Software for Hard Numbers

Small and large jewelry operations can benefit greatly by having inventory management systems in place. In fact, many would argue that these automated systems are necessary to compete in today’s marketplace. Yet many jewelers shun them.

Susan Eisen, of Susan Eisen Fine Jewelry and Watches, El Paso, Texas, is a strong advocate of technology in general and inventory management systems in particular, but she understands the reluctance. “I think people are afraid,” she says. “It’s a monumental task to put things on the computer. … I can understand the hesitancy because of the time involved, the detail, the expense.” She adds, however, “We definitely couldn’t live without it. … It’s like my right hand.”

Other jewelers agree. In a JCK reader survey conducted via e-mail, 99 percent of respondents who have an automated system said they improved inventory management, and 77 percent said having one aids their marketing efforts.

Sixty-eight percent of jewelers who responded to the survey said they have inventory management software systems, an indication that they’re gaining acceptance. Eisen notes, however, that jewelers who respond to an online survey are already comfortable with computers and automation, so the actual percentage of jewelers with such systems is probably smaller.

Tony Prater, owner and chief executive officer of Jensen Jewelers, a 14-store chain based in Twin Falls, Idaho, says point-of-sale capability is an add-on feature of the Application Systems Corp. system he installed in 1996. “The customer insight we receive is used for marketing and reaching our customers in a more direct way,” he says.

It’s important to choose a system geared to your particular industry, says Don Fornes, chief executive officer of Software Advice (www.softwareadvice.com), a Web site that helps businesses research and select software. “A jewelry retailer is very different than a mattress retailer,” Fornes says. “So the jewelry retailer should get a system that’s right for their needs.”

Among jewelers who have a system, 75 percent use a jewelry-specific inventory program, and 25 percent use a general retail system, according to the survey. In addition, 80 percent of respondents said they purchased their system from software providers, while 11 percent bought over-the-counter systems from retailers. The majority of software companies that provide systems also provide employee training (77 percent).

Jewelry retailers accounted for 76 percent of survey respondents. Seventy percent represented independent retail jewelers, and the remaining 6 percent were online jewelers (3 percent), large retail chains (1 percent), and department stores (1 percent). Twelve percent of respondents were manufacturers or suppliers. The remaining respondents were scattered among consulting groups (2 percent), associations (1 percent), appraisal and gem labs (1 percent), and schools/libraries (1 percent). Seven percent of respondents were defined in the survey as “others.”

Among this diverse group, the most popular systems were ASC, Advanced Retail Management Systems, Edge (from Abbott Jewelry Systems), IBIS (also from Abbott), Jewelry Shopkeeper (from Compulink), and QuickBooks.

Fornes says it’s important that a system have expansion capabilities, including e-commerce. “The big thing that we’re seeing right now is that retailers, including jewelers, need to manage jewelry across multiple channels—multiple stores and e-commerce,” he says.

Fornes explains that a retailer often starts out as a single store with one point-of-sale (POS) or inventory-management system and then expands either by adding stores or going online. This can lead to multiple retail management systems. “What we see is a lot of retailers are looking for a new system that can span all of their stores and their distribution facilities as well as provide an infrastructure for an e-commerce site on the back end,” he says.

He notes that there’s a new breed of retail management systems, which provide inventory management, POS capabilities, e-commerce, and other retail management capabilities over multiple selling points. Whether such a system works best for independent jewelry retailers, depends on their needs, Fornes says.

For Eisen, like other jewelers, the reports she receives from her automated system have provided details about her business that she never would have obtained by other means. “It really has educated me on things I thought I knew already but I didn’t,” she says. “Like the value of your inventory. Like how many times your items turned, which vendors are your best vendors, what gross profit you make off of each department or vendor, which customers have spent the most. There’s just a ton of information.”

She adds, however, that an automated system is only as good as the information that goes into it. “I think we all need to be realistic and admit that the accuracy of data entry is about 75 percent,” she says. “You have to put it in right. … I want it always to be right, but unfortunately that’s not the world. It requires auditing, correcting, and checking after the data’s in to make sure it’s correct. It can be costly if you have the wrong data. It can hurt you as much as it can help you, just like computers in general.”

