Business Report

A Useful Critique of Your Store

The performance review is a common practice in the corporate environment, but independent jewelers rarely get that kind of constructive criticism. After all, who’s going to tell an owner or manager what they don’t like about the store? Employees or longtime customers can offer some ideas, but they may not be objective or candid. That’s why some jewelers are turning to focus groups.

Gary Gordon, president of Samuel Gordon Co. in Oklahoma City, held his own focus group in 1991 after consolidating three stores into a single, 12,000-sq.-ft. upscale location. In 1995, Gordon hired a public relations firm for his company’s second focus group. “When we hired outside help, we got more candid, forthright answers to questions,” he says. Gordon plans to use a PR agency for another focus group early next year.

“It takes courage to engage a focus group, to ask people what’s right with my store and what’s wrong,” Gordon says. “You’re going to hear some things you don’t want to, but those are absolutely the things you’ll learn from the most. It’s no fun to hear the negatives, but in my opinion 80% of the purpose of the focus group is so you can acknowledge, learn, and act upon criticisms. The rest is to reconfirm what you’re doing right.”

Complaints and suggestions from focus groups have to be weighed carefully because the input comes from only a handful of participants whose opinions may not mirror those of your customers at large. However, the process often helps retailers identify needed changes. Here’s how Samuel Gordon Co. responded to feedback at its most recent focus group:

  • The new location was intimidating, even to sophisticated, affluent customers. Solution: The firm created a series of funny radio commercials emphasizing that the store isn’t snobbish and that it offers items anyone can afford.

  • The selection was overwhelming after the inventory from three stores had been combined at the new location. In response, the company held a large inventory sale. It also pumped considerable dollars into showcase redesign, even though the cases were new to begin with. Showcase beds were changed from gray to cream. “The color brought the jewelry to life and made the cases seem more airy,” says Gordon. New display elements were installed, as well.

  • Older customers wanted a canopy at the entrance to protect them from weather. The store’s architect felt this would detract from the store design. A simple solution: The firm’s security guard now escorts elderly customers into the store with an umbrella when the weather turns foul.

  • Customers were understandably confused by the five jewelers in the area who had Gordon as part of their name. (None are related.) In response, the store put together print ads that now run once a month. The headline “95 Years Young!” along with photos and text highlight the four generations of the Gordon family involved in the store.

Gordon swears by focus groups. He says that without this external feedback, “you wind up kidding yourself that you run the best store possible and that every aspect of your business is wonderful.”

Gordon recommends using professional focus group facilitators who can keep discussions on track and offer information about the participants’ background that will aid in evaluating their input. You’ll want 10 to 12 members in the group, half of whom should be your customers. “I rely on the opinions of women on lines we carry first and foremost,” he says, so he typically includes only two men in each group.

To find focus group facilitators in your area, contact the Marketing Research Association at (860) 257-4008, Information is also available through the local chapters of the American Marketing Association or its Chicago headquarters at (800) AMA-1150, (check the focus group section of the Marketing Service Guide). Another option: check the Yellow Pages under the heading “Market Research Firms.”

Costs for focus groups typically range from $2,000 to $5,000.

Reduce the Risk of Grab-and-Run Losses

An elderly man said he wanted to purchase a diamond ring for his wife. He asked to see numerous rings, all the while watching for his wife to walk by so he could get her approval. The sales associate presented many rings and earring sets. Finally, she placed two rings and a pair of earrings on the display pad for him to examine. She began to cough and turned away for a moment. That was his opportunity. He said that he saw his wife and immediately left. When the sales associate looked at the pad, a 2-ct. diamond ring was missing.

In another store, a “customer” asked to see a Rolex watch. He placed one on his wrist and asked to see another for comparison. The sales associate handed him the second Rolex watch. The thief darted out the door with both watches.

Grab-and-run losses are all too common in the jewelry industry. Jewelers Block policies typically provide coverage for this type of loss, but payment from your insurance company depends on your policy’s deductible. Many stores carry high deductibles in order to reduce their insurance premiums. Obviously, if the value of the items stolen in a grab-and-run is less than your company’s deductible, there’s no insurance payment.

Thieves rely on speed, distraction, store layout, and poor security procedures when planning grab-and-run thefts. Here are some ways to thwart their efforts:

  • Design the store layout so that customers must walk around showcases to reach the door, rather than providing a straight path to the exit. This enhances security and increases the amount of jewelry that a customer might notice as he or she walks through the store.

  • Before displaying jewelry, make sure you have every tool you’ll need – display pad, scope, calculator, pen, and paper. If you must leave the customer, even just for a second, put the item you were showing away or take it with you.

  • Show only one item at a time. Customers may want to compare two or more items. Explain that your insurance company allows you to show only one at a time. Offer to hold one or two items yourself, putting these next to another item that your customer isconsidering.

