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Why That Minor May Be Eligible for a Refund and More of Your Questions Answered

It’s always good to be at the right side of the law.

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One of our employees is starting to show signs of his age. He’s losing his hearing and seems to be getting more forgetful. He wants to work until age 70 — three more years. What do we do?

This is a tough one. You want to be loyal, and don’t want to be perceived as cold-hearted, but you and your business can’t afford sales-floor errors or to allow other employees see you tolerate costly mistakes. The best strategy is to stay focused on performance, not the person. Treat your older associates the same as you would your younger ones. “Deal with issues for what they are — not for the reasons behind them,” says Kate Peterson, president of Performance Concepts. For example, if your older associate hears something incorrectly and his actions lead to a customer problem, address the immediate issue — the customer problem — regardless of the underlying cause. A person can easily deny that his hearing or memory is failing, but he cannot deny the obvious outcome. If you decide your store can’t continue to support a failing employee, consider investing in a retirement package. Perhaps you could employ the associate as a “goodwill ambassador” for your store. If you decide it’s time to part ways, ensure every detail is handled correctly. “Clearly defined performance standards, daily coaching and fair rewards and consequences must be applied consistently for all associates. You can’t terminate an employee for failing hearing or memory — but if necessary, you can for continued failure to deliver to the job requirements,” Peterson says.

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I carry two competing brands in a fairly narrow, small-dollar jewelry category. Now one of them is implying I should drop the other slightly-less-popular brand or it will cut off supply. Is this legal?

There are some instances when you could take such a case to court and expect to win — such as when an unreasonable restraint of trade or similar antitrust violation can be established, or when a store’s ability to conduct business is damaged, say, supply is cut off after you’ve invested heavily in marketing and training, and the brand accounts for a big portion of sales. But for the most part, these are exceptions; the law allows a miffed vendor to cut you off cold. “In general, companies in the U.S. are free to decide when to do business and when to stop doing business with another company,” says attorney Barbara Mandell, a member of Dykema Gossett PLLC, which focuses on antitrust law.

I have a no-return guarantee on all my products. But somebody told me that if a minor buys jewelry from me, it is possible for them to return it for a full refund and I can’t do anything about it. Is this true?

Yes, says Elly Rosen, director and founder of the Appraisers Information Network. “The bottom line is that selling to a minor may leave us at the whim of the minor,” says Rosen. He notes that numerous court decisions have supported the long-standing “common law” understanding that minors do not have the capacity to contract. This means that while a sale may have been made, it might not be an enforceable contract if challenged. If you sell to a minor they, their parent, or other legal guardian can demand return of monies paid. And that’s not all. Says Rosen: “In many jurisdictions the minor will only have to return ‘whatever they can.’” Whatever is left! So, even if an item is damaged, they might only have to return what’s left and may still be entitled to get all their money back.

As I start my financial planning for 2019, do you recommend a bottom-up or top-down approach?

It’s a new year, a new beginning … start at the bottom. “Top down is quicker but invariably leads to existing costs being left in rather than being properly evaluated,” says David Brown, CEO of the Edge Retail Academy. Brown explains that when he works with clients, he asks his clients to set the financial goals they want to achieve and then work “backwards” to determine the sales and earnings they are going to need to achieve those targets. “This results in a complete budgeting process,” he says. “If an owner has planned a retirement nest egg in 10 years and they know they need $50,000 into a retirement plan each year to reach the goal, it provides them with the incentive to hit the sales target each year.”

What kind of discount should I give my bookkeeper on my merchandise, given that she knows exactly how much I paid for it?

We’d say very little. Your bookkeeper should be a pro who understands how discounts impact your bottom line. If she asks for a “good price,” offer her the employee discount or trade merchandise for her services. And to keep it fair for both parties, trade full retail for full retail. Unless your bookkeeper is willing to discount her services, you should not feel obliged to cut the price of her purchases.

Over the years, INSTORE has won 76 international journalism awards for its publication and website. Contact INSTORE's editors at editor@instoremag.com.

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Ask INSTORE

What’s a Fair Salary Plus Commission Rate and More of Your Questions for April

Bosses and workers often have different ideas on what’s equitable. Here’s how to make everyone happy.

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I have an employee who makes $16 an hour and 6 percent on retail (although for loose diamonds, commission is based on gross profit). She earns close to $60,000 a year but feels underpaid and that paying gross profit on diamonds is contrary to the industry standard. How can I convince her she has it pretty good?

