By Frank Dallahan, Editor, The Retail Jeweler
Everyone in the jewelry industry remains uneasy and unsure and is looking to the Las Vegas shows for a true sign of a turnaround. Though the past Christmas season was for the most part, one characterized as an improvement over the past few years, this spring season as of this writing seems to be unsure.
It’s time to call a halt to the nattering nabobs of negativity.
Those who can Do! Those who can’t close up shop and give up.
For the doers, it is time to refocus your thinking on the basics of the retail business: Inventory control; reorder policy; standards for reordering; and the number of suppliers your store supports. Other “basics” to evaluate are: store location, display, promotion and your sales staff.
This process begins with the internal policies of inventory control and management. You also will need to look at some of the key external policies of how you promote your store to the marketplace you serve. The one point I’ll make at the outset of promotion efforts is: There needs to be a balance in your promotional efforts. It cannot all be directed to on-line. Certainly, you need an on-line presence, but you also need to allocate promotional dollars to other promotion in its various forms from local newspaper, catalogs, community support projects, and direct mail. Your consumer market is not 100% millennials, who only search for jewelry stores and jewelry products on-line. Personal contact from your sales team to valued customers reminding them of birthdays, anniversaries, wedding gifts, graduation gifts are all opportunities that will benefit from the personal touch of a phone call.
For years industry experts have talked about how retail jewelers are over inventoried with lots of dead, non-turning stock. Just ahead, there are three or four months where retailers can decide to focus on doing something substantive about eliminating or substantially reducing this problem. Forget the politically correct word, issue. The over inventory situation is a definite problem. It attacks good merchandising principles by allowing old, picked over skus to remain in the show cases. Simultaneously, the level of old stock, in many instances, prevents reorders of merchandise that actually sells.
Part of this process is an analysis of actual unit sales by product category. You need to go through each department and review the actual sales of the products in your inventory. You need to do this with the actual inventory and sales data as well as the physical samples in front of you. This is a time-consuming process, but eye-balling your inventory and looking at the data simultaneously will provide you with a new insight into your assortment. Part and parcel of this
exercise is the evaluation of the price points of your product assortment. What is needed is balance in price range, going from low to high, making sure you are not over-inventoried at the high end or the low end.
Design differences in your product line is important as well. This part of the exercise can be especially valuable when you compare competitor lines within a particular assortment. Wedding rings, for example, offer many similar designs from one manufacturer to another. The same applies to diamond engagement rings. Eliminate duplicate designs and choose the best seller between similar looks.
In this issue of The Retail Jeweler there is an appropriate tie-in story measuring the performance of silver jewelry as a product category over the past nine years. What should capture your attention in the story is the inventory turn achieved by silver products in jewelry stores. The second attention getting fact is the margin provided by silver jewelry. Merchandise that turns over needs to be a priority in your thinking. Whether it is silver, gold, platinum or whatever, inventory turn is the most important key to profitability.
Whatever it is that’s not turning. Get rid of it. Don’t acquiesce. Identify these products with special tags in your showcase. Provide an incentive to your sales team to focus special attention on these problem children.
The next step in this process is to look at what is selling and make sure you have enough of it. There are many products in your showcases that sell day-in and day-out. Your inventory analysis along with your sales data reports will show you over the year how much of these items you’ve sold. Establishing an average sales rate will help you determine what inventory level is needed to support the particular style. This process applied to each merchandise category will produce positive results.
In every product category, you will find hangers-on products. A trend that started and then fizzled. These hangers-on can be an entire segment of your inventory or just a couple of styles bought for whatever reason. The point is you need to identify and get them. out of your inventory.
The steps outlined above will enable you to be ready later for the coming holiday season and more importantly for determining what product lines need your attention at the many shows in Las Vegas.
Preparation for ordering at the shows is key.