% Doesn't Pay Bills or Make Deposits

Margin doesn’t pay the bills, dollars do.

This is why I have such a hard time understanding why jewelers continually sacrifice dollar profits for margin by selling down.  My argument in this has been mistakenly construed as trying to sell something for more than it is worth, or selling something someone doesn’t really want or need.  Neither could be further from the truth.

My goal has always been to help  jewelers be PROFITABLE in their business.  A big part of that is teaching them how to do that through understanding the supplier and product knowledge, sales training, and faithful re-ordering.  But an even larger part is breaking old habits, like thinking the customer can’t possibly afford (or possibly WANT) to acquire anything but the cheapest there is to offer.

Over the years I have found there to be a lot of competition for a store’s attention.  It is one thing to get merchandise in a showcase, but quite another to ensure its success in selling over the counter.  Sales associates, managers, and owners have a lot to choose from when it comes to presenting options to a consumer.  And quite often the path of least resistance is chosen.  I guess that is human nature.

Take wedding rings, for example.  For years jewelers were content to sell plain, 5 or 6mm, high polish rings to men because “that’s what they want.”  And my guess is that if you let the majority of men choose today, that is what they will select because that is what they know.  It’s what they see on most other people’s fingers. (Which is EXACTLY why they shouldn’t get one)

From 1985 through 2005 the price of gold really didn’t fluctuate too much.  It hovered between $250 to $400 per ounce without any dramatic or sustained spikes or swings.  That means you could sell the same plain gold ring for roughly the same price over the course of that twenty year period.  It also means the consumer could buy it at those same prices, but they wouldn’t really know it because when it comes to wedding rings they are likely BUYING ONE over that course of time and would have no basis of comparison.

It also means making the same profit for twenty years while rent, utilities, payroll, insurance, and everything else continue to regularly rise.

Sell a plain gold 14k wedding ring at triple key for $750, make a nice margin and $500.  Not bad.  Triple key.  Whew, I bet you wish you could get that on all the merchandise in your store.  But if you are REALLY doing the customer a favor, you should probably sell it at keystone or maybe key-and-a-half.  That way you won’t be over charging them and you can be competitive with others in your market, right?

Or you could present something else, like a Titanium/Tungsten ring.  That’s different than a plain gold ring, more up-to-date, hip, stylish, alternative, etc.   Here you are selling a ring that cost about $10 to produce, sold to you for about $100, and you can sell it for whatever you want and make a couple hundred or so.

Understand where your profits are coming from.

Sell an engraved, carved, or styled ring for  $1200 at key or key-and-a-half.  Do the math and you will see it translates to $600-$720 in profit dollars.  Sell a platinum ring for $2000 at key.  Do the math.

You say your customers can’t afford to spend $1000-$2000-$4000 on a wedding ring?   Maybe.  Maybe not.  Are you REALLY sure of that?

• How hard do you try?

• How good are you at laying out the reasons they should consider something like this in a “once-in-a-lifetime purchase”?

• How good are you at helping them remember how much time and care they put into selecting the engagement ring?

• How much time do you spend opening their eyes to all the possibilities?

• How much time do you dedicate to explaining the differences in metals and manufacturing?

• How good are you at explaining what a wedding ring means, what it signifies, and how important it should be to BOTH of them?

• Or are you content in saying things like “Do you have anything in mind? Have you been shopping around? Do you see anything you like?”

Please.  Understand where your profits are coming from.

Why am I so against alternative metals and plain rings?  They are emblematic of what is wrong with our industry and what I have called “The Dumbing Down of Jewelry.”  It is the lack of understanding of what it takes to be profitable.  Don’t misunderstand what I am saying here.  I am fully aware of the cash register-ringing success of lines like Pandora and Rebecca right now.  I get that and applaud those companies and the jewelers who have embraced their concepts.  They fulfill very specific needs and desires while not trying to be substitutes.  They are what they are.

When you have an opportunity to tap into the real reasons why people are in your store and why they are considering jewelry to commemorate a significant moment in their lives—ESPECIALLY weddings—you have to take the time and spend the energy to truly help them get what they deserve.

My guess is if you are not deliberate in what you are doing you are selling far more plain gold rings and titanium/alternative metal rings than you are the others.  If that’s the case you are leaving profit dollars on the counter and hurting your business.  Get them out of the showcase and UNDER the counter!

By the way, there are many many manufacturers/vendors who are eager to do business with jewelers right now and who have all kinds of creative ways to help you re-merchandise without spending a lot of money.  Many are willing to buy out competitors’ merchandise in exchange for theirs; others are buying old gold and giving credit toward their merchandise, while still others are willing to do some 1:1 stock balancing.

Check with your current vendors and check with their competitors to see if there might be an opportunity for you to creatively freshen up your inventory .