Daily Jewelry Retail Tips from Jewelers of America

Find New Ways to Maintain Cash Flow

Nowadays cash can be key to survival. At Entrepreneur.com, “Creative Ways to Get the Cash Flowing”, details creative ways to maintain cash flow.

Use the following cash flow tips from Tom Long, founder of Solid Oak Consulting:

Cut Smart and Emerge Victorious

Survival is your first priority during tough times, but you have to be sure your business is healthy enough to respond once conditions improve. In “Six Ways to Emerge Victorious from the Recession,”  Jon Frandsen, of Kiplinger.com, writes that a company “must make choices that won’t leave it crippled and unable to respond to pent-up demand when the economy starts to recover.”

Use Frandsen’s tips to make cuts that are essential, but not fatal:

Marketing in a Recession

Like most companies, you’re still dealing with the realities of the economic turndown, even if things may be on an upturn. In “In a Recession, Put Everyone in Marketing,” Rosabeth Moss Kanter notes that when you can’t cut anymore, you have to leverage the creativity of your employees. 

Use these tips, from the article on Hardvardbusiness.org, to find creative ways to continue making savings in your business:

Think like a Businessperson, not a Jeweler

Do you think of yourself as a retailer who likes jewelry or as a businessperson who sells jewelry? If you answered the former, then you’re in line with the 54.1% of Jewelers of America members who identified themselves this way in the 2008 Jewelers of America Cost of Doing Business Report. Just 12% called themselves business people.

While the survey doesn’t delve into how a retailer’s self-proclaimed identity relates to (or hinders) their success, Ken Gassman of the Jewelry Industry Research Institute notes that too many jewelers are in the jewelry business, but not in the business of selling jewelry. In today’s challenging environment, a retailer has to operate their business on a professional level to succeed.

Gassman provides the following tips to help you think like a business person and sell more jewelry your store:

More Space Doesn’t Mean More Profits

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:

Keep an Eye on Inventory

Inventory turn is a key differentiation point between high-profit and low-profit jewelers. In fact, the most recent Jewelers of America Cost of Doing Business Report found high-profit stores had a 20 % greater inventory turnover than their low-profit counterparts. That translates to better sales growth too. With that in mind, it’s essential that you know what inventory’s moving, and what’s collecting dust.

Jewelers of America’s resident education and management expert David Peters offers simple tips for keeping an eye on inventory:

Negotiate for Cost Savings

As businesses search for ways to get through the economic downturn, one thing is certain: nothing is certain. In the New York Times Tool Kit, “Nothing is Set in Stone, So Renegotiate,” Paul B. Brown notes that fixed costs may not be as fixed as you think. He says businesses should analyze every contract -- from the company that supplies the water cooler to your neighborhood banker -- and look for places where you can get a cost reduction.

Use these tips from a variety of experts on renegotiating contracts and partnerships:

Increase Profitability Through Benchmarking

Comparing your store’s financial performance to industry averages and/or standards can have a profound impact on your business. Jewelers of America’s Cost of Doing Business Report, published each summer, helps you find out where your store measures up across multiple operating-performance areas. That knowledge is a powerful tool, since even small adjustments can lead to better profits.

Jewelers of America is currently conducting its 2009 Cost of Doing Business survey, make sure you participate to benefit from the benchmarking analysis it reveals (click here for more information).

When you take the survey online, you’ll get an immediate calculation of your financial data and operating ratios. David Peters, Jewelers of America’s resident education and management expert, says that once you have this information you can increase profitability by:

Inventory Turn: A Key to Profitability

Jewelers of America will soon conduct its annual Cost of Doing Business survey – which, starting this year, will be combined with National Jeweler’s America’s Best Jewelers survey -- but you can still gain valuable insight by looking back at last year’s numbers.

In anticipation of the new survey, we’ll be reviewing some of the key data points that help you run your business better. For instance, last year’s survey indicated that the most profitable jewelers turn their inventory 1.2 times per year, versus low profit jewelers who only turn inventory once. If your numbers are closer to low profits, brainstorm with your team on ways to improve your inventory turn – our survey shows even a slight improvement could improve your bottom line.

Tips for improving inventory turn in your store:

Learn Sales Strategies That Work for 2009

Like many retailers, your store traffic has probably experienced a downturn in this tough economy. But retail expert Harry J. Friedman says you can still grow your sales. He’ll be presenting this and other topics in “How to Thrive in a Threatening Economy,” a free webinar scheduled for Friday, March 31.
 
