Timely Tips: Getting Ready For Christmas… And 1996

This advice from experts on running a business, selling jewelry and hiring the right people will help you prosper in the holiday selling season and the new year.

Ever run dry on new ideas to improve your business? Ever wish you could bring the best brains in the industry into your office and have them fire off advice while you furiously write it all down?

Here’s your chance.

To help you prepare for the fast-approaching holiday selling season and for the new year ahead, JCK is offering highlights of the conference program conducted at the 1995 JCK International Jewelry Show in Las Vegas.

This month, we present information designed to sharpen your business strategies, with advice on your store, your merchandise and your staff. Next month, look for selling and sales training tips in the quarterly Management Study Center report.

RUNNING THE STORE YOUR CUSTOMERS

Vital statistics are a big help in defining the segments of your market, says marketing consultant Cynthia Cohen Turk of Marketplace 2000, Miami, Fla. Some things to consider:

  • Ethnicity. Learn about the cultural habits of the ethnic groups in your area. This will help you in marketing and merchandising. For example, Hispanic consumers are more likely to buy children’s jewelry than non-Hispanics, and are heavy jewelry buyers throughout life. (See “The jewelry consumer’s many faces,” page 138.)

  • Age. Look at the huge baby boom market; its oldest members turn 50 next year and are entering their peak earning years. The 45- to 54-year-olds, for example, spend more for gifts than any other age group, says Turk, and jewelry is fourth on their “must-buy” list. Jewelers can cash in by promoting a gift certificate program or adding fine crystal or giftware to their merchandise mix.

  • Psychographics. This refers people’s attitudes and is essential to smart retailing. “Affluence is a state of mind as much as a state of wallet,” Turk says. Cater to it.

  • Correlations. Knowing who buys what is useful. Women who buy bridge apparel (clothes priced between moderate-to-better lines and designer lines) are prime customers for gold jewelry, she says. Designer and couture apparel customers are likely clients for designer jewelry. Noting a correlation between designer jewelry customers and fine art collectors, Turk suggests a cross promotion with a local artist or art gallery.

YOUR IMAGE

What’s your public image? Smart jewelers make sure the image they want is the one they create for themselves.

An independent jeweler’s image should clearly differentiate his or her store from nearby department or chain stores, says James Porte of the Jewelry Marketing Institute, New York, N.Y. Creating a distinctive image is far more effective than battling those larger retailers with price and discounting, he says.

Chai Mann, president of Fox’s Gem Shop, Seattle, Wash., says he learned how to boost profits by broadening his company’s once “high-end, stuffy image.” Among other tactics, he:

  • Started to feature “statement jewelry” as show-and-tell pieces to help customers appreciate fine quality and design (and spend more than they might have otherwise).

  • Adopted a more casual in-store dress code.

  • Changed ads. The company’s former ads showed Mann’s father-in-law wearing a bowler hat and getting out of a London taxicab. New ads have family-oriented themes. For example, one invites customers to visit Fox’s display of antique teddy bears; another features a Seattle young girls’ choir.

YOUR ADVERTISING

Commit 5%-10% of annual sales to your ad budget, basing the exact figure on your overhead costs and what your competition is doing, says Susan Kromka of Kromka, Verrillo & Associates, Los Angeles, Cal.

Use demographic data about your community to develop the ad plan. For example, is most of the community’s affluence based on one income or two? How much is disposable income? What clubs and organizations do customers belong to?

When choosing an ad agency, ask to see a portfolio and documented results. Find out how the agency works and how it charges.

COMPUTERS AND YOU

The electronic future is tapping at your store door, says John Spadea, a jewelry retailer in Rancho Santa Fe, Cal., who also designs and sells computer software. “The use of electronic equipment, computer programs and services can simplify matters and let a jeweler be proactive rather than putting out fires all the time.”

When you’re ready to buy a computer, first decide exactly what you want to do with it. Next choose software programs and then buy the computer. Here’s a closer look at the latter two processes.

Software: Spadea suggests getting a program designed specifically for the jewelry industry (see JCK, April 1995, page 118, for a story about computers in the jewelry industry). The program should allow you to:

  • Create a general ledger.

  • Generate reports.

  • Set up individual customer records with such information as ring size, birthday, anniversary and special codes such as “likes emeralds” or “large stones.”

  • Create an inventory record that tracks merchandise in a variety of ways, such as product line and makeup (gold, type of stones).

