodies in, collect contact info then clientele (hey, Walgreens just did it with Rite Aid!). 

S. Maroskos Lynn, MA

Dale will probably lose more in litigation processing fees than he hopes to gain. Lawyers are expensive. Not to mention time away from his store and sheer aggravation. He will also lose potential customers that are loyal to Glenwood. 

Laura S. Indianapolis, IN

An attorney once told us that this type of sale has questionable tactics, but at the end of the day, it’s all about the money that a lawsuit will cost for an uncertain outcome. The state laws are only as good as the state’s appetite to allocate the resources to enforce them. In Indiana, the state is not hungry enough to take action. So, respectfully: suck it up and move on. Or as granddaddy would say, saw wood. 

Joe K. Lantzville, BC

They should have jumped on it way sooner; you snooze, you lose. Litigation will only put him further in the hole. I would just let it go and save paying a lawyer. Work on trying to get the closed store’s clientele by offering to service jewelry, bridal, etc. 

Marcus M. Midland, TX

This situation stinks. Sitting in Dale’s position, I don’t think there is anything you could have done to prepare. How could you know that they would continuously run the sale? And seeing that the city seems like it has a “good old boy” mentality towards Glenwood’s is even more maddening. Question is, do you let it go and move on, seeing that they did finally close? Or do you saddle up and ride their little red wagon? 

Bill U. Fayetteville, AR

Dale should sue, stressing the legal and ethical violation of Glenwood and Dale’s own ethical and honest conduct. This is Dale’s opportunity to polish his own ethics and conduct. 

Jim A. Salt Lake City, UT

At the first sign of the sale, go to the retiring jeweler and ask for an endorsement to his clients, to be deployed after the sale. In exchange, offer the retiree a piece of the action on first sales generated from his list. Now, he can do an “orphan” postcard campaign, letting people know that if they’ve lost their jeweler, he’s happy to “adopt” them.

Jumping on the legal action early may have alleviated the problem. Just asking him if he’d gotten the permit and was aware of the rules may have intimidated him into obeying the rules.

As for lawsuit, the company that did the sale probably knows the rules and since they do these things regularly, a suit against them — or the threat of going public with the complaint — may be enough to coax a settlement. Might not get it all, but get some.

Otherwise, ramp up the marketing and sell your way out of the problem. 

Patrick D. Little Rock, AR

Been there several times. Usually, none of the authorities are sympathetic to the jeweler’s loss. They only consider the harmed party to be a nuisance.

Suck it up, put on your happy face and make the best you can of a bad situation.

We have been harmed by many GOB sales. One jewelry store has gone out three times, reopening in a few months at the same location by the same owners.

Use your energy and precious resources to continually provide great service and quality in your unique manner and at excellent prices. 

Jim C. Fayetteville, AR

I despise lawsuits. I think it’s just pouting because you didn’t get your way or because you lost. It’s good info to know about the laws for a GOB sale. However, they could have offered a price match type of discount or built their own value better. In the long run, he should gain a whole lot of new clients. You have to prepare for those tough months and grind through them. We debunk the sales all the time though. Typically, the items are just marked up more to cover the discount. Especially if he was getting in new inventory. 

Rossi Jewelers Lauderdale-By-The-Sea, FL

Wow. It is clear to me, although very unfortunate, that Dale should move forward and let this go. If Dale takes the proverbial high road and moves forward as “the” jeweler in town, he will only gain more customers, more revenue, and much more goodwill in the town. He could even take it a step further and reach out to Charles Glenwood and acquire his mailing list/customer base. Then, start by marketing a special deal to get them in the store and win them over. So, he has the potential to have the best year ever in business. If Dale decides to sue for his losses (with no assurance of success), it will put the store in a bad light, the news will surely blast it out there and the town will see him as a bad guy. Again, very unfortunate, but I would let it go. Pamela Rossi, P.J. 

What’s the Brain Squad?

If you’re the owner or top manager of a U.S. jewelry store, you’re invited to join the INSTORE Brain Squad. By taking one five-minute quiz a month, you can get a free t-shirt, be featured prominently in this magazine, and make your voice heard on key issues affecting the jewelry industry. Good deal, right? Sign up here.

Kate Peterson is president and CEO of Performance Concepts, a management consultancy for jewelers. Email her at kate@performanceconcepts.net.

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Real Deal

An Employee’s Spouse Demands Another Employee Be Fired. How Should These Owners React?

If they don’t do it, they risk losing their top salesperson.

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SOME CHOICES ARE just harder to make than others. For the moment, Michael Rodriguez was feeling more like a dispirited King Solomon than the owner of a young, vibrant and growing fine jewelry store! Michael looked out his office door onto his sales floor and watched Ken Bishop, his good friend and top salesman, working with a difficult client as he considered his options.

ABOUT REAL DEAL

Real Deal is a fictional scenario designed to read like real-life business events. The businesses and people mentioned in this story should not be confused with actual jewelry businesses and people.

