Before you go on a pre-season shopping spree, check your cases—and these facts and figures
By the time you read this, you’ll be thinking about where you stashed the tinsel and twinkly lights and what extra staff you’ll need for December. All right, I might be getting a little far ahead on this…but you will be looking seriously at your inventory and asking yourself: “What product will I need to get me through the holiday season?” Unfortunately, many store owners don’t ask that question until a vendor walks in the door.
Some of you have cash burning a hole in your pocket from a late-summer sale. At times like this, attention to detail can go by the wayside—especially when we’re talking about diamonds. Thanks to the average wholesale cost of a diamond ring, it takes only one or two moments of weakness for the entire budget to go out the window (or, more accurately, in the window).
Graphics by Rod Little
The diamond market, in particular diamond rings, has seen an uptick in the last few months—for smaller and larger stores alike—with the percentage of sales contributed by diamond rings showing an improvement on the back of better storewide sales figures.
So what should you do to prepare your diamond inventory for holiday time?
1. Evaluate your current stock turn of diamonds. This will quickly tell you whether you have enough selection or too much. Do you look like a diamond store? Are you the place to shop for diamonds?
2. Review the age of your diamond inventory. It’s one thing to have enough dollars of inventory, but another to have the right product. If all your stock is more than two years old, then it’s of no use to your fashion-forward customers. Some helpful ways to move aged diamonds:
- Have a clearance sale.
- Exchange with vendors.
- Run a specials cabinet.
- Incentivize the staff.
- Remake them.
3. Find the gaps in your inventory. What price points do you sell at—and does the average retail value of your inventory match those price points? Look not only at history, but also at trends. With the recent financial crisis, the average retail value of diamonds sold has dropped for most stores across the industry.
Be careful, though—you don’t want a reduction in your average retail value stocked to be the reason your average sale drops. (Remember the hamburger-stand owner who, on being warned a recession was coming, stopped buying buns and meat—only to find his sales dried up.)
4. Set your diamond-buying budget. Now that you know what you need, determine how much you have to spend. Set up an “open-to-buy” fund— if you don’t have one, e-mail Carol at email@example.com for a free copy—to monitor your buying.
5. Prepare to purchase. Before you buy, you need to decide what to buy and whom to buy from. There’s plenty of information available on what product is selling well for others and will probably sell for you. As for selecting vendors, your answers to the following questions will help determine the suppliers you should be investing with:
- What’s the turnaround time on product when it is reordered?
- Will the vendor exchange it if it doesn’t sell?
- What terms of payment are available?
- ?Does the vendor offer training if required?
Plan your diamond buying now, and give yourself time to rest before the real holiday sales pressure begins!