  • Create a repair record, including who did the work, what was done, when and the price.

A jeweler also should have software packages that allow for spreadsheets (to maintain a daybook and create daily balance reports), a data bank (to log consumer information and create mailing lists), a word processor (to write letters and other documents, including appraisals) and desktop publishing (to create fliers, newsletters, showcase signs and other promotional material).

Equipment: Now you’re ready to buy the computer to run the program. How much you’ll pay depends on whether you want to “drive a luxury car or a compact,” says Spadea, but plan to spend at least $2,000.

Here’s some other equipment you may find useful in connection with your computer:

  • A modem allows you to hook your computer into on-line services via a telephone jack. Generic on-line networks such as America OnLine, CompuServe, Prodigy and Internet provide general information, trends and business data. Industry on-line services such as Polygon, Rapnet and GIA Net include such services as Jewelers’ Security Alliance crime bulletins, stories from JCK, loss prevention tips, Jewelers of America’s J Report and information from the Jewelers Vigilance Committee and the Manufacturing Jewelers & Silversmiths of America. You also may “chat” with other jewelers and send and receive color photos of merchandise.

  • Fax machine. A computer can send faxes to other computers or fax machines. (This involves printed documents only. To send a photo, a scanner is necessary.)

  • A scanner can capture an image, such as a sketch of a custom piece, and send it via computer through the fax modem. Clippings and photos from magazines and newspapers also can be scanned and transmitted.

  • Cellular phone. By using a notebook-type computer (with built-in or external modem) together with a cellular phone, you can send faxes and/or messages while you’re away from the store.

TIME IS MONEY

Time management is crucial to running a business successfully and reducing stress, says Larry Helms, a personal growth consultant and president of Western Training Systems, Medford, Ore. To do that:

  • Clarify your objectives. Put them in writing and be specific.

  • Focus on your objectives, not your activities. Being busy doesn’t mean you’re making progress.

  • Work on a major long-term objective every day. “It may be huge, but if you devote some time to it every day it will eventually get done,” says Helms.

  • Record your activities in terms of how you are meeting your objectives.

  • Eliminate any activities that waste time.

  • Make the first hour of your day the most productive. “Too many business people waste the first hour with coffee and newspapers and small talk,” says Helms.

  • Set time limits for each job and stick to them. Don’t allow interruptions except for emergencies.

  • Be proactive, not reactive. Determine why recurring crises recur.

  • Make time for yourself: Set aside a quiet time each day to collect your thoughts. Make vacations real vacations.

  • Don’t procrastinate. Do unpleasant tasks that you’ve put off &endash; and resist the urge to be a total perfectionist.

  • Resist the impulse to do unscheduled things, and don’t get sucked into unscheduled activities. “Learn to say no to those who make unnecessary demands on your time.”

SELLING THE GOODS STOCK DESIGNER JEWELRY

To focus on the designer jewelry market you must know how to differentiate yourself from other jewelry stores, says Jim Terzian of the Terzian International Group, a strategic marketing consulting company in Forest City, Cal.

First decide which type of store you want to be: an exclusive designer jewelry store, a fine jewelry store with a design jewelry section, a custom goldsmith with a designer section, a non-specific store with designer jewelry included just because you like it or a gallery focusing on art, with jewelry as one expression of art.

Once you’ve decided, consider these questions:

  • What customers comprise your market; are they design jewelry customers?

  • Where will your suppliers and the ideas that drive your business come from?

  • What must you do to make the business flow?

  • How will you get from where you are now to where you want to be as a jewelry store?

  • What are you trying to do and why? “If it’s because you love designer jewelry or for money, well and good,” says Terzian. “But if you’re not sure, you need to find out because that’s what determines how you answer the other questions.”

The store: Several factors affect whether your current or prospective location is suitable for a designer jewelry store.

  • It should be easy to reach from parking areas, visible and surrounded by compatible businesses.

  • Signs should be sized, worded and designed to reflect the quality of your merchandise and service.

  • Window displays should be spare, with space around each piece of jewelry to emphasize its importance.

  • At least a third of the window displays should be changed each week to keep the interest of people who walk by daily. “Think of it as advertising that potential customers see every day,” Terzian says. At night, display lighted pictures of jewelry that is now in the safe.

Inside, the store should be neat, clean and well-lighted. Do you smell anything and, if so, is it pleasant? Is music playing? Do the walls have art, or artfully displayed jewelry, on them? Is the jewelry easy to see?