Friedman says retailers need to make 2009 the year of the individual salesperson who can meet and exceed his or her goals.

He offers tips on how you can achieve this:

Cut the Fat Creatively

One of the most challenging aspects of the current economic downturn is learning how to operate lean and mean, without harming your business in the long run. The good news is that many businesses are rising to the challenge and you can learn from their success. Small Business Trends has compiled 75 of their readers most “Outrageously Creative Tips for Saving Money & Growing Your Business.” 

Here are some of their outrageously successful ideas for saving money:

Improve Cash Flow

As we’ve stressed since the beginning of the economic crisis, cash flow is essential to your businesses’ survival. In “Keeping the Cash Flowing,” Paul B. Brown of the New York Times shares ideas on how to improve cash flow in the coming months.

Cash-flow strategies from the New York Times:

Take Advantage of the Economic Recovery Act

Times are tough, so it’s critical for jewelers to seize whatever assistance and opportunities they can. One example is the recently passed “American Recovery and Reinvestment Act of 2009,”  which includes much-needed small-business tax relief measures. In order to ensure that your business is getting the most from this new law, we recommend you check with your tax consultants.

Business provisions in the new law that could have the biggest impact on your business include:

Effectively Cut Expenses

You have to be lean in order to survive. But there’s a big difference between smart cuts that won’t hurt your business in the long-term, and a crash diet approach that leaves your store starving.

At National Jeweler Network’s America’s Best Jewelers (ABJ) Retail Benchmarking Symposium -- held in January – jewelers, like William J. Curry, of Curry Fine Jewelry, shared ideas on how to smartly reduce expenses:

Decrease Average Inventory Dollars

One of the best ways to manage your costs during these challenging financial times is through better inventory control. During a recent presentation at the National Jeweler Network’s America’s Best Jewelers (ABJ) Retail Benchmarking Symposium, jewelers discussed ideas on decreasing average inventory dollars.

William J. Curry, president of Curry Fine Jewelry, and other jewelers shared the following inventory management tips:

Reduce Discounting for Increased ROI

In these challenging economic times it’s easy to get caught up in “discount fever.” But by holding the line and cutting back on your cutbacks -- even just a little -- you can increase your return on investment.

That was the message delivered by William J. Curry, president of Curry Fine Jewelry, during a presentation at the National Jeweler Network’s America’s Best Jewelers (ABJ) Retail Benchmarking Symposium.

Curry and other jewelers offered the following tips to thrive while decreasing discounts:

Watch Your Numbers

Keep track of your financials in a downturn could be the difference between your survival and a liquidation sale. Tom Shay of Profits Plus says your financials offer the tools you need to make informed decisions about your business.

Shay offers the following ideas on effectively watching the numbers:

Common Sense Strategies

It’s too soon to know whether or not Zale CEO Neal Goldberg can turn his company around. But at least in terms of attitude and outlook, the relative newcomer says the right things. In “Zale’s Strategies Are Common Sense” for IDEX Online, industry analyst Ken Gassman broke down some of the CEO’s key strategies:

What Not to Cut

As you reflect on the recent holiday season and look to the months ahead, it’s easy to lose your bearings. Cutting costs is without a doubt one of the best ways for your business to make it through these challenging times, but a slash-and-burn approach could do more harm than good.

In Entrepreneur.com’s “Recession Cost-Cutting No-Nos”, experts discuss the measures to avoid.

Perfect Pricing

Putting the right price on product can be a delicate balance, especially during challenging economic times. Over at the Small Business Trends blog, Ivana Taylor shares ideas from The Art of Pricing by Rafi Mohammed.

Consider these strategies when pricing goods:

• The Nine and Zero Effect. People associate the number nine with value and zero with quality. Decide what you want to communicate and price accordingly.

Seize the Opportunities within a Downturn

The dust hasn’t settled yet on Holiday 2008, but whatever the specific results, the current economic climate has likely forced you to take a closer look at your business. The hard truth is that not every retail business can make it to the other side of a downturn, but those that see the opportunity through the clouds—and capitalize on it—can emerge stronger.

Understand the Ups and Downs of Economic Cycles

For many retailers, the end of the holiday season marks the end of a tough year. With analysts expecting the current economic woes to continue, business will remain volatile in 2009. As we’ve done from the beginning, Jewelers of America will continue to offer guidance and perspective.

