In a presentation titled “The Morrissey Files,” Jane Morrissey of Colormasters, New York, told jewelers that defining who you are and sticking to your definition is one of several ways that jewelers can be successful at increasing margins and managing inventory.
“Make yourself more important to fewer people,” was the theme of Morrissey’s presentation at The JCK Show ~ Las Vegas. To do this, jewelers must understand who they are and control it zealously.
“Become a fanatic in your business and who you want to reach,” she advised, explaining that jewelers, instead of broadening their product line by using many suppliers, need to focus on products that define the business they are in and then find a handful of suppliers that can meet their supply needs.
Another benefit for jewelers who take this approach is that customers will consider them experts in their field. “You’d be surprised once you define who you are how many new customers will actually see your services,” she said. “And you will be surprised at how little resistance you will get from your customers.”
Focusing on product, defining who you are, and partnering with suppliers were three of the eight points Morrissey presented. The fourth was creating a core margin analysis program. Without such a program, said Morrissey, jewelers are unable to control their inventory and risk running out of popular items. Another risk is having too many slow-selling items, which affects margin. “Not having a core program is dangerous,” she said.
She recommended that jewelers work on a three-month program with suppliers. That provides enough leeway to adjust the program as needed, for example, to negotiate returns and exchanges up front with suppliers. Morrissey suggested buying American products for core programs to avoid dealing with duties and other unexpected importing costs.
Morrissey said jewelers should use cost sheets-which are used primarily by large retailers-when appropriate. Cost sheets are used to break down the cost of the product in writing and to keep track of the costs and payment. “Some people argue that they are not applicable to all manufacturers, and I agree with that,” she said. Examples of this are branded products, which require a great deal of development and marketing costs, and handcrafted jewelry, which in some cases takes years to make.
Morrissey also discussed the pros and cons of jewelers’ making their own jewelry. She advised caution; among the challenges are the cost of buying raw product, breakage of stones and mountings, and quality control. “The ultimate best buyer can be expected to hit the mark with quality and quantity 85% of the time,” she said.
The eight steps for making margins more profitable and balancing inventory:
* Focus on product
* Have a core program
* Partner with your suppliers
* Define who you are and stick to it * Buy American
* Make it yourself (but know the pitfalls)
* Negotiate your returns and exchanges up front
* Use cost sheets when appropriate