Wednesday, April 04, 2018

What To Do About The Challenging Scene of the Current Jewelry Business

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.

Friday, December 08, 2017

The Show Wars Have Started

By Frank Dallahan

This past week (December 6th) AGTA Gem Fair announced it would move from the JCK Show in 2019 to the Las Vegas Convention Center (LVCC). Within a day or two of the announcement JCK announced they would replace the AGTA space by soliciting other gemstone dealers presumably from around the world to fill the space. A few days later the U.S. Antique Show announced it will continue to exhibit at the LVCC and intends to co-locate there with AGTA. What will come in the days ahead will be interesting to see.

“Those who fail to learn from history are condemned to repeat it” is a quotation of George Santana and it is so appropriate in this current circumstance. The history to which I refer is the story of the origination of the JCK Show in Las Vegas and the circumstances that resulted in the industry’s major show developing in Las Vegas moving from New York City.

In the late eighties, Jewelers of America owned the show in New York. Their show was the big one and was held at the Javits Center. If you were to ask the exhibitors of the JA Show then, you would get an extensive list of complaints. Show management did not listen to the exhibitors. The timing of the shows (Spring and Fall) was all-wrong. The spring show was too early (January) and the fall show (July/August) was too late. There was an arrogance connected with individuals who ran the show. They didn’t listen and treated many with distain and you might even say with disrespect. A take it or leave it attitude probably characterizes it best.

In this environment Charles Bond, Publisher of JCK Magazine and the current Co-Publisher of The Retail Jeweler, Ed Coyne, presented to Chilton Management (JCK’s parent company at the time) the idea of starting a new show for the industry located in Las Vegas at a time of the year more suited to the industry’s needs in late May/early June. JCK needed the financial clout of Chilton to deal with the Las Vegas convention site and hotels for the necessary room blocks. JCK’s management and staff went to the trade to solicit their opinions of the idea.

At the time, I was vice-president of marketing for Krementz & Co, and was contacted by my space rep Joy Englebert to solicit my opinion of the idea of a new show in Las Vegas and in late May/early June. My response apparently mirrored the reaction Joy received from her other clients. She was literally shocked with the responses she received and couldn’t believe the depth of animosity toward the JA Show and particularly the show’s management.

JCK announced the dates of the show and the reaction from most of the “industry experts” was the show would not succeed. To the contrary, The JCK Show became the industry’s new leader after several years.

Charles Bond established an advisory board of manufacturers and retailers to discuss plans for the show. We met periodically throughout the year to discuss plans, ideas, and problems. It was a good group. They were forthright and not bashful about expressing their opinions. The result of their meetings was a good show that became better and better. Bond’s goal was to have a show where all were welcome.

Reed Elsevier acquired Chilton. And, gradually, Reed imposed its will on the show and show management. As with most corporate entities, this pressure from above eventually resulted in the departure of many of the people who had managed the transition and indeed adapted to the jewelry industry. Dave Bonaparte and John Tierney are two prominent examples of personnel who left Reed.

The current AGTA – JCK situation is the result of Reed not listening to the realities of today’s jewelry business similar to what JA did in the late eighties. I know the current key people at Reed and I know they understand the industry’s situation. Reed’s decision to raise prices by 45% on booth space and layer on top of that a 6.5% annual increase locked in for three years clearly indicates a lack of understanding and a lack of common sense.

The rest of the industry is talking about AGTA’s decision to leave the JCK Show after a year’s effort to negotiate a more reasonable deal all to no avail. If AGTA can successfully leave will other groups now consider the same decision and join AGTA at LVCC? Exhibitors, large and small, think the cost of exhibiting has gotten well out of hand. Retailers, too, evaluate the cost of sending their buying staffs to Las Vegas for the show. Their reaction will also be interesting to watch.

Shows make a great deal of sense for both retailers and exhibitors. Buyers and sellers come to shows to see new products, hear about new programs and talk with principals of their respective suppliers and clients in a safe business environment. This is unchanged from 25 years ago.

However, looking at the shows you can see significant changes have taken place since 1992 when JCK first took place. Many of these changes involve significant cost components. The question is are these cost components worth it or are they just revenue generating ideas for the show management companies? The answer is AGTA chose to say No Mas. The more things change…the more they stay the same.

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