What’s the secret of taking a business to the next level of success? That’s what JCK recently asked hundreds of U.S. jewelers. We found that one in five has intentionally expanded the business—by entering a new market niche, boosting sales, adding another store, etc.—over the past two years. The information they shared falls into two categories: knowing when it’s time to grow and knowing how to grow. Here’s what they told us:
WHEN TO GROW
Changes in business. If sales have been falling off for a while, it’s time for a change. One Midwest jeweler, for instance, admitted to “flat sales performance for four years [due to] relying too much on too few clients”—definitely a red flag.
On the other hand, if sales keep rising and customer traffic is strong, think about the next level of business, say successful jewelers. Three consecutive years of 15%-plus annual sales growth, for example, was a major reason behind the expansion of Victoria’s Gold in Rockport, Texas.
Review recent sales numbers and profits, and evaluate your sales staff. One New England jeweler, who increased annual volume from $65,000 to $725,000 in six years, suggests asking yourself these questions: “Is your inventory turning at a good rate? Is your staff effective in their closing ratios? Is your marketing effective in bringing in traffic?” Answering “yes” means you should consider expanding, whether internally (staff, new lines) or externally (physical expansion, a new location).
Overcrowded, understaffed. Do your customers have to wait in line to be helped? If your location is too small or you don’t have enough staff to handle all your customers, consider expanding. A Maryland jeweler knew it was time to grow when “we outgrew our old location so badly [with] too many people in too small a place.” One East Coast jeweler got the message when his store “became too small for more employees and more inventory, and our customers complained.” The moment of truth came for Dan Gill, owner of Victoria’s Gold, after he decided to upgrade his lines to keep affluent residents from driving to nearby Corpus Christi, Texas, “but couldn’t because we had run out of space and outgrown our old facility.”
Ability to grow. Knowing when to grow also requires a review of business operations and finances. “Do the numbers,” urges a Los Angeles jeweler. “Gauge demand for your products and brands. Make some projections. Look at your infrastructure and ability to support growth.” One Southern panelist knew it was time to make a move when he had “more than 50% of the capital needed to grow, the support of suppliers, and the [new] location.” A Wisconsin jeweler told JCK that the time to expand “is when our debt is less than our equity.”
Changes in the market. Look at the community you serve. Is population increasing or decreasing? Are more housing developments being built? If so, what kind—expensive homes, tract housing for young families, townhouses? What businesses—office parks, warehouses, insurance firms, shopping centers, etc.—are on the planning boards?
Are your market’s demographics changing? Which groups (e.g., older couples, young families, working women) are increasing or decreasing? Are more customers coming from outside your market? These developments will affect your marketing and business, say jewelers polled by JCK. You can find the information you need in your local newspaper’s legal notices, at your municipal zoning office, or at regional planning commissions.
Customer comments. Listen to clients. One Virginia jeweler realized “we had to make a major decision when customers repeatedly told us how much they hated the mall” in which one of his two stores was located.
Know what customers want. “We talk to our customers,” says Kevin Gates of Gates Jewelry, Ontario, Ore. “Since we buy for them, whatever they want, we get.” In Kirkwood, Mo., jeweler James Durbin “took a good look at what customers requested and found fast service was important.” That led him to add a salesperson and another experienced repairman.
Review the past two years. Have sales and average purchases increased in some categories? Are there more requests for certain merchandise or services? Dunbar Jewelers in Yakima, Wash., regularly tracks sales in various merchandise niches. “As our average sale increased, we raised the average value of inventory,” says owner Pat Gilmore. “As our diamond sales became larger in dollars, we stocked larger diamonds.”
HOW TO GROW
Share your vision. One key to business growth is commitment by owners and staff. The owners of Ford, Gittings & Kane in Rome, Ga., for example, pledged to “keep the company strong by re-investing profits in the building, in quality inventory, and in the staff, while our staff made a commitment to quality service, one-on-one with customers,” says co-owner Jan Fergerson.
The owner must have a vision of where he wants to take the business, share it with staff, and ask them to support it. As C. Clayton Bromberg of Underwood Jewelers, Jacksonville, Fla., says, “Can you sell the ‘increase dream’ to people working for you—and get them to buy into it?”
“Selling the dream” is an ongoing project. The owner should regularly report to his staff on store goals and solicit their input. Bill Sustachek of Rasmussen Diamonds gives a “state-of-the-business” address at the start of each year, telling associates “where we’re going, outlining the vision for the store and our year’s goals in detail.” He also holds weekly meetings where, “in addition to training and a review of procedures, we get input from employees and look at where we stand with our goals.”
