Bigger doesn’t always mean better. That’s one of the more interesting figures highlighted in the 2008 Jewelers of America Cost of Doing Business Report, which found that high-profit retail jewelers on average had smaller stores than their low-profit counterparts -- 1,775 sq. ft. compared to 2,200 sq. ft.
Ken Gassman, of the Jewelry Industry Research Institute, analyzed the survey for Jewelers of America and noted how high-profit stores do many things just a little better than their low-profit competition. So size doesn’t matter, but efficiency does.
To improve efficiency in your store, make sure you are aware of the following points:
- The business is about profits, not sales, says Gassman. The Report found high-profit store sales were 3% lower than those for low-profit firms, but they were able to get more from their inventory, turning it faster and selling it at higher margins.
- High-profit jewelers have higher-inventory turn. Gassman says if it doesn’t turn, high profit retailers “return it, melt it or sell it off,” since dead inventory is costly.
- Low-profit stores have more staff on average. To be exact, 6.5 employees per store versus 5.5. Perhaps it is to cover that extra space? Whatever the reason, Gassman notes that it may not be worth it, because it adds only $35,000 in annual sales per store.
- Jewelers need to put a magnifying glass on their stores. That way they can identify the small changes that could make a big difference. For instance, you may have the right amount of staff, but your store may be open the wrong hours to maximize efficiency.
Take The Tip:
To get a jumpstart on improving your store performance, in key areas like those mentioned above, participate in the 2009 Cost of Doing Business survey today! Visit www.jewelrysurvey09.com to complete the survey by May 15th and you’ll receive an immediate calculation of your financial ratios and a copy of the renowned benchmarking tool, The Cost of Doing Business Report – both invaluable to analyzing your business performance.
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