Bill Underwood of Underwood Jewelers, Fayetteville, Ark., has plenty of inventory, but he’s not complaining: Some of the stock has increased in value based on the rise of the euro compared to the dollar.
“We’re fat on inventory, but we always have been,” Underwood says. “I’m not too unhappy with that. It’s a good place to keep your money these days. A lot of what we purchased in Europe last year and the year before has turned out to be a complete value.
“There has been a trend for jewelers to order things as needed and to use just-in-time so the retailer has less money tied up in inventory,” he adds. “We just haven’t embraced it as much as others have.”
Underwood says he has modified his ordering somewhat, but that has more to do with the scheduling of several major shows and his inventory system than with business needs. The store’s fiscal year ends June 30, and several shows, such as Basel, occur earlier. When Underwood orders pieces at spring shows, he has the items delivered after June 30 to keep inventory and finances better organized. “It’s good to keep that balance,” he says.
Jim Clark, president of B.C. Clark jewelers in Oklahoma City, says his inventory is significantly greater than it was five years ago. “Sometimes our buyers get a little over-enthused in buying,” he says. “But we’re in a position where we can carry more inventory. We’re carrying more lines than we did before,” he notes, citing Roberto Coin and Leslie Greene as two new ones.
Clark says he’s gradually trying to incorporate just-in-time inventory practices into the operation. “We always try to do a better job reordering,” Clark says. “That’s a constant discipline for us. We’re much better off if we can turn over [an item] immediately, and it’s something we can do a better job at all the time.”
For Alpha Omega, a high-end watch retailer in the Boston area, a well-traveled and better-educated clientele has meant a dramatic increase in upscale watch sales. “The inventory in my company has tripled from what it was five years back,” says president and CEO Raman Handa. “The end business has been phenomenal for us during the past five years. The more we stock, the more response we are seeing.”
The company has added more stores in the past five years, including its new flagship location, a 6,100-sq.-ft. store in Harvard Square. It has also added new lines of watches and jewelry, including Bulgari, Blancpain, and Piaget.
Allan Schulman, owner of B. Alsohns Jewelers, Palm Desert, Calif., said his inventory has increased by about 10% in recent years. “We don’t like selling out of catalogs,” he says. “We want to have items on hand for immediate sale.”
Memo and givebacks. Luxury jewelers prefer to own the items they carry rather than rely on memo. Most said it provides savings that can be passed on to the customer. Some said they just feel better when they own the product.
“We probably buy less off of memo than we did in past years because we are in a position to own our own inventory,” Clark says. “We don’t depend on any memo programs. This enables us to offer our customers a better value.”
Donnie Thompson of Windsor Jewelers, Augusta, Ga., says he, too, gets far less on memo than he did a few years ago. “Lately, if you want a good price, and the consumer is shopping hard, you need to get a lot of it.”
“We choose to buy,” Toby Joseph of S. Joseph and Sons, Des Moines, Iowa, says. “That’s just the way we run our business.” Joseph says he doesn’t use vendors’ giveback programs, but he likes having that option.
Ronda Daily, owner of Bremer Jewelry, Peoria, Ill., says a very small percentage of her inventory consists of memo because she prefers the pricing of the products she buys back. In addition, she says, if she doesn’t like a vendor’s buy-back program—for example, a forced three-for-one exchange—she won’t work with them again.
“My buyers and I work very diligently with suppliers to have good relationships,” she says. “There are times when I traded back and bought five pieces. I may buy 10 to one. If that vendor won’t work with me, I won’t work with them. I’ll take their stuff and never work with them again.”
Like their multi-store counterparts, luxury jewelers also are paying attention to their relationships with suppliers. “I look for great vendor relationships,” Daily says. “If I create some new ones, great. If not, I work with the ones I have. I work with people I like, and that’s how I do business at the retail level. My sales staff’s job is to create relationships. It’s not to sell jewelry. Anybody can sell jewelry. Wal-Mart sells jewelry. Do you care?”
Daily’s bottom line: “I’d rather make a friend than make a sale.”