One critical point to keep in mind is the cyclical nature of the economy and the business. Jewelers of America’s Director of Education David Peters offers the following insights:

• Since 1948, there have been nine recessions averaging 11 months each.

Plan for the Future

Despite a flurry of negative news, especially in fourth quarter, don’t forget that what you do -- offering treasured, memorable and lasting gifts for individuals to give their loved ones—is relevant in both good and bad times. Looking ahead to 2009, industry analyst Ken Gassman, who contributes to IDEX Magazine, says retailers should plan for a “down” but not “dramatically down” year.

As you look to the New Year, keep in mind these industry stats from Gassman:

• It’s not the end of the world. Gassman reminds us that we’ve had worse economic challenges. He also reminds us that jewelry is no fad. People have been wearing it for 50,000 years or more.

Good Credit Connections Can Encourage Repeat Business

Consumer financing doesn’t just help close sales with a new customers, it helps you build relationships and repeat business. In an editorial for InStore Magazine, Regina Leadem, Vice President of Sales for GE Money Luxury, writes that solving the “affordability conflict” for clients is just the beginning of the relationship building process that can start with credit.

She says it also lets you:

Tips In Action: Retailers Who Thrive

Create Positive Holiday Returns
Michael Pollak, CEO, Hyde Park Jewelers, Pheonix, AZ, shows how

Michael Pollak, CEO of Hyde Park Jewelers, is ready to thrive this holiday season. “We’re in the celebration business,” he says. Pollak adds that while it’s easy to get caught up in the negative news, retailers must resist. 

Pollack was in the Native American jewelry trade before opening Hyde Park with business partner Steven Rosdal in 1976. The business has grown from its first year, when the most expensive item sold cost $300, to today’s extensive range of $50 to $500,000. Today, Hyde Park is headquartered in Denver, CO, and has locations in Phoenix, AZ, and Las Vegas, NV.

Factor in Financing

The current credit crunch means that banks are less likely to approve business loans and more likely to revoke lines of credit. One option some businesses have considered is factoring, a financing tool that gives companies the capital they need to operate.

At the Bottom Line Blog at Expert Business Source, Shanu Singh Guliani of Guliani’s Fine Jewelry explains that factoring involves selling invoices at a discount for immediate cash. Factoring companies make money by charging fees for their services. Since most don’t insure against non-payment, she says businesses may need to pay back the money advanced should their customer default.

Identify Your Profit Winners & Losers

Retailers balance the products and business practices that contribute to profitability with those that don’t.

For example, you may accept losses in the off-season if you know you can make them up during times of peak demand. Or, in achieving sales goals you may accept products that don’t contribute to your profitability. But as the Deloitte white paper “Preparing for an Economic Storm” points out, businesses must be able to challenge these practices and assumptions. That doesn’t mean you need to completely drop them. Instead, you should look for ways to restructure, renegotiate or re-price them to become contributors.

Prepare for Customer Shifts

Customer behaviors you’ve come to rely on can change dramatically as a result of an economic downturn.

That’s why, “Preparing for an Economic Storm,”  a white paper from Deloitte, notes the need for customer-driven businesses to stay ahead of the curve, so they can reevaluate and react to shifts in client behavior.

For instance, many customers will “trade down” to offset changes (like high fuel costs) in their planned spending. Deloitte suggests you evaluate your product mix and pricing strategies in the context of changes in consumer demand.

Tips on how to best prepare your pricing strategies to reflect new customer behavior:

Survive a Cash-Flow Crisis

As the crisis on Wall Street reaches out to Main Street and credit markets get tighter, cash flow may be the most critical component to your store’s success (or failure).

Over at Wall Street Journal’s Independent Street Blog, Raymund Flandez shares “Five Tips for Surviving a Cash-Flow Crisis.”

He spoke to Rusty Luhring, owner of Luhring SurvivalWare Inc., which provides financial modeling software for small businesses, who offered the following tips.

Ideas on how to best manage your cash flow:

Conserve Cash

According to “Preparing for an Economic Storm,” a white paper released this summer by Deloitte, a leading professional services organization, many companies do not include performance metrics that look at cash flow in their management goals and incentives. Being “lazy” about these processes can mean missed opportunities during normal business cycles and can seriously threaten your business in the bad times.

In a downturn, Deloitte notes less demand causes most businesses to experience a combined cash and margin squeeze: inventory turns more slowly, causing a greater need for price reductions, which affects working capital and margin.

To help you avoid the cash and margin "squeeze," Deloitte suggests retailers: