Business Report

Are Expensive Items a Drag on Profits? In a classic example of the counterintuitive, fine jewelers are boosting profits and accelerating inventory turnover by offering more lower-priced jewelry. Joe Romano, president of the jewelry consulting firm Scull and Co., uncovered this surprising trend after a five-year analysis of 60 clients representing more than 100 stores. His conclusion: “When the average price point comes down from $500 or $600 to $200 or $300, the gross profit goes up, inventory turn goes up, and the jeweler makes more money.” Romano recommends that jewelers fine-tune their open-to-buy purchase budgets by adding two steps to their monthly fiscal management routines. First, analyze inventory turnover (number of times an item sells in a year) by price point. Second, analyze gross margin return on inventory (money earned on jewelry holdings). “The jewelers we trac

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