ABOUT THE AUTHOR

Kate Peterson is president and CEO of Performance Concepts, a management consultancy for jewelers. Email her at kate@performanceconcepts.net

Village Diamonds and Fine Jewelry was a dream come true for Michael and his wife Megan. They started dating while in college, both working part-time in the mall for a large national jewelry chain. By the time they graduated — Michael with his degree in business management and Megan with hers in marketing — they had both developed a genuine passion for the jewelry industry.

When they got engaged the following year, they promised each other that they would someday have their own store. For the next five years, they saved every dime they could, banking their wedding gift money, Megan’s part-time paychecks and Michael’s bonuses while continuing to live the simple life they’d grown to love in their Midwest town.

In 2007, with the help of a sizeable inheritance from Michael’s grandmother, their dream became a reality. While visiting a downtown coffee shop, Megan noticed a Going Out of Business sign in the window of the Village Jewelers store. She snapped a picture of the sign and texted it to Michael. That afternoon, Michael made his way to the store and talked with the owner, who agreed to sell the store. They knew that the business itself had died a slow death, but they saw the opportunity to recreate something great out of the ashes. Michael left his position with the national chain and within a year, he and Megan had closed the deal, renovated the showroom, sold off the old inventory, and found the right vendor partners to supply the contemporary product lines they wanted. With the addition of one salesperson and the contracting of a trade shop to handle repairs, they were ready to open the new Village Jewelers.

Ken Bishop, their new sales associate, came to them with extensive retail background, but no jewelry experience. He had worked for over 12 years selling high-end sporting goods in a local store that was a client of Megan’s former marketing firm. Ken had heard about the Rodriguezes’ new venture, and when the sporting goods store was bought out by a large corporation, he gave Michael a call. Ken quickly became a highly valuable asset to the store, and as business grew, so did his skill and ability. Over ten years, through the building of just under $6 million in sales volume and the addition of eight permanent staff positions, Ken remained the stabilizing force on the sales floor and a great friend to Michael and Megan.

The Rodriguezes were supportive when Ken announced that he and his wife of 20 years were separating. Michael even loaned Ken his truck the day that Ken moved into his own apartment across town. Susan Bishop had also become a close friend of the family, making the situation more than a little tense at times, but the Bishops seemed to be keeping things amicable, and Michael and Megan did their best to stand by their employee without taking sides or allowing things to get personal.

Several months after the separation, Megan noticed that Ken seemed to be spending an inordinate amount of time with Amanda Davis, the generally competent, very attractive and much younger office manager who had been with them for nearly two years. Michael asked Ken directly what was happening, and Ken confirmed that he and Amanda had, in fact, recently begun dating. He confirmed that his interest in Amanda was part of the reason for his separation from Susan. He indicated that he and Amanda were not at all serious, and that he was still hoping to reconcile with his wife. Michael and Megan were troubled by the revelation, but had no reason to question the performance of either of their employees and felt uncomfortable questioning their judgment.

About a month later, Megan noticed a marked difference in Amanda’s demeanor in the store. In talking to Amanda, Megan learned that she was no longer seeing Ken — that Ken had decided to make a solid effort to repair his marriage. The next day, Ken asked for a meeting with Michael and Megan. He told them that he and Susan had made the decision to get back together and were doing everything possible to work on their marriage. He was hoping to move back into their home the following weekend, but before that could happen, he had to see to Susan’s one non-negotiable demand: Susan would not take him back as long as he continued to work with Amanda. Ken made it clear that if Amanda continued to work at Village Jewelers, he would have to resign. He asked the Rodriguezes for a few days off while they thought about what would be best for their business, and asked them to get back to him when they were ready to talk.

The Big Questions

  • Should the Rodriguezes give up a top salesperson who has consistently produced in excess of 30 percent of the store’s sales volume, or should they give up a competent (but not extraordinary) office manager?
  • If they decide that Ken’s contribution is too significant to lose, is there a way to dismiss Amanda without crossing a legal line?
  • Is there any way to create a compromise that would work for everyone?
John M.
Seattle, WA

The Rodríguezes should recommend that Ken move on to a new career. They made two fatal mistakes in their employment of Ken. First, they mixed business relationship with personal relationship, and second, they allowed an employee other than themselves to control the success of their business. Allowing Ken to stay on puts them and their business in a compromising position. Their current dilemma clearly demonstrates this. Ken’s sales productivity and “friendship” with the Rodríguezes is controlling the success or failure of their business and confusing their ability to make a candid business decision. Moreover, this situation with Amanda will likely not end here. Most importantly, the Rodríguezes cannot allow any person other than themselves to control the long-term success of their business. There are many great salespeople to take Ken’s place, and the Rodriguezes will be better off for setting an example to all their employees that their interest is in protecting the business they worked so hard to grow.

