Historically the economy in Hanover, N.H., home to Dartmouth College and some of the state’s premier medical facilities, has enjoyed steady growth, without booms or busts. The local economy was fairly bulletproof, according to Stephen Doubleday, co-owner of Amidon Jewelers.
Nevertheless, in 2007 Doubleday noticed that consumer credit was drying up and home values were in decline. Local employers weren’t hiring, and state unemployment figures were wobbling between 3.5 percent and 3.7 percent.
In the fourth quarter of that year, Doubleday added beads to the stores’ inventory mix. Even though December 2007 sales were 18 percent up and year-end sales rang in at a 14 percent increase, spending thresholds for customers were trending downward.
Doubleday met with peers during a Continental Buying Group event in January 2008. Other store owners expressed similar problems and concerns.
Doubleday returned to his store and more than tripled the case space for bead inventory at each store. He organized events to introduce existing customers to the new products.
In April 2008, Doubleday started a gold-buying program by sending out 20,000 zip-lock plastic bags containing information cards as inserts in a local newspaper. “I was really the first jeweler [in the local market] to do gold buying, and the response was very good,” says Doubleday. “We had lines going out the door for three straight days.”
To get money from gold buying back into his store, Doubleday offered store credits of 50 percent over take-in cash amounts. Roughly 12 percent of customers took the credit, which averaged $380. Many used it for purchases slightly above the credit amount or on repair work, which is even more lucrative.
Bridal didn’t factor into Doubleday’s strategy until bead sales started to surpass core bridal business, which dropped 6 percent in 2008. To revive bridal inventory, Doubleday bought product at price points that sold well. “I eliminated the $4,000 to $5,000 range of bridal jewelry that wasn’t selling,” he says.
Doubleday created a new bridal category of $1,000 and under, added some inventory to the $1,999-and-under category, moderately expanded in the $2,000 to $3,500 range, and was more generous with open-to-buy for bridal in the $8,000-plus category.
“Customers are still looking for value, and while some customers define this as lower-priced items, others see the value in truly fine goods and are willing to spend the dollars on something they view as having intrinsic value,” Doubleday explains. “People have tended to trade up or down with little in the center of the market.”
Doubleday couldn’t have predicted the wrecking ball that hit the economy in late 2008. Poised for 12 percent growth that year, a poor Christmas shaved 8 percent off that forecast. In 2009, gold buying became less lucrative, and Doubleday struck an inventory balance of 40 percent (of total sales) in beads, 45 percent bridal, and 15 percent everything else.
Thanks to gold buying, custom work increased 20 percent last year, trade-up 30 percent. Doubleday predicts another up year for 2010. “If we stay on track, I foresee sales up 20 percent for this year,” he says.
Jim Boling, owner of three stores under the Crider Jewelers name, remembers the housing market glory days. “In 2005 it seemed like every day someone was telling me about a major investment,” says Boling. “Whether it was a new car, a major remodeling project on an existing home, or buying a second house, a lot of people were spending a lot of money.”
But his gut told him a day reckoning was coming. During Christmas 2007 Boling began to reduce all of his payables and was debt-free by the first quarter of 2008. He also made it policy to carry only 30-day debt and did not accept vendors’ offers for extended credit terms.
Other inventory control measures included more frequently reordering fast turners and taking significantly fewer chances on inventory. “Like most jewelers, I was guilty of trying to sell the jewelry I wanted to sell instead of selling the jewelry my customers wanted to buy,” Boling says.
Three years ago Boling brought on Pandora. The popularity of the affordable sterling silver and bead jewelry has boosted foot traffic. “In March 2009 we had 398 transactions in a 10-hour day,” says Boling. “That’s a transaction every 90 seconds.”
Boling implemented additional strategies. “We had to convert the under-$100 and under-$50 customers into diamond buyers, namely bridal, and make them aware of our services, with an emphasis on our repair work,” he says.
He also captured data on the new customers and used it to send out notices on new jewelry arrivals. Meanwhile, repeat customers became increasingly familiar with the stores’ range of inventory and services.
The Sandusky store has boosted the company’s overall sales figures. In 2009, it had a fiscal year-to-year sales increase of 45 percent. Boling attributes much of that store’s sales success to a high-visibility location and the large digital sign he purchased for $75,000 in April 2008, which pulled in more walk-ins. The sign can change a displayed message every eight seconds and is programmable as far out as 30 days.
Boling says he will continue to develop his business to “where our customers want us to be.” He opened a Pandora Concept store in Charleston, S.C., and plans to gut his Sandusky store this year to better redirect foot traffic.
When Ginger Clarke inherited her father’s jewelry store, it had been struggling for many years. Issues included financial problems, employee theft, low staff productivity, suboptimal cash flow, and inventory shipment problems.
As these were being resolved, Clarke worked with her father on the decision to relocate the store in 2000 to the city’s first shopping mall. Here Clarke and her staff could tap into the high-income area surrounding the mall.
The change was liberating. Clarke could focus on bringing in the designers that would allow her customers to “develop a relationship with jewelry,” she says.
In 2004 Clarke took out a loan to pay down existing debt. Two years later she received a local award for Small Business of the Year, and in 2007 Louisiana’s State Chamber of Commerce awarded Clarke with the Small Family Business of the Year.
That year, business was up 29 percent, with $3.5 million in sales. Her brother retired from banking and agreed to get the store’s financials in order. But past problems got only a temporary fix. By the time her son Jay, representing the fourth generation, joined the family business, Clarke had not yet formalized store policies and departments. “I was so busy I didn’t even have time to train Jay,” she says. “Most of what he knows is self-taught.”
In 2008, Jay began to confront inventory control and cash flow problems by addressing vendor relationships. He established strategic buying and flexible payment options, which cleared the way to bring on new designers with an emphasis on bridal-related jewelry to better balance the inventory with diamond jewelry.
Clarke improved her marketing strategies with the goal of increasing her customer base by 50 percent in 2008. That was accomplished in part by capturing customer data from foot-traffic-friendly smaller purchases such as beads, fashion jewelry, and repairs and converting them to more-upscale customers. Clarke brought in 600 new customers, exceeding her goal. “Thank goodness we brought in these new customers as they’re now our top customers,” Clarke says.
Space in the 2,000-square-foot store was an issue. With a lease up in April 2010, last year was the time to move out of Pierremont Mall. The move was literally 134 steps from the mall to a nearby thoroughfare that offered greater visibility (18,000 motorists per day) and a gain of 600 square feet.
The build-out for the new store that began in June was to be completed by November, but wasn’t done until December. Contractor delays and the time needed to move the inventory and set up the new space translated into a 10-month sales year. Despite all the challenges and lost time, Clarke ended 2009 up 14 percent.
What saved the day were new customers, a broader assortment of inventory, and a six-week moving sale that liquidated old inventory and helped stimulate foot traffic that kept customers abreast of breaking news on the relocation.
For 2010, Clarke estimates sales will be up a projected 16 percent. Part of that boost will come with a new Web site that will include e-commerce sales.