At Durbin Jewelry Designs, which grew from $500,000 to $800,000 in annual volume between 1998 and 2000, owner James Durbin involves the staff in major business planning sessions. “We review what we listed the year before, from buying a chair for the benchman to exploring [the addition of] non-jewelry items. We consider physical, inventory, and marketing needs; professional education and workshops; shows to attend; and how stock we buy or make is doing. We share information, and everyone can bring matters to the table,” he says. “We also confer daily and have production meetings about jewelry [we make].”
Durbin updates employees by posting cards that state “what we want to accomplish, divided into six-month, 12-month, and long-term goals.” At Rasmussen Diamonds, Sustachek posts monthly and yearly goals inside the store vault’s door “where employees see it every time they open it.”
Be prepared. Sustachek knew for years that he wanted to expand his business, so he prepared for a move. The store’s antique jewelry cases were remodeled and inventory put in order. He replaced old displays with new ones and re-evaluated his staff to determine who was best suited to which jobs in a new location. “If you wait and do all that when you move, it can cost beaucoup bucks,” he says. He spent more than 10 years checking potential locations until he found one—a former meat store—that met his requirements. “Our new location is not a reason for our growth, but the result of it,” says Sustachek.
Find holes to fill. Look for market niches you aren’t serving. “When you attend local functions and 95% of attendees still aren’t wearing your jewelry,” ponder ways to reach them, says jeweler Eve Alfille of Evanston, Ill.
Consider the example of Susan’s Jewelers, Corpus Christi, Texas. The store serves an upscale clientele with high-end brands and does $3 million a year. Owner Denny Bales wanted to do $5 million, “but no matter what we did, we couldn’t break out of $3 million,” he says. “So, we decided to get the other $2 million from the 65% of the market we weren’t serving—the middle to blue-collar income households.”
Last year, he opened a second store—called “Fine Jewelry Options”—in a nearby shopping center. Geared to the middle-income buyer, it has done good business against national chains by using “competitive prices, quality merchandise, buying correctly, and strong advertising,” says Bales. Based on current traffic and sales, he expects the store to do $2 million within two years.
Filling a niche doesn’t always require a new store. A New Jersey jeweler went to the next level by expanding his corporate awards business. Others cultivate the marriage-minded. Holland Jewelry, San Angelo, Texas, saw business grow when it increased advertising targeted at bridal-age consumers, while Gumer & Co., Louisville, Ky., expanded into bridal registry and crystal. In Sidney, Ohio, jeweler Joe Allison increased business with “the custom work we pull from as far away as Columbus and Toledo. We give customers what they want, including the best service. We size rings and fix chains while they wait, work one-on-one with customers, and do all work in our shop. We have five bench people—and intend to get larger.”
Get some breathing room. Jumping to the next level of business often requires more spacious quarters. Dan Gill, owner of Victoria’s Gold, seized an opportunity when a bank building in Rockport, Texas, became available. “It was the chance [to own] my own building and to do things I’d wanted to do for some time,” he says. He moved from a small mall location, enlarged his business and expanded into upscale lines. In San Angelo, Texas, Chase Holland of Holland Jewelry Co. bought a nearby corner lot and built a freestanding building to keep pace with his growing community. “If one waits for the perfect time, one may never expand,” he says.
A new building isn’t always needed. “We decided years ago to have one large store instead of two or three [smaller ones],” says jeweler Michael Genovese, St. Louis, Mo. It now exceeds 10,000 square feet. A recent addition to the Ford, Gittings & Kane building in Rome, Ga., has meant better inventory storage, a reconfigured sales and display area, and more room for staff and clients.
Solomons Jewelers of Plainview, N.Y., has doubled business since the mid-1990s by adding platinum remount and jewelry finishing departments, a separate watch section (“a mini-watch store,” says owner Al Solomon), and on-site watch and jewelry service centers (six repair people doing 10,000 jobs annually). Solomon recently bought an adjacent store and used the extra 3,300 sq. ft.—a one-third increase in floor space—to add a fine-gift department. “There was a need for a local store with specialized gift collections,” says Solomon. “Customers who bought upscale gifts in nearby New York City said they would shop here if we had them. When the adjoining store became available, we seized the opportunity.”