Creighton W.
Yuba City, CA

While in an ideal world you could keep your top salesman and let go of a solid but seemingly replaceable office manager without hard feelings, the reality is you couldn’t do so without crossing moral, ethical, and legal lines. Both individuals chose to partake in an office romance, so both are responsible for any awkward atmosphere in the workplace, along with the right to be let go because of it. However, the manager should not lose her job because of the insecurities involved in Ken’s relationship, which is outside of the workplace, and what would be needed to mend it. It would also be difficult to justify her firing and would very likely lead to a lawsuit. With a business that’s still relatively new, it could bring bad publicity. The solution? If the owners are as close with Ken and his wife as they say, I say they bring her in and explain the logistics of firing Amanda and see if any other compromises could be met. If not, Ken unfortunately will have to resign.

Jim S.
Kapaa, HI

Goodbye Ken! Ultimatums are a deal breaker in any negotiation.

Karen M.
Oneonta, NY

An employee’s spouse does not make the hiring and firing decisions for the Rodriguezes’ business — only they do! So with all due respect to Ken as a friend and major contributor to the business, Michael and Megan need to let him resign. He has proven himself as a capable salesperson in more than one area and will land on his feet financially. And if he is sincere about saving his marriage, he needs to make a life change that shows this commitment. This will be the only long-term solution. Amanda, meanwhile, may perform better and more loyally in Ken’s absence. It is entirely possibly that working in his shadow has hindered Amanda’s performance up until now, and she will come into her own with his departure. In the meantime, this is a great illustration of why workplace romances are problematic! Mike and Megan may want to consider formalizing a policy about this to avoid headaches down the road.

Daniel S.
Cambridge, MA

Oh man, this is all on the owners. The in-store relationship should never have happened. When I had employees, we had a work manual everyone had to sign off on and it clearly stated that no sexual relationships were allowed between employees or between employees and suppliers. As soon as the owners found out about the relationship, they should have told them that one or the other had to go immediately. No option on ending the relationship because then they would just lie about it. One had to leave and then the two of them could decide which one. If it meant the top salesperson left, so be it, because it never should have gotten as far as it did.

Steve J.
Carefree, AZ

Ken created this situation by leaving Susan for a fling with a co-worker. Ken ditched the co-worker, causing a change of dynamic on the sales floor. Ken then pulls out the “I’m the most valuable employee” card. I’d call his bluff and let him go. The marriage is doomed for failure; better to cut off that wart now before it grows.

Marc F.
Houston, TX

This is where the regular reviews of performance take over and make the decision. In Texas, an employer can fire an employee for “cause”. The cause here would be “general reasons”. Of course, the office manager has to go. Salespeople make things happen, and it would be a big mistake to let your one-third producer go. However, I would not let the wife know the reason for termination.

Tina S.
Chicago, IL

They should fire both employees. What’s to keep them from doing it again, especially Mr. Bishop, who should have known better? Not good to mix your social life with work on that level; how dare him even ask them to choose.

Tim S.
Fairbanks, AK

First of all, Ken cannot be allowed to call the shots. I would let him know that he would have to make a decision to continue or stay, but that in no way would I make a choice between them. It sucks you right into their drama. As a matter of fact, I would lean towards letting him go. He needs to take care of his family, but not at the expense of someone else’s job. Second option is to let them both go.

Stacey H.
Lincolnwood, IL

It’s not Amanda’s fault, and sales staff does not get to decide who works at the store. Amanda stays, and if Ken has to go to save his marriage, so be it. You can’t reward an ultimatum, and while Ken has been a good salesperson, he himself is the one with the decision to make, not the Rodriguezes. He should not cost the store unemployment insurance upcharges because of his marital situation, and Amanda could sue the snot out of them for firing her with literally no reason. Ken needs to do what he needs to do, fine, but that isn’t a reason to deprive Amanda of her job!

Kevin L.
Naperville, IL

He finds a new job. He used his senior position to court the office girl. So she gets fired because he wants to try and get back. It most likely won’t work. Then what? They break up and he hits on another girl? If he loves his wife, he quits.

Ira K.
Tallahassee, FL

Michael and Megan should have a meeting with both Ken and Susan (outside of the store) and remind them it is Michael and Megan’s store and not theirs. They cannot dictate who is hired or fired. If Ken decides to leave, so be it. In any event, Amanda should not be fired. I lost my best-selling employee many years ago — yes, it hurt — but not for as long as feared. I found out through the years that a store should never rely too heavily on one salesperson, unless it’s you.

Maya C.
Madison, WI

I think it’s absolutely wrong of Ken to basically ask his bosses to consider firing another employee because of the results of his lapse of judgment. If it was work-related, that would be one thing. But this is a personal issue. If Ken wasn’t prepared to face the consequences of his actions, then that’s on him and should not cause the other employee to lose her job just because of bad personal choices.

Mitsuko H.
Watsonville, CA

With my past forty years of running my jewelry company, having a good policy from day one, I expect each employee to always be a professional representing my company. No personal matters are to be brought in while on duty. Have a good store policy and make them sign it before employing them.

David C.
Traverse City, MI

Ken brought this whole situation on of his own choice. It is hard to let a valued employee go, but it was his choice to start the inappropriate relationship and his choice to end it. I commend Ken for ending the relationship and to work on his marriage, but I would personally have to allow Ken to walk. His leaving might actually inspire another salesperson to come from behind his shadow and step up into Ken’s shoes.

