After what I hope was a successful holiday season, it’s time to plan for the upcoming year. I have outlined some important points to keep in mind while going through the planning procedure.
The initial step in any forward-thinking process is to know your current position, which means conducting a comprehensive review of past yearly results. Include total watch sales, sales by brand, and turnover ratio. (Over a two-year time frame, an ideal turnover rate is 1.5+; below 0.75 is a major concern and should be discussed with the brand.) Also assess brand profitability (up to the individual jeweler), percentage of total sales by brand (if the brand isn’t at least 1 percent of total store volume, review it), and any circumstances that may have contributed to unprecedented or unexpected results.
Plan a meeting with each brand representative to update your knowledge of the brand and discuss future plans. Ask about the directions of the brand for the year, any changes to the marketing strategy, and your possible participation in national and cooperative campaigns. Also inquire about any special events or public relations activities and let them know early if you’re planning any in-store events at which they should be present.
Make sure current collections by brand are up to date and new product is ordered when appropriate. Be aware that just reordering best sellers won’t allow you to convey a brand’s image. Accurately conveying the spirit of the brand is important to your customers. When adding new lines, don’t overlap brands that are similar in look and price point.
Be sure all employees are current on product knowledge. Schedule formal training sessions if there are new technological, marketing, or strategic developments within a brand. Inquire about brand training sessions for your staff. If needed, order displays and sales aids (plaques, signage, catalogs, etc.). Your sales staff is essential to building a trusting relationship between the customer and the brand, and this connection needs to be founded on current product knowledge.
Your initial review of brand performance and brand directives will determine the open-to-buy process. As this is primarily based on inventory and sales ratio, reserve a significant amount of money for reordering sold items and replenishing stock, especially best sellers. Match this to turnover objectives already outlined. Generally, turnover ratio is one to two times per year on average. A good rule of thumb for replenishment is 75/25 when restocking inventory versus adding new pieces.
It’s also important to address slow-selling pieces. First, try and work with the brand on an exchange plan. After working with the brands, it’s up to the retailer to find creative ways to move remaining slow sellers.
The new year is a good time to consider whether you need to add or delete a brand. Determine if a brand has consistently poor sales because of incompatibility with the store image, over-distribution, or lack of confidence in company management. You may want to replace it with a brand that does fit the store image or fills a void in a certain price point or one that customers have been asking about.
Come to an agreement with the brand representative on the number and timing of visits throughout the upcoming year. This will ensure your inventory is up to date, product is reordered, and personnel trained. However, you can reorder and special order products throughout the year, when needed. With the introduction of each new development, schedule a formal training session.
It’s important to go to as many trade shows as possible to increase your interaction with the brands and stay up to date on each. Attend the Basel Fair and Salon International de la Haute Horlogerie (by invitation) in early spring and The JCK Shows in late spring. They’re great places to meet people from all of the brands you carry while prospecting new brands. The Basel Fair and SIHH also allow you to gain a better understanding of a brand’s culture and worldwide spirit and give you a chance to see and order new pieces for the fall.