Showcases should use artful but spare displays of jewelry, perhaps with a small photograph of the designer, a plaque describing the pieces and something unusual related to them (for example, a small bundle of cinnamon sticks gracing a display of jewelry by Cinnamon Designs).

Designer jewelry takes longer to sell because customers want to make a personal connection with the designer &endash; through the retailer. So if your store gets crowded, you may have to redesign or rearrange the interior to allow room for one-on-one consultation and staff the sales floor accordingly.

Designer jewelry also tends to be larger than other jewelry, so use display pieces of larger proportions. And don’t use display pieces from the 1950s and 1960s for designer jewelry that is theoretically either timeless or current in styling.

Use pin spotlights in the ceiling and in the cases to highlight striking pieces of designer jewelry.

The merchandise: When it’s time to order merchandise, Terzian suggests six to 12 designer lines, with at least 12 pieces per line. “That gives enough for your customers to focus on,” he says. Include:

  • At least one white metal line (let customers’ spending habits decide if it’s sterling or platinum).

  • Two gold lines.

  • A line as avant garde as you think your customers will accept &endash; and maybe a little more if you tend to be conservative.

  • A designer remount line &endash; if you wish &endash; for your own stones or those that customers bring to you.

  • Don’t forget unusual colors and gem cuts that capture customers’ attention.

TREND WATCHING

Jewelers should learn to recognize change and be among the first to go with it, says Robert Chalson, president of William Chalson Co., New York, N.Y. He cites his own company’s early use of tanzanite: “We started selling it 30 years ago and now it’s one of the top-sellers.”

Charles Lein, president of Stuller Settings, Lafayette, La., indicates these are the latest trends at his company:

  • Religious jewelry, often as a fashion accessory.

  • Ear trims, particularly two-tone styles.

  • Pendant enhancers, also in two-tone looks.

  • Bridal jewelry, particularly in platinum and 18k gold combinations.

  • Trillion-style diamond cuts.

  • Tanzanite, which he adds to emerald, ruby and sapphire as the top-selling colored stones.

  • Family jewelry, a steady sales item that never fades from sight.

  • Electroform products, new looks creating a vibrant niche market.

THE ART OF COLOR

Jewelers need to master the art of buying and selling colored gems, according to a panel composed of gem dealer Cynthia Marcusson of Cynthia Renée, Fallbrook, Cal.; retailers Scott Sedlacek of Ben Bridge Jeweler, Seattle, Wash., and Helene Huffer of Elaine Cooper & Co., Philadelphia, Pa.; and Doug Hucker of The Registry Ltd., an on-line estate and antique jewelry wholesaler in St. Paul, Minn.

Their first word of advice: base your open-to-buy on logic, not lust. A phenomenal item may excite your staff and be a showpiece for customers. But it is lower-priced, more ordinary pieces that sell again and again.

This doesn’t mean you should overlook beauty in search of the dollar, says Huffer. If a stone doesn’t make you catch your breath, don’t buy it.

Neither should you ignore the dramatic just because you think it won’t sell in your town. “Everyone says, `It’ll never play in Peoria,'” says Marcusson. “But what about the people from Peoria who go other places to buy and then wonder why they can’t find it in Peoria!”

When acquiring colored gems, Sedlacek advises buying major pieces in the U.S. (“unless the jeweler is truly experienced in overseas buying”). But consider going abroad when buying a high volume of calibrated gems (“that’s where they’re cut”). The bottom line: “Buy where you’re comfortable and from someone you trust.”

CHANGING PEARL INDUSTRY

The future of pearl jewelry for fine jewelers lies in South Seas and black Tahitian pearls, says Henri Masliah, president of Assael International, a major pearl importer in New York, N.Y.

Two other types of pearls that have graced showcases for years have a diminished future for fine jewelers, he says. Freshwater pearls, first produced in Lake Biwa in Japan but now mainly produced in China, are so plentiful that their low prices make them more suited to discount jewelry counters. (The U.S. has a fledgling freshwater pearl industry, with John Latendresse’s operations in Tennessee and Texas. But Masliah says production figures are unavailable.)

And the traditional round Japanese akoya market has changed substantially because of high prices (due to the yen’s strength against other currencies), lower quality (because pearl farmers have shortened the time pearl-bearing mollusks remain in the water, resulting in very thin nacre) and competition from China. While the Chinese haven’t perfected round akoyas yet, Masliah predicts they will within 10 years. Then he expects akoya prices to fall into discount-store range.