Andy M.
Williamsville, NY

Both employees must be let go. Neither employee used any common sense, and while doing so, put the business in danger.

David B.
Calgary, AB

For those that would say this is an ownership problem for not having a policy or protocol in place to prevent office romance, get real. Most of us probably spend as much time with our workmates as our partners. Always best to be truthful with Amanda. Tell her the demands made by Ken and that he is too integral to the company to lose. Then discuss a termination agreement. Typically, one month per year worked is generous, but in this case, offer her six months or even more with a nice recommendation and see where that heads. Most likely, Amanda is not comfortable in the current situation and would like a reasonable way out.

Nick F.
Woodstock, VT

This is business, it’s not personal! For the good of the company, and for Ken’s marriage, Amanda must go. To soften it, try to find her an opportunity with a fellow jewelry store. This decision keeps a marriage together and an indebted manager. Being young and with the owners’ help, it’s probable she will find a job in the industry and be happy.

Bruce A.
Sherwood Park, AB

There is nothing here that requires Michael and Megan to involve themselves. They dodged a potential bullet when their top salesperson started dating their office manager, something that would have left them vulnerable to internal theft. Ken made his bed (sorry for the pun), and his ultimatum means that it is his decision to leave Village Jewelers.

Drue S.
Albany, NY

I have had experience with this situation, and it did not come out great. For me personally, it was two great jewelers. One had a nervous breakdown, and the other ended up leaving anyway.

So since there is no reason to fire the office manager and no reason to fire the salesman, they should try having a conversation with the two of them. Having said that, you cannot allow an employee to dictate who does or does not get fired. I am sure there would be legal ramifications from doing so.

They were two adults deciding to start a relationship, and they should be adult enough to still work together. It’s totally out of place and unreasonable for Ken’s wife to place that demand on the business.

I say it’s up to the owners to have a conversation with the two employees involved and ask them what result they see as the best solution, asking them if there is a way for them to work in the same environment.

What’s the Brain Squad?

If you’re the owner or top manager of a U.S. jewelry store, you’re invited to join the INSTORE Brain Squad. By taking one five-minute quiz a month, you can get a free t-shirt, be featured prominently in this magazine, and make your voice heard on key issues affecting the jewelry industry. Good deal, right? Sign up here.

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Real Deal

When a Once-Happy Client Sends Back a Damaged Ring and Demands a Refund, What Should the Store Owner Do?

The ring is scuffed and dented after just a year’s worth of wear.

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JOSH WELLMAN AND Brooke Kerney were best friends back in high school. When they both moved back to their Midwest hometown and reconnected after 12 years of living on opposite sides of the country, their friends and family — most notably Josh’s mother — were convinced that a wedding was inevitable. With that in mind, she gave Josh, her eldest son, her engagement ring — a family heirloom that had been passed down through generations. The ring, a late Victorian design, was a 1.50-ct. old European cut diamond in a platinum filigree setting, with milgrain detailing and several accent sapphires.

ABOUT REAL DEAL

Real Deal is a fictional scenario designed to read like real-life business events. The businesses and people mentioned in this story should not be confused with actual jewelry businesses and people.

ABOUT THE AUTHOR

Kate Peterson is president and CEO of Performance Concepts, a management consultancy for jewelers. Email her at kate@performanceconcepts.net

Josh finally proposed while on a trip to visit one of Brooke’s friends just after Valentine’s Day. Brooke had been close to Josh’s mom when they were younger and was more than honored to serve as the next generation’s custodian of the heirloom ring. It was just a touch too big, though, so Brooke suggested they take it to a custom jeweler in the city who had done some work for her the year before. The couple made an appointment to see John Anford, owner of Anford and Company Fine Jewelry.

Brooke knew John Anford to be a knowledgeable professional who delivered quality work at a fair price. She was referred to John by a friend when she lost an earring and needed to have a replacement made. The work was done perfectly and well within the time frame expected. Brooke was confident that John would take good care of her new treasure as well.

At the Anford office, John measured Brooke’s finger, then examined the ring carefully. He told the couple that while beautifully made and still wearable, the heirloom was showing the signs of its 100 years of experience. He pointed out areas of weakness and structural issues that he believed made the ring unsuitable for everyday wear, and he recommended that Josh and Brooke consider having the ring restored by a vintage expert. They left the ring for sizing and said they would think about it.

By the time they returned to pick the ring up the next day, Josh and Brooke had come up with another plan. They were both uncomfortable with the idea of restoring or altering the ring in any way and agreed that keeping it in original condition was more important to them than Brooke being able to wear it every day. With that in mind, they asked John to design a companion piece for the ring — a band that would be in keeping with the original ring’s design — in platinum filigree with milgrain trim and sapphire accents. Brooke said that her work as an executive for a technology company didn’t require any activity that would be especially rough on a ring, and she didn’t have any “heavy-duty” hobbies. They worked with John on initial concepts and agreed to stay in touch via email. Brooke made an appointment to come back in three weeks to look at the model and make a final decision.