She does indeed have it pretty good, says industry consultant Andrea Hill, owner of Hill Management Group, noting that her hourly rate is almost 50 percent higher than the average for retail salespeople of $11.50, and even more than the average of $15 paid by very high-end luxury retailers (think Gucci). The commission is also higher than the industry average of 3-4 percent on retail, although, significantly, Hill notes, “wise” businesses are increasingly moving away from such a formula to pay commission on gross margins. “In this way, sales professionals are challenged to balance the need to get the highest price possible with the need to close the sale. When commissions are paid out on total sales only, then it becomes very easy for the salesperson to sacrifice profits for the easy close,” she says. While exposure to such numbers should mollify your associate, what you really want to do is excite her about the potential of earning as much as $100,000 a year — which is what top luxury salespeople make — although that requires building a “strong book” of customers through active networking, clienteling and prospecting work. Keep in mind, however, that even the most generous commission rate won’t help if you’re not on top of your game, meaning advertising intelligently, keeping up with changing retail trends, providing the right technology for how consumers today want to shop, and maintaining an exciting inventory that reflects current tastes, says Hill. “If the retail business owner does not ensure that they are running a strong merchandising and marketing operation, then even the best salesperson in the world will not be able to turn the promise of commission into actual earnings.”

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I still can’t get my head around color temperatures. Can you help?

It probably helps to think of the original theoretical model that underlies the index — that of a black metal radiator, whose color changes as it is heated, from black to orange to red to blue to white hot. Similar to Celsius and Fahrenheit, the Kelvin scale marks different degrees of thermodynamic temperature, but it is the association with color change that makes it useful as a way to designate light bulbs. Where it gets confusing is how at the lower end of the scale, from 2000K to 3000K, the light produced is called “warm white” and ranges from orange to yellow-white in appearance. Meanwhile, color temperatures further up the scale, between 3100K and 4500K, are referred to as “cool white,” but the bulbs are emitting a brighter, hotter light.

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We’re planning on holding a thank-you dinner for our best customers to celebrate our store’s 50th anniversary. How do we avoid offending people, especially those small ones who have been loyal if infrequent customers for many years?

This is a tough one. We’d suggest you start with the number of people you’re able to host and then divide that figure up among your sales staff. They should know who their most deserving and valuable customers are. Refrain from advertising the event to all your customers so as not to offend those who aren’t invited. You may also want to prepare a back-up list so you can add names in place of those who can’t make it — there will no doubt be many — to cover as many people in your customer base as possible.

What’s a good way to sell our company to prospective employees — particularly top salespeople?

Just about the most valuable skill a businessperson can have is the ability to recruit and retain good people and yes, it all starts with that job posting. “When the right people read your ad, their hearts will whisper, ‘These people are like me, and I am like them,’” says Roy H. Williams, author of the business bestseller The Wizard of Ads. Bullet point what the job entails, what kind of inventory they will be handling, and also the benefits, but the core message should be about who you are as a company, your reputation and your goals. The best salespeople often have don’t have a sales background, so go easy on the requirements. Your message should be more about culture than qualifications.

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How to Address Drama In Your Store and More of Your Questions Answered

Don’t miss: How to avoid getting in a price war with a competitor.

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My store seems like a reality TV show: all unnecessary drama. It’s exhausting, but addressing it only seems to add fuel to the fire. Is there a way to bring it under control?

You’re not alone. After profitability concerns, this is the No. 1 headache of business owners, says business coach Lauren Owen. Drama and discord create stress and hurt productivity. There is no quick fix, but there are a number of things you can do, starting with regular meetings. “Scheduled, well-run meetings are essential to clear communication and team building and addressing potential conflicts,” says Owen, adding that such meetings are conspicuously absent at stores with drama issues. Other steps include confronting your drama queens, addressing your underperformers (there is often a hidden cost in the resentment they cause), performing a cost-benefit analysis on your high-maintenance employees (sometimes they just suck all the energy out of a store), and finally, taking a good look at yourself. “Some people actually like drama, despite what they say,” Owen says. “If you were really honest with yourself, you might understand that the drama is satisfying some need of yours. Attention? Power? Control? Do you avoid all conflict, even healthy conflict, at all costs?” And are you giving your staff a clear sense of purpose — that jewelry is about something bigger than profits or self-interest? Employees instilled with a sense of higher purpose tend to grouse a lot less, Owen says.

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What are the pros and cons of hiring older workers?

The list of advantages is as long as their teeth: seniors are often more responsible than their younger counterparts, call in sick less, work harder, don’t get involved in office politics, and have good life skills. Yet many retailers have mixed feelings about hiring those over the age of 55. To be sure, some older workers do tire more quickly from long hours on the sales floor or may want to work shorter hours either for personal reasons or to protect their Social Security benefits (but that can also mean fewer benefits that you’re obliged to pay). Ultimately, your decision should be guided by this rule of thumb: in retail, people like to do business with people who are like them or share their interests. So, make sure your staff matches your area’s demographics. Although for just about anywhere in the US, that now means a graying market. According to Bureau of Labor Statistics projections, 25 percent of the workforce in 2024 will be over the age of 55.

Where can I get my old displays rewrapped?

We applaud your frugal instincts, but this is a bit like getting your 14-year-old refrigerator reconditioned — you’re often better off buying a new one. “The costs are prohibitive and the old display structure is usually destroyed in the process,” notes Larry Johnson, the author of The Complete Guide to Effective Jewelry Display. Johnson recommends you tell your display vendor what you liked about your old display and get them to help.

Should I delete old names from my email bulletin list?