Multiple Benefits

As already noted, many automated inventory management systems provide other services. Eighty percent of retailers have systems that provide POS capabilities and keep track of jewelry repairs. Retailers with these systems in place say they’re better able to store and retrieve detailed customer records, track their best and worst sellers, replenish stock, track repairs, and stay abreast of precious metals pricing.

Eileen Eichhorn, of Eichhorn Jewelry Inc., Decatur, Ind., says keeping track of gold prices has been extremely valuable as prices of precious metals have risen. “It’s been really good as far as doing updates for gold price increases that need to be done,” she explains. “The market has changed so dramatically in the past six months you don’t even want to tag the inventory. I’ve been in the jewelry business for 43 years, and I’ve never seen it like this.”

Eichhorn says she had a card inventory system in place since 1977 and first automated her inventory in 1997. In 2005, she went with a system that included POS capabilities.

Eichhorn says her store is one of the few in the country that has a diamond club, a kind of savings account for jewelry, where members accrue credit and are eligible for weekly drawings for additional credit. Because of this she needed a system to keep track of credit memos. “I needed an inventory management system and accounting system combination,” she says.

It took Eichhorn three years to find the right system, and it turned out that she didn’t have to leave the Hoosier State. Called Guild Jeweler, it’s sold by Van Horne Jewelers, a third-generation jewelry retailer in South Bend. (Eichhorn describes it as “written by these geeks up at Notre Dame.”) Her store was the 30th to have the system installed.

Three years ago, Eichhorn automated her repair inventory. “It’s a big learning curve,” she says. “We’ve gone nearly 40 years without it.” The system includes imaging technology that allows a picture of the jewelry being repaired to be placed on an envelope.

Automated jewelry repair isn’t for everyone. Eisen is among those who don’t include it. “We have so much going in and out on a daily basis I would need a person just to sit at a computer all day long and handle this, and it’s impractical for me to keep up with,” she said.

Even for some larger operations, where automated inventory is a necessity, repair work continues to be tracked manually. Jensen Jewelers is one example. “We don’t use the repair part of it at this point,” says Prater. “We do a huge amount of repairs in each store, and we have one repair facility with goldsmiths.”

The jeweler automated its 14 stores and corporate office in 1996 with bar coding and POS capabilities. The company still does its own collecting, as 70 percent of its business is in charged sales. “Centralizing helped us control our accounts receivable,” Prater says.

Before being automated, inventory control was managed by employees on a 24-hour basis at each location.

Joe Barnard, director of sales at Bernie Robbins Fine Jewelry, said automating its repair service is a corporate priority for the luxury jeweler, which has nine stores in New Jersey and Pennsylvania. “With all the doom and gloom in the world, people are going to have to take a look at reducing costs and building revenue streams, and I think repair departments are the most undervalued portion of our industry,” he says. “It’s a key area to focus on at this time. Our repair business has been building. It’s a corporate objective for us to build a repair system that we could monitor and make sure it’s profitable—use it as a revenue stream instead of a service.”

The company, which has been steadily growing in recent years, installed an automated system from ARMS in 1994 (when it was a three-store operation). Before that, “We took inventory once a year, manually,” Barnard says. “We used handwritten tags. It was a mess.”

Eisen says strong support is vital for any system. “It’s a big, big issue,” she says. “If the people on the support desk are new and just learning, it could be very aggravating. Support could make or break a jeweler’s system. … To me it’s one of the most important things.”

In the JCK survey, more than three-quarters of retailers (78 percent) said their system is open to all employees, while 19 percent provide access only to management; 2 percent limit access to the sales staff.

Barnard says not all of Bernie Robbins’s 105 employees have access, and for some, access is limited. At Jensen Jewelers, all 120 employees have access to the system, Prater says. Eisen says she uses a password-protected system that allows employees (she has about 10 staffers) different levels of access.

Even though Eisen has stayed with the same company for more than 10 years, she stays on the lookout for new systems. “You shouldn’t get complacent,” she says. “It’s kind of like recruiting. You never know if there’s a bigger and better one.” She adds, “I think they all have their pluses and minuses.”