Brooke and Josh loved the design of her new ring, and over the three-week period, signed off on the CAD rendering as well as various detail decisions and price. When she next visited John’s office and saw the resin model of her ring, she was delighted and confirmed the order. She and Josh returned in mid-April to see the finished product — and after a minor adjustment to a milgrain edge, were happy. Per his policy, John verified that his clients were completely satisfied with the ring, reminding them that they still had the option to cancel before taking delivery if the ring failed to meet their expectations in any way. They agreed that the ring was exactly as they had envisioned, and paid the $3,000 balance by credit card. The ring was shipped to Josh and Brooke’s Midwest home and was received on April 20, 2018.

About a year later, John received an email from Brooke containing pictures of the ring, significantly damaged with bends and dents in the metal and several broken sapphires. In her message, she said,

“Earlier today, I put my ring in an overnight package coming to your office. When I came to you last February, we discussed that my heirloom family ring was not suitable for daily wear, so we agreed to commission a custom ring that could be worn regularly. I approved the design for this ring, but relied on you to ensure proper materials and craftsmanship. You assured me that the problem with the milgrain edge we originally saw was a minor cosmetic issue and not a structural concern. Yet, less than a year later, the structural integrity of the ring has been severely damaged through nothing more than the ordinary use we discussed.

We’ve consulted with two reputable jewelers in our town. They both said that platinum was not the right metal for this ring — that white gold should have been used, given the design. Based on their opinions, and the significant damage that has occurred in just 11 months, I’d like you to honor the cancellation offer you made initially and issue a full refund for the piece so that I can use the money to get a ring I can actually wear every day.”

John noticed that the pictures were taken by one of the jewelers Brooke had consulted. He was tempted to contact the store to find out how they could have suggested that the choice of platinum was the issue here, but instead, chose to review his notes and talk with his craftsman as well as other trusted metals experts. He came away from his research with the thought that while there might have been a sturdier metal choice for the ring design, even 14K white gold would not have held up to the obvious abuse the ring had suffered.

John didn’t think he could afford — financially or philosophically — to send a check for the full $4,750 sale price of the ring, since what he received from Brooke was essentially scrap platinum. On the other hand, as a small custom shop in a highly competitive city, he also couldn’t afford scathing reviews across social media.

The Big Questions

  • Who is responsible for the situation and who should absorb the cost?
  • Should John have known that white gold might have been a better option, despite her heirloom platinum ring having lasted over 100 years? Should the contract craftsman who made the ring have been more proactive in presenting the right design characteristics?
  • What should John do?
John M.
Grand Haven, MI

Ouch. Hard to convince a customer it wasn’t a problem with your year-old band when her similar engagement ring lasted 100 years. And maybe with good reason. Did you make the band solid enough, or was it a flimsy shell because you cheaped out? Was it wide enough to keep its shape for everyday wear? You’re the expert who’s supposed to know platinum keeps its color, is tough, and chemical resistant, but scuffs, mars and bends easily. And hers is likely a hard die-struck piece, whereas your band is a softer casting. If your band was too lightweight, it’s not going to do the job she specifically tasked you with, and you need to take care of it. If the ring was beaten regardless of the metal or who made it, then point out the specific indicators, while also assuring her you want to help her resolve her situation. Your fault, offer to make a new ring in 14K white gold for free. Her fault, offer to make her one at cost.

Richard S.
Seattle, WA

She obviously abused the ring, but it sounds like between the client and jeweler, they did not resolve the original concern about daily wear durability. Regardless of metal choice, it does not sound like a good design choice. The jeweler needs to either recreate it, making the ring a little heavier and using a ruthenium alloy, iridium being much too soft for platinum casting, or make a new design that both parties can be happy with. But to simply give a refund is unreasonable, assuming he has had a conversation about her lifestyle and what could have caused heavy damage.

Jack Van D.
Wellington, FL

Offer to fix the ring the best way he can, at no charge. We’re not responsible for abusive wear to a piece we design and sell. They’re just trying to get something for nothing.

Marcus M.
Midland, TX

These people are trying to take advantage of John, and shame on them. Platinum was a fine choice for a ring like this and should be more than durable enough to handle her said lifestyle. She obviously started working out with it on or it slipped down the disposal and took a spin (I’ve seen both be very destructive). Either way, something has happened and rings like this don’t self-destruct. I would offer to repair or remake it at my cost, but I would NOT give a refund. Stand your ground, John. You can treat her with respect and understanding and still keep your integrity. Letting them walk all over you is not the answer, especially when you and they know that this ring destruction was user error.

Sandi B.
Ocala, FL

Almost the exact thing happened in our store about two years ago. The couple had purchased a platinum radiant three-stone for a right-hand anniversary ring and was quite happy with it. A year later, they wanted to reset her wedding set into platinum with a bigger center diamond. It was made, loved and within one month, they did not like the “scratches” and dents on the bottom of the shank. It was an existing design that was just tweaked, so not completely custom. I talked with the manufacturer extensively about the platinum content, had it refinished, and the couple was still not satisfied.

