From inspired sales events to bartering, jewelers are
getting more inventive in finding solutions to inventory problems. In recent
years, jewelers have been doing more or are becoming increasingly receptive to
inventory swaps. For those who have participated in them, such swaps have
become a lucrative way to bring in new inventory without impacting cash flow.
Five years ago, the Prestige Jewelers Inventory Clearance
Show event involving 50-plus Centurion retailers fell short of the organizer’s
original objectives of attracting bargain-hungry consumers to buy
highly-discounted, high-end jewelry. What should have been a
business-to-consumer event turned into an impromptu inventory swap among a
handful of retailers. Lucian Lee, owner of Hale’s Jewelers in Greensville,
South Carolina, and Daniel Moyer, owner of
Moyer Fine Jewelers, in Carmel,
Indiana, were at that event years
ago.
Lucian Lee, owner of Hale’s Jewelers.
The two store owners came together once again this summer
for another inventory swap. Organized by Moyer, six store owners came together
to exchange inventory before the start of the fourth quarter. This blog
provides some good takeaway knowledge from Moyer and Lee, who have been
together at two inventory swaps.
Although inventory swaps are as much or more work than a
regular trade show, the approach is completely different. For trade shows the
open-to-buy budget allows for steady-sellers and fast-turners to be purchased
plus a little left over to dabble in new lines, designers or expanding into a
new product category.
But before venturing off to an inventory swap, a store owner
must make a careful inventory check. Cherry-picking single pieces for an
inventory swap with the hopes of getting rid of them is the wrong approach.
It’s better to take a big-picture look at collections or larger portions of
inventory that aren’t selling well and bring a number of pieces as a group to
swap.
Secondly, bridal is a category that simply doesn’t swap well
at these events. “Everybody has bridal and we all pretty much have a lot of the
same inventory,” says Lee. “Unless it’s a bridal item that’s really something
special, I don’t bring or buy much bridal at swaps.”
For Lee, the inventory that tends to swap well are fashion,
fashion color, designer silver collections and designer lines of significant
value. Although Moyer agrees in general terms with Lee that bridal doesn’t swap
well, his position is: “There really isn’t one thing that swaps better than
another. The trick is to swap inventory that’ll be new to your store and will
most likely go over well with your customers. A store owner needs to really
know his inventory and customers well to make sure the swapped inventory
performs well in his store.”
Bringing the right product to the table is just part of the
challenge for a successful inventory swap. Another point the two retailers
fervently agree on is not approaching the event looking to swap inventory
category for inventory category.
“The more correct mindset is swapping inventory dollars for
inventory dollars,” says Lee. “If you swap categories, it’s like saying, ‘I
like yours better than mine,’ then bringing it back to your store and trying to
sell it. Success at an inventory swap is defined by taking x-number of dollars
of your old inventory and getting that same amount back in new inventory
without impacting cash flow. That’s it.”
The two jewelers also concur on the pros and cons of
inventory swaps, with both agreeing the advantages outweigh the disadvantages.
A store owner doesn’t have to hound a vendor with the fine print of a
contractual buy-back agreement. Taking proactive measures such as an inventory
swap maintains the integrity of the retailer/vendor relationship. And, a store
owner doesn’t have to sacrifice a product category or designer line just
because portions of it didn’t sell in his market. An inventory swap allows the
store owner to refresh instead of restock inventory.
At his first inventory swap, Lee purchased a number of
diamond pendants and sold every one of them in the calendar year. The diamond
pendants were part of an inventory swap ranging in wholesale value from $50,000
to $75,000. Every piece of the new swapped inventory turned for Lee.
Daniel Moyer, owner of Moyer Fine Jewelers.
Moyer has his own success story from an inventory swap: “I
swapped $11,000 worth of inventory from a retailer who hadn’t sold the pieces
in three years. I brought them into my store and sold it all out in two weeks.”
The single and most obvious risk is much like switching
seats on the Titanic. Taking on inventory that didn’t sell in one store and
moving it to your store where it continues to be idle inventory.
“That’s the risk you take, but it’s really the only risk,”
says Moyer. “I’d rather take a chance on trying to sell new inventory that
didn’t sell for another jeweler in another market versus continually trying to
sell my old inventory in my shelves I know isn’t selling.”
And, the two jewelers are in agreement over how active they
are in pursuing future inventory swaps. Although Moyer was the organizer behind
this summer’s event, he and Lee aren’t actively organizing nor planning to attend
an inventory swap any time soon. But, they remain open to the idea should the
stars align for the right inventory swap.
“I contacted 10 store owners and only six came to this
summer’s inventory swap,” says Moyer. “More people would have made it more
interesting, but I’d rather have a smaller number of retailers of like mind and
backgrounds to make the swap work well for everyone involved.”
For Lee and Moyer the right jeweler must be unattached to their
inventory. The goal of the swap is to, once again, trade dollar amount for
dollar amount in order to bring in new inventory without spending money. A
store with similar merchandise being sold to a similar clientele spec from
analogous markets makes an inventory swap go smoother.
And, be sure to provide networking opportunities at evening
social events so retailers can exchange the second most valuable thing brought
back to the store when seeking out new inventory: knowledge.
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