A new year begins. The Christmas season is behind us. The industry has weathered a tumultuous year. Still, writing this column in November, I predict that the year-end numbers will again demonstrate that the real merchants produced increases in business. At the same time, you will hear the same complaints from those who ran scared in 2001: “Business is bad. I have too much inventory. I have the wrong inventory.” On and on it goes.
Last year, many suppliers lamented about jewelers who weren’t buying because “business is bad. We don’t need anything.” These are the same jewelers who couldn’t make a sale for a basic 16-in. strand of pearls; instead, they call to get one strand “on memo!” That’s some inventory management.
The same is heard in the diamond community, the colored stone department, and gold jewelry and watches: Basic goods are out of stock, and too many jewelers call their suppliers to “get basics on memo.” This is not good inventory management, not good customer service, and not good business.
Consumers are notoriously self-centered. They want what they want when they want it. The basic function of a retail jewelry store is to provide time and place utility. You must have the goods when the customer wants to see them, not when you can get them.
Determining what you should have on hand requires good inventory records. Whether you use sophisticated computer software or a three-ring binder, every department in the store must be included. Inventory records should be segregated by manufacturer and must provide basic data: beginning inventory, what you bought during the year, and ending inventory. All this should be done in units for each individual SKU in the store, along with the manufacturer’s style numbers, cost, quality characteristics, and selling price. From this you can calculate item turnover and start the process of identifying “basic goods.”
Once you begin, update religiously. If you have a computer system tied to your cash register, the process should be automatic and relatively easy, once you’ve finished the time-consuming process of data entry. If you have a manual system, do periodic inventory counts and update your records.
Each department should develop a “key item” list. These basic items constitute a high proportion of your sales and should never be out of stock.
Make New Year’s resolutions part of your written business plan for 2002. We know there will be up and down periods, but over the long haul the U.S. economy will continue upward. Knowing your inventory, identifying the core group of best sellers within each department, and resolving to keep those key items in stock is one of the best and most fundamental New Year’s resolutions you can make. And as for those things in your inventory that haven’t sold, get them out—now! Mark them down, return them for exchange or credit, melt them, or give them away to a charity auction. The important point is keep your inventory clean and fresh.