I refunded the whole set and got a credit from the manufacturer, so it wasn’t a complete loss. Probably a little buyer’s remorse along with the softer metal performance. I would love to say they have purchased other things after that and it was a win-win situation; however, that is not the case. You win some, you lose some. Our reputation is still intact.

Daniel U.
Hamilton, ON

I think that the dealer got “played” by a person who abused her ring and then wanted a free ride to make up for her negligence. If she wanted to wear the ring “hard,” she should have said so at the beginning. My impression is that she got a suitable ring for her lifestyle, which she abused not just once, but several times. I believe that she knew she abused it, that she was morally wrong but that she did not want to accept responsibility for her actions.

The reason I believe these things is we have had clients who misrepresented their lifestyles and tried exactly the same type of scenario: to get a refund after they damaged something they could not afford. It is a measure of the solidarity of our clients that they stood together and denounced that individual as a liar and a fraud.

June M.
Aberdeen, MD

Since the customer indicated before authorizing the band that she did not do any heavy duty work in her employment or have any heavy duty hobbies, she could wear the ring every day. And she had worn it for a year or so. What DID she do that could have possibly caused that ring to end up in such a condition? I also don’t feel the store is responsible for the whole outcome of the finished ring. The craftsman is also responsible. Possibly also the customer.

Instead of a refund, the store could offer to replace the ring in a sturdier ring, possibly a heavier gauge for the filigree and the base plus a thicker band. That way, the cost for the store would be less than a refund.

Saro A.
Chevy Chase, MD

In the custom business, there are always cases when things go wrong either in design/manufacturing or by customer. I think Josh and Brooke should have at least given John a chance to make a new ring instead of asking for a refund. As bad as making a new ring would be for John, he should take the loss and never promise to give a refund on a custom made piece once the customer has seen and approved the wax model.

Ira K.
Tallahassee, FL

I think that John should refuse to accept the package. Make the brute that beat up the ring come to the store to discuss any concessions to be made. And while she’s there, explain the abuse of the jewelry. I would NOT refund under any circumstances.

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Real Deal

A Vendor Raises an Item’s Memo Price After It Is Sold. What Should This Store Owner Do?

The ring was sold for less than the vendor now wants for it.

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GUILD AND STONE WAS a second-generation, high-end store in the Pacific Northwest. Store owner Dean Callen had used his 28 years as the company’s general manager to expand on the strong reputation his father built with an extensive vendor network and a local client base that included most of the town’s VIPs.

ABOUT REAL DEAL

Real Deal is a fictional scenario designed to read like real-life business events. The businesses and people mentioned in this story should not be confused with actual jewelry businesses and people.

ABOUT THE AUTHOR

Kate Peterson is president and CEO of Performance Concepts, a management consultancy for jewelers. Email her at kate@performanceconcepts.net

Back in April, Sharon Sanderlund, president of a local construction company and one of Guild And Stone’s best customers, came in to talk with store manager Jennifer Lee about finding a pendant to match the fabulous Art Deco citrine earrings she had just inherited from her aunt. Since there was nothing workable in the store’s estate collection, Dean recommended that Jennifer contact Ed Ansell, one of the store’s regular estate vendors who specialized in vintage colored gemstone pieces. Jennifer spoke with Ed and he agreed to memo several pendants for her to show.

The day the package arrived, while it was sitting on Dean’s desk waiting to be opened, Jennifer received an email from Ed letting her know that in addition to three citrine pendants, he had also included a number of other pieces in the shipment, all from an estate he had recently purchased and all on memo to the store. Since the lot was very well priced, he thought she and Dean might want to keep a few of the pieces for stock.

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When Dean opened the package, he was surprised to see that it contained a total of 13 pieces. As he checked them in, he had to agree that the prices were great, but he was further surprised to see that there was one item in the package — a vintage aquamarine and diamond bracelet — that was not listed on the memo. He contacted Ed immediately to report the error. Ed apologized and emailed an updated memo within the hour.

Later that week, Sharon Sanderlund came in to look at the pendants. She chose a beautiful art deco citrine and diamond pendant from the memo and a vintage chain from the store’s collection for a total of $4,550. While she was still in the store, Jennifer remembered the additional items that Ed had sent and brought them out of the safe to show Sharon. Sharon was immediately drawn to a Victorian sapphire and diamond ring — a cushion-shaped sapphire surrounded by 13 Old European Cut diamonds in 18K gold. Jennifer checked the memo and saw that the store’s cost for the ring was $3,500. She checked with Dean, who assigned a retail price of $6,100 to the ring — then promptly sold it to Sharon.