Where does this leave fine jewelers who want to offer pearls with lasting beauty and durability? Masliah’s answer: large, good-quality white South Seas and black Tahitian pearls offer beauty and durability, as well as design and pricing possibilities that will set fine jewelers apart from less-informed competitors.

SHOPPING FOR DIAMONDS

Where’s the best place to buy your diamonds? New York City, says Hertz Hasenfeld of Hasenfeld-Stein, a De Beers sightholder. Hasenfeld says jewelers who buy diamonds in New York City are assured of:

  • Fine makes.

  • Convenient services.

  • Familiar language.

  • Stable prices.

  • High security.

  • Consistent use of Gemological Institute of America nomenclature.

  • Suppliers who specialize in manufacturing larger stones (0.75 ct.-plus).

What should you look for in diamond suppliers? Price tops Hasenfeld’s list, followed by a deep and varied inventory, memo support, credit support, program buying, co-op funding and service.

Service, in turn, includes basics such as accessibility (it’s easier for a jeweler anywhere in the U.S. to trade with a New York firm than with one in Antwerp, Tel Aviv or Bombay) and recutting and trade-in facilities.

Suppliers also look for certain attributes in customers, he adds. Among them are:

  • Paying bills on time.

  • Buying regularly.

  • Buying a range of goods.

  • Giving prompt response on memo goods.

For jewelers unfamiliar with buying diamonds in New York, Hasenfeld suggests a visit to the Diamond Dealers Club Inc. at 580 Fifth Ave., New York, N.Y. 10036; (212) 869-9777. This provides a chance to see many vendors and types of goods without having to travel from office to office.

PREPARING THE STAFF BEYOND WARM BODIES

To hire a good sales staff, you must know precisely what type of person you want. “Avoid warm-body hiring,” advises Laura Laaman of Executive Training Consultants, Rochester, N.Y.

Start by listing the elements that you think make up a successful hire, she says. Also develop a complete job description &endash; and don’t skip the less appealing parts &endash; and a clear idea of character traits and work attitude you expect in an ideal candidate. Some key traits are enthusiasm, stability, discipline (the habit of working steadily and conscientiously), ability to get along with others and leadership potential.

Avoid common interviewing mistakes such as:

  • Talking too much. Use only 25% of the time, mostly with questions. The candidate should have the other 75%.

  • Selling the position up front. Let the candidate sell you.

  • Telling the candidate what you want. Let the candidate tell you what he or she can do.

Laaman offers eight “great hiring questions” that work for any interviewer in reviewing applicants:

1. What two adjectives best describe you? (The words to look for are “enthusiastic,” “outgoing,” “friendly,” “energetic” and similar adjectives.)

2. If you could change anything about the management/ownership at your last job, what would it be? (Beware the applicant who attacks a former boss. This is a grudge-bearer.)

3. What did you like best about your last job?

4. What did you dislike most about your last job? (If someone dislikes late hours and you need an evening shift for your mall store, it’s good to find out early on!)

5. What was your biggest professional success? (This shows how high a candidate can reach to get the job done.)

6. What was your biggest professional failure? (Beware the applicant who never had a failure! We all have had. Look for the person who admits to a failure and tells how he or she turned that negative into a positive.)

7. What have you done with your own time and money in the past year that will assist you professionally?

8. What is one of your professional pet peeves?

Hiring cautions

Jewelers often overlook or ignore some crucial issues when hiring and training salespeople, says Thomas S. Tivol, president of Tivol Jewels, Kansas City, Mo. Several points jewelers should consider:

  • The job application. Most jewelers don’t give one to all job seekers, which violates a federal law saying all applicants must be treated equally. An attorney should review the application for what can and can’t be asked under state and federal laws. “You are responsible for the language in the application, even if you didn’t write it,” says Tivol.

  • Sources of information on a job applicant include personal interviews, background checks (Tivol uses an outside agency), drug testing and psychological testing. Interview questions must be “absolutely identical, written and only job-related.” He says background checks are “absolutely necessary” for hiring decisions because employers should know about criminal records or poor health, which aren’t constitutionally protected and can be considered. Prehire drug testing &endash; as opposed to post-employment testing &endash; is “simple, easy and almost free of risk,” though few jewelers do it, he says.

