The JA Report: News, Tips & Trends from Jewelers of America

Check Your Business Temperature

Attitudes, including those of consumers, have definitely improved since the start of 2010. But while things appear to be improving, but there are also indicators (like the jobs and housing markets) that we’re not quite out of the woods yet. That’s why it’s important to check the temperature of your business, especially as you look ahead to the second half of the year and the critical holiday season.

Some things to keep in mind as you look at your business today:

Think Twice When Cutting Costs

When reviewing how to save money in your retail business, it’s important to carefully consider how each cost-cutting decision you make will impact your business. David Peters, Jewelers of America’s resident education and management expert, shares his insight on how to analyze cost-cutting decisions.

Use his tips to review your cost-cutting options to see how they will affect key areas of your business: 

Boost Your Jewelry Profits

As the economy starts its slow recovery, businesses still need to be cautious when it comes to spending. However, there are opportunities out there to grow.

David Peters, Jewelers of America’s resident education and management expert, offers the following action items to increase your profitability:

Research Before You Lower Your Processing Costs

Among the lessons learned from the downturn is that saving money can be equally important to increasing revenue. In looking to cut costs, jewelers must be creative -- and careful. If you are considering switching to a new service provider, like that for credit card processing, do your research before you leap into what looks like a great cost-cutting deal

According to Matthew Focht, president of Tru -- a consulting firm specializing in payment processing -- it is important to take a few precautionary measures to insure that the great deal you are promised is what you will get.

Use these simple steps to negotiate the best rates on services, like processing fees:

Analyze Your Store From The Inside

In looking to where your business needs to go (and grow), outside factors like the economy can have an impact, but you also have to look within. As we've noted earlier, identifying your strengths and weaknesses is a critical component of success. David Peters, Jewelers of America’s resident education and management expert, says you must put your business under a microscope.

Peters recommends taking the following steps to analyze your business:

Anaylze Your Store's Strengths & Weaknesses

In order to ensure your business not only survives, but thrives today and tomorrow, it is important to take a close look at your S.W.O.T.S. (Strengths, Weaknesses, Opportunities and Threats). David Peters, Jewelers of America’s resident education and management expert, says that a thorough evaluation of all four positions should be done at least annually, or when a major shift (such as the current economy) occurs.

Peters offers the following guidelines for analyzing your business's SWOTS:

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 2010 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:

Cut Personnel Costs Creatively

When it comes to cutting costs, personnel is one of the toughest areas to look at. One way to ease the pain is by taking a little bit off across the board, versus hacking off costs in one area or another.

David Peters, Jewelers of America’s resident education and management expert, shares some tips on how to effectively control personnel expenses.

Use this tips to thrive with creatively cutting the personnel costs of your business:

Price Merchandise Strategically

When it comes to pricing your merchandise, there are a number of factors to consider before reaching that final number. That’s why the price may seem right to you, but without careful consideration, you could end up being over -- or under.

David Peters, Jewelers of America’s resident education and management expert, offers the following advice to help you properly price jewelry product:

Cut Expenses On Your Retail Space

Use Simple Steps To Improve Inventory Management

Price Proactively

One of the keys to profitability is being able to buy and price merchandise effectively. David Peters, Jewelers of America’s resident education and management expert, notes that passive pricing -- with little or no strategy -- is the norm for many independent retailers. But by treating all your merchandise with the same exact formula (such as, buy it, keystone it, put it in the case), you could miss out on opportunities for increased profits. Instead, he says jewelers should use proactive pricing to maximize the profit contribution of your inventory.

He shares the following proactive pricing strategies:

Analyze From the Inside

In looking to where your business needs to go (and grow), outside factors like the economy can have an impact, but you also have to look within. As we've noted earlier, identifying your strengths and weaknesses is a critical component of success. David Peters, Jewelers of America’s resident education and management expert, says you must put your business under a microscope.

Peters recommends taking the following steps to analyze your business:

You’re Never Too Small to Strategize

For many small, independent businesses, thinking strategically about the future -- particularly during times when you’re caught up in the day-to-day -- can be tough. For those smaller business owners asking, “Do I really need to go through all the trouble of strategic planning?” Jewelers of America’s David Peters says it is imperative “if you want to keep your doors open and prosper.”

Peters’ says small business owners should consider the following factors, and start creating a business strategy now:

Inspire High Performance from Mediocre Staff

Among the elements of a successful business is a manager’s ability to lead. Yet, in today’s high-stress climate, finding time to inspire and lead staff to success is not a priority for many owners and managers. However, leadership must be on a successful store’s agenda. According to Harry J. Friedman, of The Friedman Group consulting firm, leadership and sales inspiration are critical to the growth and long-term success of any retail organization.

Friedman insists that a successful manager must have vision beyond store statistics, like average sales, items per sale or sales per hour. The focus should be on providing customers with the absolute finest, most exquisite and elegant sales presentations possible. “If you train your staff to execute this service-centric strategy on a consistent basis with every customer, the last thing you’ll have to worry about is your numbers,” he explains.

Take Friedman’s advice and inspire your sales staff to perform, so you can stop worrying about the numbers:

Benchmark to Success (and Survive)

Knowledge of your strengths and weaknesses is important in any economy, but in the current downturn it can be the difference between advertising your product or advertising your “going out of business” sale.

The 2009 Jewelers of America Cost of Doing Business Report proves this point. The Report found that despite the fact that jewelers of all size and type saw declines in 2008, those who controlled costs were able to lessen the impact of the downturn. On average, high-profit firms grew by 3.1%, while their low-profit counterparts were down -12.6%.

David Peters, Jewelers of America’s resident education and management expert, says using the Report can help jewelry retailers see how their business compares to industry averages, so you have the tools you need to shore up strengths and eliminate weaknesses.

Use the 2009 CODBS Report for strategic planning and benchmarking, and you will be able to:

Get Rid of “Toxic” Inventory: Dispose of the Duds

 According to The Gordon Company’s Retail Jewelry Insights, as much as 25% of many jewelers’ inventory was unproductive last year. Given the downturn an even a higher percentage of this “toxic inventory” won’t be what customers want this holiday season.

Today, we offer tips on how to dispose of hard to sell inventory. The following suggestions can be found in “Toxic Inventory Threatens Jewelers”:

Reduce Returns

In today’s tough economic climate, getting a sale is great. But before you celebrate, make sure you’re doing enough during the sales process to keep that customer from returning the product. In JCK Magazine’s  “11 Ways to Reduce Product Returns,” consultant Tim Malone shares tips on selling right the first time.

Use these tips to reduce returned sales:

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:

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:

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:

Hold Tight to Top Performers

Having competent and reliable staff is essential to steering your business through these challenging economic times. As you consider or enact cost-savings measures like hiring freezes, don’t forget to hold onto those employees who have supported your business through the good and bad times.

David Peters, Jewelers of America’s education and management expert, notes that retaining well-performing staff is good business since:

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.