Your email marketing program will be more effective the cleaner and more up-to-date your subscriber list is, but there are a few things you should do before you start deleting names. First, segment your subscriber list into new, active and inactive customers. “Reach out to the old customers on your list with a different message. Contact them with a special offer, information about something that would be of interest to them, or educational information that would benefit them,” advises Steve Robinson, regional development officer (Illinois) for Constant Contact, which provides email marketing services to more than 300,000 small businesses and organizations in the U.S. “Consider offering a link to an online survey that would allow them to tell you what specifically they are interested in.” If there is no response after two or three more attempts using this approach, Robinson suggests you consider those addresses inactive and either remove them from your list or move these people to a new list to which you email only once or twice a year so as not to lose contact with these old customers completely.

A new competitor seems to be trying to undercut our prices on everything from diamond prices to repairs. How can we avoid getting in a price war?

First, understand that not every price challenge is real. Many of your customers make their purchase decisions because of the quality of your products, services (especially your services), or just the relationship they have with you. Still, if you’re sure price is the issue, and you are losing customers as a result, you may want to a adopt a three-tiered pricing strategy by offering premium and budget options in addition to your regularly-priced goods. The idea is not actually to sell the cheaper or more expensive options, but to underscore the true value you are giving customers with your regular prices through your explanations of what they get with each option. When consumers are faced with such choices, they overwhelmingly choose the middle road.

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How to Prepare for 2019, Finding a Good CPA and More of Your Questions Answered

London Business School prof advises, “Keep your vision fuzzy and your priorities clear.”

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The sales experts you quote often recommend role-playing exercises. But my sales staff always slinks away when I suggest them. How can I get them to play along?

That may be because the focus is negative, says Dave Richardson of Jewelry Sales Training. Make the role-playing positive and fun. First, play the role of the salesperson and let your salespeople critique you. Then, when it’s your turn to play the customer, instead of saying, “Here’s what you did wrong,” start off by telling the person what you felt they did well and what you would change if you had the opportunity. Always finish on a positive, encouraging note, Richardson says.

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Our marketing team’s images were recently lifted and used by the vendor for their advertising without crediting us. When I contacted them, they said, “We’re sorry; it was the intern’s fault.” How should I handle this?

If it was “the intern’s fault,” who approved the final vendor layouts? But regardless of whose fault it is, you should get some compensation for the use of your images, says consultant Kate Peterson. The vendor would have paid for the images had they used any other marketing professional to create them, so they should have no issue with paying your in-house team. “I would suggest that the retailer assign a fair price (what she typically pays her team per image) and send an invoice directly to the head of the company with pics of their ads and an explanation. If applicable, tell them you will apply the amount of the invoice against an outstanding balance,” says Peterson.

“The key here is to remain positive and confident, as opposed to challenging. Assume they are expecting to compensate, and communicate in a tone that expresses confidence in their interest in doing the right thing.”

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2019 seems like it’s going to be a volatile year. What should we do to get ready?

Eight years of economic growth and cheap credit allowed many business owners to gaze far into the future and craft successful, long-term strategies, but it does seem those times are coming to an end as trade wars, rising interest rates, political turmoil, spooked financial markets and ongoing technological change cast a shadow over what otherwise is still a strong economy. In such a shifting, unstable environment where visibility is low, Donald Sull, a London Business School professor, recommends “active waiting.” Contemplate alternative techniques, explore likely scenarios and focus on general readiness. This is a time of threat but also opportunity. “Keep your vision fuzzy and your priorities clear,” Sull says. “Maintain a war chest and battle-ready troops. Know when to wait — and when to strike. When you grab an opportunity or move to crush a threat, amass all your resources behind the effort.” At the same time, continue making routine operational improvements such as cutting costs, strengthening distribution, and improving products and services. “Though mundane, these initiatives foster efficiency, which can position you to snatch a golden opportunity from rivals’ jaws,” Sull says. It all sounds rather dramatic, but then high drama surely awaits.

Where do I find the best CPA?

There are more than a few sloppy accountants around, so it pays to be picky. A good CPA will be a stickler for details and accuracy and very time-conscious. So a useful initial indicator is how long it takes them to reply to your first inquiry (although if it’s April 10, cut them some slack). Look for someone with a history of working with small businesses, but be careful about relying too much on the recommendations of business friends. Draw up a list of three or four prospects and make a decision after you’ve sat down and discussed your particular needs with each of them. If they want to charge for the time, look elsewhere. Final word of wisdom: as good as the person may be, never abdicate your responsibility to know what’s going on with your finances. Get tax smart.

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Is it legal for retailers to say they are selling at wholesale prices?

In short, no — unless they really are. Many states, including Arkansas, Georgia, North Carolina, Kentucky, Texas, California, New York, and Michigan, have strict laws prohibiting the use of the word “wholesale” in retail advertisements. In some states, this is a criminal offense, due to the word’s ability to mislead consumers. “If a jeweler advertises it is selling at wholesale prices, it must sell at the wholesale price,” says the Jewelers Vigilance Committee. Some states define this as the price the jeweler paid for the item from the supplier. Other states, and the federal government, say the price must be lower than the average price retailers would pay in the area.

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