  • Orientation of new employees is important. “The first day is vital,” Tivol says. “Capitalize on their enthusiasm. Set up a breakfast meeting with new employees and their manager. Make them feel they are the most important person in the organization.”

RECRUIT WINNERS

How do you spot the certain winners among job applicants? Follow these laws of interviewing, says Sam Arnstein, a management training specialist in Mercer Island, Wash.:

  • Always be on the lookout for potential employees who have a work ethic and style suited to your store. You should never try to steal employees from other jewelers, he says, but you can start a gentle form of recruiting before you even need someone to fill a vacancy. If you receive a promising application but don’t need any new employees at the moment, keep the name in a file and periodically keep in touch.

  • Most employers hire based on “can do” rather than “will do.” In “can do” interviews, a candidate’s skills, attitude and aptitudes are measured. In “will do” interviews, past performance is measured, and that’s more important. A pattern of success is likely to continue.

  • Form an opinion within the first 10 minutes of the interview based on five hiring criteria: ability, enthusiasm, experience, image and success pattern. Ask questions that start with “Describe…” or “Tell me about…” rather than those that require only “yes” or “no” responses.

  • Don’t ask questions that are none of your business. For example, questions about marital status, religion, national origin, physical handicaps and race are illegal. Ask only questions that are job-related.

  • At the time of the interview, ask for more references than the candidate has supplied. Possibilities include current or former supervisors, coworkers, teachers and coaches. Check all references thoroughly, and don’t limit questioning to the last job on a candidate’s resumé.

FOCUS ON CUSTOMER, VALUE & FUN

To thrive in the competitive ’90s, focus not on how things are, but on how they can and should be. That advice comes from J. Richard Blickstead, former president and chief executive officer of the fine jewelry division of Wal-Mart and now vice president of general merchandise and marketing for Wal-Mart Canada. Wal-Mart is the largest jewelry retailer in the U.S.

This means creating retailing strategies that answer customers’ demands for low costs and value and that make shopping fun for customers and retailers. “We need more merchants in the jewelry industry, not more merchandise buyers or computer jockeys,” says Blickstead.

Though the jewelry industry is one of history and tradition, jewelers can’t rely on what their parents or grandparents did when it comes to marketing and merchandising. “Learn from the past [but] plan for the future and be the very best you can,” he says.

Here are some important changes Blickstead says jewelers should understand in the 1990s:

  • Consumers are getting older, saving more and spending less time shopping. “That’s great,” he says, “because it means people are spending more time with each other, caring for each other, going back to romance.” That can benefit jewelers &endash; if they realize its implication and use it in their marketing. Today’s consumers also are better educated about jewelry. “They know what they want, they know what they want to pay and they demand value,” he says. Jewelers should be equally prepared and ready.

  • Jewelry retailing is changing. Mass merchants such as Wal-Mart, Service Merchandise and Target sell substantial amounts of jewelry. “To ignore that is to hide your head in the sand,” he says. And you can’t dismiss mass merchants by saying you offer better service because consumers don’t expect the same kind of service from mass merchants. In addition, mass merchants are getting better at micromarketing to specific needs of individual markets. TV home shopping programs? “[They’re] the greatest thing that ever happened to the jewelry business,” says Blickstead. “They’re 24-hour commercials for jewelry” that create opportunity for jewelers who know how to capitalize on it.

  • Customers demand more value and quality. Value doesn’t mean excessive discounts, rather it means “giving more for the same price or the same quality for less price,” he says. It also involves “fanatically” scrutinizing and trimming costs. Wal-Mart executives empty their own trash to cut down the cost of janitorial services, for example. Value also means making vendors stand behind what they sell and give better quality at better prices.

  • Customers will tell you what they want &endash; if you listen. Wholesale outlets, catalog stores, discount clubs and TV shopping programs have succeeded because they’ve listened to consumers who want to pay less for what they buy. “We listened and now sell a lot of 10k gold,” says Blickstead. “We are our customers’ buying agent. We don’t judge [what they want to buy].”

  • Make retailing fun. “Sometimes we take ourselves a little too seriously,” says Blickstead. Research shows 65% of customers think in-store events, promotions and marketing gimmicks are fun; they spur business.

  • Set high goals. Don’t hesitate because something might go wrong or because you don’t know what will happen tomorrow. “Set a goal of 50% growth, not 5%, in 1996. Do it now, and fix [what has to be fixed] later.”