Do the Math, Part 1

Market researcher Pamela Danziger continues to call attention to the seismic shifts occurring in luxury consumers’ buying habits. Shoppers’ needs and wants are in transition as old-line luxuries like jewelry give way to new, experiential luxuries like ecotourism and day spas.

Starbucks, selling $3.95 “luxuries,” has built a huge business by promoting itself as an inviting third place—after home and office—for its customers. Is your store a destination or just another place to buy nice jewelry?

Danziger’s Let Them Eat Cake: Marketing Luxury to the Masses—As Well as the Classes provides background on consumers’ desire for experiential marketing. (See “Icing on the Cake,” JCK, June 2006, p. 332.)

One key area to change, in terms of your customers’ in-store experience, is the sales training and development of your newer counter staff. For sales associates who have worked in your store more than a year on a regular basis, and who are in the top 20 percent of your revenue earners, apply some quintile sales analysis (dividing your sales into five parts). Tie a portion of your top earners’ bonus program to teaching product knowledge and selling skills to newer sales associates or those in the bottom 20 percent or 40 percent of your sales ranks. When the underperforming associates’ figures improve, reward the better associates twice over.

If your best performers can’t help raise the revenue numbers of your poorest performers, then tear a page out of Jack Welch’s General Electric sales management playbook and help the underperforming associate understand that selling jewelry, in your store, is not a long-term proposition. This is the “up or out” theory quantified and paired with a legitimate, quantifiable opportunity to improve. It may seem harsh, but you’re doing the weak employee, and yourself, a favor. (You’ll have to work around this process if the weak employee is a relative. You must address this issue, since you cannot have one set of rules for employees and one for family; this leads to discontent and problems across the ranks of all the employees.)

Charles Lacy, of the eponymous 60-year-old jewelry business in El Paso, Texas, pinned the tail on the donkey with these comments at his educational presentation at The JCK Show ~ Las Vegas: “You have to have a passion for the watch product. You have to decide you want to have—and they must want to be—the best watch salespeople there are, not just in your market, but anywhere, period! A store’s watch salespeople, buyer, and watch department manager absolutely need to be knowledgeable about the watches a store sells. They need to be experts and able to inform and advise a customer about any watch brand and model. … We train them thoroughly, and then we test them—and if they don’t pass the test, they don’t sell watches.”

And remember, watches have one of the poorest gross margin returns on investment—imagine what he requires of associates in really profitable areas like gold jewelry?

Retailers have to make jewelry shopping more engaging and compelling. Become more competitive by offering a fresher and more interesting selection and making sure the people selling it know as much—or, better yet, more—than the prospective customer. Require vendors to provide better sales training aids and in-store learning opportunities. Invest your time and money to improve the knowledge base of all your employees. Make these same professionals responsible for passing along their knowledge to younger or less experienced associates, and reward them when they do it. You’ll be on your way to gaining a significant retail advantage.