  • Display high-value merchandise away from the exit. Luxury watches, large-carat jewelry items, and other high-value pieces should not be displayed in the same showcase. Instead, distribute these throughout several cases toward the back of the store.

  • Keep showcases locked. If you must leave for even a short time, lock the showcase first. Before going to a second showcase for merchandise, replace items from the first showcase and lock it.

  • For high-value items, consider having a secluded area where you and the customer can sit. This makes the buying experience special while also increasing security.

  • If an unfamiliar customer asks to see high-value items, explain that your insurance company instructs you to ask for identification as a security measure. Keep the customer’s driver’s license or other form of identification on the counter beside you while you show the items. Your legitimate customers shouldn’t mind, but thieves will be uncomfortable.

  • Give the customer your full attention. Never turn your back.

  • Keep every slot in display trays filled with merchandise or markers, so you know if something is missing.

  • Remember that arguments or commotions may be an attempt to distract you. Stay alert.

This is one of a series of case studies prepared by Ronald R. Harder, president and CEO of Jewelers Mutual Insurance Co., Ronald R. Harder, president and CEO, Jewelers Mutual Insurance Co.

Seven Habits of Top Managers

Great managers make for high-performing stores. So how does a good manager work to become a great manager?

At the recent Pacific Jewelry Show in Anaheim, Calif., George Whalin, president of San Marcos, Calif.-based Retail Management Consultants, presented this list of work habits that are typical of highly successful managers:

  1. Spell out staff performance expectations. Whalin recommends a short daily sales meeting to set clear objectives as well as to communicate values. Use empathy and understanding in these and all communications with staff. “Half of good communication is good listening,” he says.

  2. Surround yourself with good people. “Hire for attitude, intelligence, talent, aptitude, and personality,” counsels Whalin. “You can always teach a skill.” Conversely, avoid hiring “warm bodies” who fill an immediate need but are mediocre at best.

  3. Use challenges, trust, appreciation, and recognition to motivate employees. “A leader is someone who can persuade people to do something they don’t want to deal with, and do it well,” Whalin says.

  4. Integrate teaching into your management culture. Build a mentoring environment in which more experienced employees routinely teach newcomers. Share information, ideas, and insights (never be a control freak), and take a vested interest in developing each of your staff members’ skills.

  5. Focus on results. “Don’t get caught up in the minutiae. Begin with the end result in mind,” says Whalin. If you delegate a task, create an atmosphere in which the employee feels a sense of freedom to work toward those goals without someone looking over his or her shoulder. “Don’t yell at the person if they do the job poorly. Point out where they went wrong, and teach them how to do it right.”

  6. Know where sales peaks are – daily, weekly, monthly, and yearly. Staff accordingly so that you can manage labor costs and work flow effectively.

  7. Share the store’s success with the entire staff. Everyone in the store – sales and back office – contributes to the success of the business and should share the rewards for their efforts. – George Holmes

George Whalin, president, Retail Management Consultants

Upward Surge in Jewelry Sales Continues

This has been a banner decade for jewelry store sales, according to the recently released Jewelers of America (JA) Cost of Doing Business Survey.

The 1998 edition reported that sales among the nearly 400 retailers surveyed by JA increased by 7.8% in 1997, the seventh straight year of sales growth. This was the closest the industry has come to 1988’s peak sales increase of 9.4%. Meanwhile, the real indicator of jewelers’ bottom line, net profits, also showed steady gains – up 6.4% in ’97 from 5.6% in ’96 and 4.6% in ’95.

The survey also provided insights on comparative sales growth among different types of stores. The largest sales growth, 19.8%, occurred in the “Designer/Artist/Custom” store category in 1997, though this was down slightly from 22.5% the previous year. High-end independents posted 10.5% sales gains, up from 7.1% in ’96. Meanwhile, chain store sales rebounded slightly in 1997 with 5.7% growth compared with 1.1% in ’96.

Key Stats

42% Of jewelry sales in 1997 consisted of diamonds and diamond jewelry, up from 39% in 1996.

9.2% Of jewelry sales came from colored stone jewelry in ’97, down from 11.5% in ’96. 5.9% Of jewelry sales came from watches in ’97, up from 4.6% in ’96.

51% Of retail jewelers used the Internet for business or recreation in 1997, an increase of 12.3% over the ’96 figure.

13.5% Of jewelers are now using a catalog for selling. More than one-third Of all retailers expect to offer online shopping by the year 2000.

900% Anticipated jump in use of business-to-business electronic commerce in all retail sectors over the next two years.

$191,241 Annual sales per full-time employee at independent high-end jewelers (annual sales over $1million).

$141,571 Annual sales per full-time employee at mid-range independents (sales between $500,000 and $1 million).

$148,337 Annual sales per full-time employee at a chain jeweler.

4.7 Number of candidates screened for a temporary position, on average, among all types of retailers.

5.6 Number of candidates typically screened for a part-time position.

7.2 Number of candidates screened for a full-time position.