Independent jewelers are entering the new year in a brisk and businesslike manner. They plan to analyze inventory continuously, aiming to stock up with strong sellers that offer high profit potential and discard slow movers. They want to improve turn, motivate and press their staffs to be more productive and take full advantage of any supplier deals available.
Most of all, they aim to bring in more customers. They’ll do so with a variety of highly-targeted programs that mix advertising, direct mail and community involvement.
As a group these jewelers, members of JCK’s Retail Panel, are confident their initiatives will pay off, often handsomely. More than two-thirds expect to increase their profits in 1998 and fewer than one in 10 looks for a decline. The median profit forecast is for a 5% gain from 1997 and a significant number of panelists see profit gains of 10% or more. They’ll stress doing their own job well rather than worry about the competition.
Having the right merchandise and promoting it successfully are the core components of many business plans.
The broad merchandise goals are to offer products that are beyond the ordinary and that provide satisfactory margins. Thus there’s much talk about selling quality, about selling high-ticket items and about selling the unusual – particularly when it comes to diamond jewelry. Time and again, panelists talk about the competitive advantage they’ll gain by offering a well-cut stone. Many also favor offering some of the new, more commonly available cuts now on the market.
There’s also a lot of talk about focusing on likely best sellers – ones that appeal to a particular store’s own best customers. A logical add-on to this idea is the conviction that if customers really like what they see on display, they’ll buy – with a resulting improvement in inventory turn.
The focus on strong sellers will have two other side effects: jewelers who follow this route will buy more carefully and more selectively, discarding suppliers who don’t fill their needs, and they’ll make a real effort to clean out unwanted inventory. The buy-with-care philosophy is summed up in this comment by Georgie Gleim, president of Gleim the Jeweler in Palo Alto, Cal.: “We try to buy what we need, not just buy.”
In spite of all the recent hullabaloo about vanishing diamond profits, panelists still say that diamond jewelry is their most consistent profit producer. It’s followed a long way behind by karat gold jewelry, then diamond and colored stone jewelry and custom-designed jewelry. Further, panelists put diamond jewelry at the top of the list of profit-producing lines they’ll add in 1998 to help improve their bottom lines. In a surprising move, they put watches number two on this list.
How do they get good margins on diamond sales? The clear answer is, “Sell quality.” Panelists insist that a well-made stone, preferably an expensive one, can be sold at a good profit. A number of jewelers add that it’s better to go with smaller rather than larger diamonds because upstairs “wholesalers” and dealers who sell directly to the public have mostly eaten up the big-stone market and most of the profits that should belong there.
Diamond profits also can be improved by smart buying. This may mean buying overseas if the buyer is experienced and well capitalized (more than one panelist notes that there are some real bargains in the Asian market right now). Or it may mean becoming an important customer for one or two New York sources or even doing smart (but fair) buying off the street. Other factors that help make a diamond jewelry sale more profitable are a well-trained staff and an educated customer, panelists say. The last word on the subject comes from I. W. Marks of I.W. Marks Jewelers in Houston. His succinct answer on how to improve diamond profits? “Don’t give them away!”
Getting the message out. Many jewelers projecting higher profits in 1998 expect the added dollars to come because their various marketing programs will attract more customers. Others foresee added dollars because they’re targeting advertising very precisely either to promote high-margin sales, to reach specific high-spending customers or both.
Robert Young, who operates a store under his own name in Belleair Bluffs, Fla., is doing very well by cultivating his clientele and he predicts that doing more of the same will help push his profits up by 20% this year. “After three years of more focused advertising, marketing and inventory improvement, I am reaping great rewards,” he reports. The rewards include an 8% sales gain from the year before through the first nine months of 1997 – and a 200% gain in September alone which, he notes, was “a great month!”
Looking ahead to 1998, Young says he plans to continue his focused marketing. Plans include constant weekly advertising in a local arts, activities and restaurant magazine, postcard mailings to top clients, charity involvement and probably a repeat of a getting-to-know-you wine tasting that brought a number of newcomers into the store.
The idea that advertising pays is chorused by many panelists. Leo Alfred Jewelers in Dublin, Ohio, wants to build business this year with “more efficient advertising” that uses less radio and more direct mail. In Pennsylvania, Dale Perelman, president of Kings, a regional chain based in New Castle, lists target advertising of more profitable items to his best customers as one of three profit-building goals this year. The other two: close under-achieving stores and improve turnover chain-wide.
Both sides of the counter. The human element will have its usual huge impact on business success or failure. Many jewelers say they have work to do on both sides of the counter, to educate both customers and salespeople.
Customer education often begins when the jeweler makes his or her point that reputation, credibility and better merchandise all are key reasons to pick a particular place to shop. But, as panelists relate often, keeping the customer informed on what sets quality apart from so-called bargains is an on-going process. It can turn a $1,000 engagement ring sale into a $5,000 one.
Bringing the sales staff up to speed is even more vital. Jewelers from South Carolina to Kansas and from Ohio to Connecticut or California agree that they must initiate or continue sales training. “Training personnel on selling quality rather than price will be critical,” notes Roger Marks, president of Roger’s Jewelers in Modesto, Cal.
Unfortunately, no matter how good the staff or fine the merchandise, harsh competition and/or local economic conditions sometimes can make growth difficult if not impossible. And there are panelists who face these realities. But judged by their attitudes, they’ll still fight to get what business they can.
Frank Molteni, whose D. B. Ryland & Co. store is in Bristol, Va., for example, sees his 1998 profits shrinking because of heavy catalog competition. His response will be “trying to persuade customers to buy quality, to buy from a store they can trust and to buy locally.” Meanwhile, in Miami, Buchwald Jewelers will try a three-prong campaign to offset an anticipated drop in profits. The elements: better salesmanship, more advertising – and prayer.
PROFITS? NOT THAT BAD
Asked to rate their satisfaction with overall profit margins, panelists replied:
WHERE THE PROFITS ARE
Asked to name the most profitable products they carry, panelists listed these as their top seven (in descending order):
Diamonds and diamond jewelry
Karat gold jewelry
Diamond and colored stone jewelry
Asked which products they’re likely to add in 1998 to help boost profits, here are the top six named (again, in descending order):
Cultured pearl jewelry