Take advantage of new blood. Newcomers, who often bring fresh ideas and enthusiasm to an organization, can spur growth. Two years ago, Kevin Gates of Gates Jewelry, Ontario, Ore., took in two younger partners—Tina Bunch, herself a former business owner, and Nancy Toomey, a jewelry designer. They offer opinions on advertising and promotions, suggest new ideas, and do most of the buying. Inventory has been trimmed and new lines added. The new lines are attracting more customers, especially younger adults. “We’ve dramatically increased our purchases of white gold and platinum pieces, and we’re quick to special-order merchandise from our suppliers,” says Gates.
Gates’s 18-year-old business has increased some 20% since the partners joined. “New blood has been my best solution,” he says.
Provide sterling service. Treat customers like royalty, and business will increase.
“Customer service is the most important thing to do, but also the easiest,” says Alice Shaw, co-owner of Ford, Gittings & Kane, whose business has grown “at least 50%” in five years. “We have free gift wrapping and delivery and a full bridal registry. Among our seven-member staff, we have two watchmakers—for mechanical and quartz—and two certified gemologist appraisers. We have an accredited gem lab. Our customers know, too, they can call us anytime to bring something to their offices to look at.”
In Appleton, Wis., Avenue Coins and Jewelry, a $2 million jewelry business, improved repair service with a new $32,000 laser spot welder. “We use new technology to build a pillar of profit in our repair business,” says owner Joe Pankratz. “The welder is quicker, cleaner to use, can do diversified jobs, and lets us take in work we couldn’t do by torch.” He also added a $12,000 computer design system to create jewelry for customers while they watch.
Business-boosting service can also be unconventional. Dunbar Jewelers in Tacoma, Wash., recently sold a $30,000 custom-made piece to a man for his wife. “To celebrate,” says owner Pat Gilmore, “we immediately sent them to a luxury dinner, at our expense, at the finest restaurant in town.” Such attention to customers helps keep Dunbar successful in his city of 65,000.
Upgrade operations. Are your computer and software up to date? Do you have direct mail, e-mail, or fax services for customers? Do you have an informative Web site? How closely do you track inventory turn and the size of customers’ purchases?
“Technology is an important tool in our business,” says Dan Gill. When he moved Victoria’s Gold to new quarters, the firm upgraded its computer system, added more workstations [for bookkeeping, sales, appraisals, and gifts], and put in better software and phone systems to improve the business database and speed of operations.
J. H. Anderson Jewelers, East Hartford, Conn., installed a new computer system for inventory and points of sales when the company enlarged. When Joe Pankratz bought Avenue Coins and Jewelry, he knew what his priority was: “Apply 1990s business practices and technology to an establishment still using 1970s operations. [The result is] increased margins through better technology,” Control inventory. Pat Gilmore, owner of Dunbar Jewelers, says his company “is always trying to grow by increasing our average sale, increasing turnover, holding margins, and reducing inventory.” And business has grown—66% in five years. Goodman Jewelers in Madison, Wis. “examines inventory to work out better sell-through and turn ratios,” says a spokesman.
Help with inventory control is available at seminars at industry association meetings and trade shows, through industry home study courses, and with jewelry inventory software. Gilmore and Dan Gill both use the inventory control methods and software of ARMS Inc., Las Vegas, Nev., to track and reorder fast-turning merchandise and quickly return slow-movers to suppliers. “We hone inventory and maintain our best sellers, while keeping fewer pieces in stock,” says Gilmore. “We used to have all kinds of gold chains, for example, until we began working on what actually sold. Now, we carry a half-dozen—but only what people want.”
Upgrade merchandise . Upgrading or expanding merchandise is another way to attain the next level and attract new clientele, say successful jewelers. Eve Alfille did it by “stocking larger, finer stones and also creating fine merchandise that would take us to a higher price point ($2,000-$5,000).” In Louisville, Ky., Gumer & Co. increased business with “new jewelry and watch lines we hadn’t carried previously.”
Show high-ticket jewelry to everyone who walks in, even if they come in for a new watch battery. While the battery is being changed in the back, a salesman up front can show fine jewelry. “You never know when a seed will grow,” says Gilmore. “One guy recently bought a 2-ct. diamond while we changed his [watch] battery.”
Have a positive attitude. To arrive at the next level of success, a business owner must consciously choose the path that leads there and maintain an upbeat, determined attitude along the way. As Gilmore says: “We’re always looking to expand business.”
James Durbin describes a successful jewelry business this way: “Positive—upbeat about its identity and its community; passionate—love what it does and be driven to succeed; and purposeful—having a plan, with promotions and ideas for now and the future, and a purpose in the community, filling market needs while cultivating customers.”
And what happens when a jeweler reaches his or her business goals? Simple, says Sustachek: “Set new, bigger goals, and go to another level. Don’t be content staying where you are!”