Out With the Old, In With the New

By Rick Bannerot -- JCK Online, 5/1/2008 2:00:00 AM

A successful fourth quarter, in what will likely be a tough economic environment, will depend on what you do in the next three months to prepare your store's inventory, cash flow, and marketing. It's time to marshal your resources, do some self-examination, and get reacquainted with the 80/20 rule.

Take stock of your inventory and cast a critical eye on everything in the store, not only what's in your showcases and windows, but also your understock. Now is the time for significant inventory clearance, especially on stock that's more than nine months old. If it didn't sell last holiday season, it probably won't sell this year, which is expected to be worse for selling jewelry. It will be a year older in terms of fashionability and "must have" quotient. Aging inventory ties up your cash and keeps you from having something fresher and more salable. Your best customers have seen it, passed judgment, and voted with their wallets.

Take a page from the playbook of Leading Edge Jewelers (a consortium of retail jewelers in Australia) and hold a highly promotional progressive sale to raise cash and reduce inventory during a nonprime sales period, which won't preempt your largest sales with the best margins. Clearly mark the sale jewelry reduced for sale, and each day it hasn't sold, mark it down further, showing the prior markdowns. At some point, the consumer cannot stand the thought of waiting another day and losing it to someone else, and it sells. Dedicate a few showcases to the event, designate a section of the store, or use the whole store, depending on how much you want to sell. The bigger the display space, the more old inventory you'll shed. For anything you don't want to reduce, either don't stock it or keep it in an area outside the progressive sale. (If you exclude specific pieces, be sure to indicate that ahead of time, so you don't create any sense of bait and switch.)

At Maier & Berkele, one of Atlanta's oldest and most prestigious jewelers (now owned by Birks & Mayors), this type of annual clearance event was such a success that people lined up outside the store an hour before it opened. The store eventually started pitching a tent over the parking lot and pulling in merchandise from all their stores in the Atlanta area. The buying was contagious (as was the sales associates' enthusiasm). It gave the store empty shelves to replenish with new product following trade-show season and ready cash to buy it. It increased customer loyalty and enhanced the store's regional recognition and market share.

Clearing out older inventory raises money to invest in new product. If you're like most retail models, 20 percent of your customers account for 80 percent of your business. As you set your appointments for The JCK Show ~ Las Vegas and the JA Summer Show in New York, concentrate on suppliers that sell best with your best customers. Talk with your vendors about what excites them and what's on trend. They should be able to support their claims with pictures and editorial stories from recent issues of InStyle, WWD, and the fashion-focused jewelry trade magazines like JCKstyle, JCK, and Italy's Vogue Gioiello.

This is also the time to talk to vendors about working with you to add these new collections to update their presence in your store. With your commitment to fresh product, ask for new wall units, Dura-Trans, posters, counter pads, logo mirrors, a small HDTV and DVD player to play promotional videos, a collection of three or four new postcards to mail over a seven-week period, and co-funding for self-mailer mini-catalogs to promote the collections. Get some outdoor billboards for the new product for Q4 to create external awareness and anticipation of what's in your stores for the holiday season.

Vendors know the 80/20 rule and are reading the same dire retail news. The good manufacturers will gear up to help promote their best retail customers—those working to improve their business—so come to the shows not only with a plan but also with money you've raised to back it up, along with a willingness to freshen your lines and enhance your customers' retail experience.

Author Information

Rick Bannerot is a luxury goods and jewelry marketing consultant in Stamford, Conn., and is reachable at Rbannerot@aol.com. He has held key advertising and marketing positions with World Gold Council, Mayors Jewelers, Hill & Knowlton Public Relations, Rolex Watch USA Inc., and Kenyon & Eckhardt Advertising.