Buying and pricing jewelry is a balancing act, and most independent jewelers have a difficult time buying the type of jewelry that will sell in their stores and pricing it properly, said David Peters, Jewelers of America’s director of education, during a presentation at The JCK Show ~ Las Vegas.
“One of the biggest problems today with independent jewelers is not having too much inventory, but having the wrong inventory,” Peters said during his presentation, “Buy It Right, Price It Right.”
“Keystone is not a buying, pricing strategy,” he said. “Every piece of inventory needs to work for you.”
A proper buying and pricing strategy includes knowing your customers, your community, and your competitors. Then it requires you to price inventory in a strategic way that takes into account the type of product and your customer. It also involves knowing your business and how it fits inside the fabric of the community. “Your merchandise should reflect the demographics of your community,” he said.
Peters said jewelers could find the demographic profile of their areas by using a number of sources, including advertisers, the local Chamber of Commerce, and other local business groups. He said it’s important to know the mix of the community, whether it’s trending older or younger, the growth or decline of certain neighborhoods, and household income. “If you don’t know your local market, you have a pipe dream. You don’t know who’s going to walk in,” he said. “Your merchandise should reflect the demographics of your community.”
Knowing your business includes knowing the average sale in dollars, the strongest merchandising categories, volume, and profitability—which items turn quickly, which items can be priced higher, and which items in the bridal department are the best sellers.
“Look at your business strategically,” Peters advised. “Let the numbers help guide you.”
With this information, jewelers could then create a “proactive” pricing strategy. “Use this strategy and you’ll make more money,” Peters stressed. “The finished price needs to be a well thought out, proactive compromise.”