The next day, Dean sent Ed an email reporting the sale of the two items, adding a list of three more pieces from the lot that he wanted to keep for stock and asking for an invoice. Ed called back an hour later to let Dean know that there had been a mistake on the memo. He said that he had mixed up two rings from the estate — that the sapphire in the ring Jennifer had sold was unheated and that the actual cost for the piece was $7,500, not $3,500. He told Dean that the invoice would reflect the $7,500 price. Dean struggled to remain calm and rational while he very clearly explained to Ed that the ring was sold based on the memo price, and that was the price he would pay. The conversation got rather loud as Ed suggested that Dean contact the customer to get the ring back — something Dean flatly refused to do. The call ended with Ed insisting that the ring would be invoiced at the $7,500 price and subtly suggesting the possibility of legal action if Dean chose not to pay.

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Dean remembered thinking that like the rest of the lot, the ring was a great value at $3,500 cost, but he did not believe that price to be unreasonably low for an estate item. In an effort to be fair and to preserve a vendor relationship, he called Ed back the following day and offered to split the difference — to pay $5,500 for the ring. In his view, since the ring didn’t need sizing, that would leave him with a small profit once he paid Jennifer’s commission. Unfortunately, Ed refused to move off of his demand that Dean pay the invoiced amount for the ring. Dean hung up when Ed mentioned that as a professional, Dean should have noticed that the price was not right for a ring of that caliber in the first place.

The Big Questions

  • What should Dean do?
  • Is it reasonable to think that Ed might be right — that someone at Guild And Stone should have noticed that the price was too low for the ring?
  • Should Dean contact Mrs. Sanderlund and explain the situation in an attempt to either recover the ring or to re-sell it at a higher price?
Kevin P.
Newark, OH

When you write down a price on paper or write it in an email and send it, that is your responsibility to be correct. Once a vendor or a retailer gives a price, it is a done deal. In 40 years, I have never backtracked on a sale. A few times, I made mistakes in my calculations, once using per carat instead of net price to figure my cost.

In this case, I would call back the vendor and reiterate your offer to pay the $5,500 for the ring, as well as the second item and buy the three additional items. Remind him of the business you have done and may do in the future and ask him if he is willing to forget that. If he does not agree, I would send the amount he is asking for the two items and return the rest, and ask that your account be closed. There are other vendors who will behave in an honest and straightforward way with integrity.

John T.
Atlanta, GA

It was the vendor’s mistake and the vendor’s responsibility to catch and correct it before the sale was completed. The offer to split the difference from the jeweler was more than fair. Pay the memo price, and not a penny more, then find a new estate dealer; this one is crackers.

Oscar V.
Chicago, IL

Pay what is on the memo.

Stuart T.
Bel Air, MD

I always try to be fair with my trade partners, BUT in this case Ed is being unreasonable. Dave made a very fair offer to split the loss, and Ed refused to bend at all. Dave could have kept the Aquamarine and diamond bracelet but he was too honest to do so. Ed doesn’t have a leg to stand on, so let him sue, and loose a customer as well.

Michael J.
Port Charlotte, FL

I know the fine print on most memos says items are not to be sold until invoiced, but this can be argued since virtually no company actually holds to these words, so precedents have been set. The fact that Dean offered to split the cost at all was more than fair to the vendor, and in my opinion, should have been accepted without hesitation, especially if he had any desire to salvage the business relationship. The fact that Ed vehemently declined the offer means it should be rescinded and a check mailed for the price on the memo.

Albert D.
Fords, NJ

This is cut and dry. The store would only be liable for the original invoiced price. The fact that they were willing to give more was a very generous. I think the original vendor should have accepted their offer, considering that they know the ring was sold.

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Colleen Z.
Hershey, PA

Ed is absolutely in the wrong here. It’s his duty to correctly identify and price his merchandise — and to eat the loss if he makes a mistake. If he ever wants Dean as a customer again, he needs to honor the original price on his memo. Dean should absolutely not let his client know what’s going on — it’s not at all her responsibility to deal with and it ruins the magic of the purchase. If he ends up having to pay the full cost so she can keep her ring and he can avoid legal action, then so be it. However, he should never work with Ed again. Dean went above and beyond to compromise, and Ed clearly doesn’t value the relationship in the same way. If his customer service is this poor, I wouldn’t trust Ed with other items. Dean should contact his lawyer for advice to handle the situation but above all else — keep Sharon out of it!

Jay S.
San Diego, CA

The retailer tried so hard to be fair. The supplier made the mistake and should live with it. When the supplier was not willing to work with his customer, I would have told him to sue me, and then I would have told him to pound sand!

David B.
Calgary, AB

When is a deal a deal? On both ends. Dean cannot go back to his client and ask for more. It makes him look unprofessional. It may even cost him a client. His offer to eat some cost was very fair. The consignor showed no professionalism. And getting an offer to split the difference was very fair. When I was a traveling salesman, this situation happened to me. I did not go back and ask my retailer for more money. I ate the loss and practiced better accounting. Further, the consignor making threats about court action is ridiculous. I know a fight is expensive, but where do you draw the line? Retailers get kicked in the backside at every turn, and even when it is a clear mistake, why are we expected to make it right? Dean needs to hold his ground.

