In light of the economic recovery, jewelers are reflecting on policies they put in place during the recession that made them leaner, meaner, and more profitable.
In 2008, when the economy tanked—taking scores of retailers with it—the owners of Long’s Jewelers, a five-store chain based in Boston, knew the only way to survive was to undergo the retail equivalent of elective surgery. Assessing everything from staffing to marketing to merchandise, they took a scalpel to anything that reeked of a prerecession mindset.
First under the knife: the employees. Long’s downsized its staff by 20 percent, says president Craig Rottenberg, and kept the reduced numbers through 2009—even when business began to pick up.
|It’s a Long’s story: Long’s Jewelers locations in Natick, Mass. (left), and Boston (right)|
To prevent the diminished sales force from compromising customer service, Long’s tried something unprecedented: bringing in a sales trainer who encouraged the staff to continue promoting luxury items rather than assuming that customers couldn’t afford them. “Things can become a self-fulfilling prophecy,” Rottenberg says. “We didn’t want to fall into our own trap.” At the same time, the company introduced a new software program that logged employees’ sales data and used various metrics to gauge their performances to help “teach accountability.” Finally, Long’s encouraged its senior staffers to become more involved in mentoring.
“We learned to staff based on the existing business level, not ahead of demand,” Rottenberg says. “We are using our people more efficiently, and we got our cost structure in line with the business. Our people are also more prepared in terms of training, we expect more from them now, and we have been more proactive in reaching out to our customer base. This helped carry us through the recession and led to a strong year in 2010.”
In other words, the recession wasn’t all bad—at least not for retailers like Long’s, which has emerged as a leaner, nimbler, and more efficient operation than before.
|Above left: one of Tapper’s 11 new recession-era Gold Exchange stores; above right: the original Tapper’s Diamonds & Fine Jewelry, which opened in West Bloomfield, Mich., in 1995|
Performance was the first thing most jewelers scrutinized, says Diamond Staffing Solutions president Suzanne DeVries. “Today, you can’t afford to staff sympathetically,” DeVries says. “You have to hold people accountable, regardless of tenure. Jewelers are setting expectations higher, and if someone is not performing, they cut them loose. The result is a stronger, more productive, more efficient staff.”
Other employee issues retailers grappled with: scheduling, salaries, commission, benefits, full-time versus part-time, training. They became more creative with perks, offering salespeople relatively low-cost incentives such as paid time off or gift cards to their stores and other (non-jewelry) stores, DeVries adds. Jewelers are partnering with local merchants on cross-promotions—discounted gym memberships for jewelry associates in exchange for jewelry discounts for health-club staff, for example—in lieu of bonuses or raises.
Since many jewelers couldn’t afford formal training, says DeVries, many owners and managers took on those tasks or set up mentorships between senior and newer staffers. This not only saved money but also fostered team bonding and encouraged employees to become more invested in the welfare of the business.
It pays to be a Facebook fan of Corinne Jewelers—to the tune of $25.
It’s all about learning to make do with less. For instance, at Tapper’s Diamonds & Fine Jewelry, a three-store chain in suburban Detroit, a supervisor was trained to handle inventory control and in-house manufacturing—previously two separate functions. Of course, cross-training should be par for the course at all retail operations, says DeVries. Every employee should be able to change a watch battery or do basic repairs; backroom staff should know how to ring up a buyer when salespeople are engaged. With effective cross-training, you’re able to operate at full capacity on a daily basis and you’re less vulnerable to disruption when a position becomes vacant.
To Marketing, To Marketing
If you don’t know exactly where your marketing money is going, you should. Retailers are carefully measuring store traffic, dollar sales, gross margin, pieces sold, and other key metrics for every promotion and event, says Fruchtman Marketing president Ellen Fruchtman.
In the quest to get the biggest bang for their advertising buck, many jewelers have shifted focus from direct mail to email blasts. The savings are dramatic: Fruchtman’s typical retail jewelry client sends a printed holiday mailer to 2,500 to 5,000 customers at a cost of $1 to $1.25 apiece, for a cost of $2,500 to $6,250. An email blast to the same list costs pennies per customer—$300 to $500 total.
Says Fruchtman: “Jewelers continually ask themselves, ‘What can we do that’s creative and clever that won’t cost a lot of money?’ Many are paying more attention to social media because it’s an inexpensive way to connect one-on-one with the customer. Some are doing events they promoted solely on Facebook, cross-promotions with other retailers, and videos on their websites, Facebook, and YouTube.”
sees her retail jeweler clients crunching the marketing numbers.
You may also have noticed a reduced focus on holiday and store events. Jewelers now understand that every day is a key selling day, and they are spending more time reaching out to customers directly. “You see a 20 percent bump in a promotion if you just pick up the phone to remind customers about it,” she says.
Corinne Jewelers, a high-end retailer in Toms River, N.J., has never been considered a price-point jeweler. Yet during the recession, the company needed to let customers know it offered more than just bridal and designer jewelry, says owner and general manager Ryan Blumenthal. Corrine embarked on a broad campaign—including billboard and radio ads—that stressed affordability. Even its website features banner ads promoting sterling silver, Pandora, and gold buying.
At the same time, the jeweler has taken a much closer look at its media spend, making a conscious effort to “engage customers one-on-one for a lot less money,” says Blumenthal. “We realized social media was a great way to catch younger customers and stay in touch with them. We had a New Year’s event that offered a $25 gift certificate to Facebook customers. We saw some nice growth from that.” This year, a bigger chunk of Corinne’s marketing efforts are being diverted to the revamped website, emphasizing search engine optimization, an updated bridal area, and a new design-your-ring function.
It’s a Goods Thing
Go through your inventory, and be ruthless, advises merchandising consultant Sally Furrer.
Selling to the postrecession customer means taking a good hard look at your inventory. A rigorous inventory regime will help you pinpoint what to buy, how much to spend, what price points to hit, how to get rid of old inventory, and what kind of markdowns to offer, says jewelry merchandising consultant Sally Furrer, president of Sally Furrer Consulting. “It’s not pretty, but it’s healthy and necessary for retailers.”
The best marketing strategy is meaningless if the merchandise mix doesn’t support it. Naturally, today, that mix is frequently built on beads, silver, and bridal; the recession may have spurred people to invest in these categories, but jewelers continue to promote them because they still resonate with cost-conscious consumers and thus are strong ancillary revenue drivers.
And don’t forget gold buying, which has brought many a retailer back from the brink of ruin. In September 2009, Tapper’s launched Tapper’s Gold Exchange, a take-in spot for people seeking to unload old gold. The upscale retailer—which had long catered to its area’s most affluent demographic—now boasts 11 mall-based Gold Exchange locations that lure a range of shoppers. “Our Gold Exchange has provided much-needed cash flow that helped us weather the ups and downs of business,” says chief operating officer Jeff Garden.
You need a more businesslike, less emotional approach to staffing, says Suzanne DeVries.
They pay fair market value on gold, platinum, and silver and issue checks on the spot. Plus, Tapper’s will pay up to 10 percent of sales to customers who host a gold-buying party or fundraiser, and offers $25 to anyone referring a friend (as long as the friend sells at least $250 in one transaction). Initially, the retailer melted down the old gold it purchased. But recently, Tapper’s began reselling some of the better pieces, using the service as a springboard for a by-appointment-only diamond, watch, and estate jewelry buying service.
“We’ve gained market share and attracted guests we haven’t seen in the past,” Garden says. “We’re using the Gold Exchange to turn a one-time opportunity into a long-term relationship.” Echoes Blumenthal: “We were up 30 percent in 2010 over 2009, and we’ve come out of this with a bigger footprint in the community. In some ways, I’m grateful for the recession. I learned more in the last two years ‘steering the ship’ than I would have in less challenging times.”