Stewart P.
Lansing, MI

It is truly unfortunate that we all make mistakes in a variety of different ways. With 45 years in the trade under my belt, I can honestly say that I have paid a small fortune for the errors in judgment that I have made in an attempt to retain or strengthen the integrity of my business. I could have paid much less if I had chosen to place blame on others and refused to accept the responsibility. In the instance described, the error was clearly in the vendor’s corner. The retailer was completely blameless and should not be punished. We cannot function if we cannot rely on quotes and estimates from our vendors as written or stated.

Joe K.
Lantzville, BC

A deal’s a deal. The cost on the original invoice is all that should be paid. Looks like Ed is a little lackadaisical in his invoicing. Suck it up, Ed.

Jim G.
Champaign, IL

The ring as invoiced stands correct. If they had picked up the phone and told the new price before the ring was sold, then the new price would be in order. Too bad for the vendor.

Rex S.
Houston, TX

It is basic contract law. The items were sent out on consignment to be shown to a retail customer and allowed to be sold to retail customers based on the offer price listed on the memo. The retailer sold the item to the retail customer based on the price that the vendor sent to the retailer in good faith. It should also be noted that the vendor had previously told the retailer that this lot was an exceptionally well-priced estate lot; therefore, the retailer was reasonable in not questioning the pricing of the items. The retailer absolutely should not be asked, nor should they contact the retail customer, as that customer bought the item in good faith from the retailer and this has no duty to resend that sales contract. In short, the “memo” is in fact an offer to sell, and the retailer accepted that offer.

Norbert M.
Nairobi, Kenya

Especially in gem and jewelry trade, the customer is always right and therefore should not be bothered. Also, why should the initial seller want to unscrupulously transfer his error to his jewelry broker friend? This is wrong! He should accept the loss as his mistake and use the mishap as a future strength-point! Going to a court of law will only break their wonderful business association. Furthermore, 1) the untold truth is that estate jewelry is often bought at extremely lower price to exploit the owners and to sell off fast to make a quick buck! 2) the money involved is too low to cause the fuss considering the long-term business relationships. In a nutshell, for all the parties, let it be what has already been and move on. Hope I don’t sound too blunt!

Jim S.
Kauai, HI

Dean in good faith sold items based upon a written memo price. That the wholesaler made a mistake is not his fault. His offer of a compromise showed integrity and fairness. Ed’s response showed a lack of both.

Dianne H.
Eldon, MO

They must leave the satisfied customer out of the deal. That part is finished. The customer did nothing wrong. Neither did the jeweler. Carelessness by this supplier shows as the one bracelet was not even on the original invoice. Now the jeweler should prepare to get legal advice and not be bullied by the supplier! $10 payment per month FOREVER!

Marcus M.
Midland, TX

Dean should not pay a dime over $3,500. That is the price listed on his memo sheet, and if Ed tries to take any legal action, then Dean has the proof of the price Ed originally gave him. This is Ed’s mistake and should be his loss, not Dean’s. Also, Ed should probably realize how much money Dean was about to send him and be happy that he could probably recoup his mistake. If I was Dean, I wouldn’t do a bit of business with Ed again. There’s lot of estate dealers out there; go find another one who is more professional. And there is no chance I would call a great customer and ask her for the ring back or to pay more money. You would lose her for good if you did something like that.

Joel M.
New York, NY

Estate jewelry is tricky on value. We receive from our dealers and trust them to value the pieces. Thus, the store owner is not liable and his dealer should have taken the offer to split the profit.

Stuart S.
Egg Harbor City, NJ

This is an estate ring and could have just been an amazing value. Dean was very generous to split the difference. If the ring had not been sold, I’m sure Dean would have either returned the ring or agreed to the price. I feel bad for Ed that he made the mistake, but he has nobody to blame but himself. Ed no longer deserves the benefit of the split. Obviously Ed does not have the same respect for their business relationship as Dean!

Jon P.
St. George, UT

Ed’s mistake. Ed should eat the difference.

Tom C.
San Marcos, CA

You live with your mistakes. An error in pricing is the sender’s fault, not the buyer’s. It may affect any future dealings, but so what? If you can’t trust the sender’s memo pricing, what good is it to solicit goods from them?

Bruce A.
Sherwood Park, AB

Dean is required to pay the $3,500 plus applicable taxes. Anything greater than that requires a visit to his lawyer. When the dust settles, Dean should let Mrs. Sanderlund know the incredible deal she received and offer his services to appraise the item. Mistakes happen to all of us, and Dean’s offer of $5,500 was overly generous. Once rejected, I believe a judge would rule in Dean’s favor.

Valerie S.
Champaign, IL

If I’m not mistaken, this was fictionalized based off of my post on the Jewelers Helping Jewelers Facebook group. Fortunately, the wholesaler honored their memo price and we all moved on.

Ira K.
Tallahassee, FL

Let me see if I understand this correctly … The memo said one price, the vendor changed it (doubled), and then Dean offered to meet Ed halfway. Dean is a mensch; and Ed is a _______! (fill in the blank as you deem appropriate). I would send a check for the memo price — I would not buy the other three pieces that looked good and probably not buy anything else from Ed.

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