The current version of Jimmy Carter’s malaise got me thinking about changes in the retail jewelry business over the past 30 years. My wife and I were discussing the current economic slowdown when she related a story about our daughter’s recent shopping experience in two different jewelry stores near her home. The story has two points. First, jewelers may have become too focused on selling only jewelry. Second, a continuing focus on maintaining inventory positions on key products remains a problem.
About 30 years ago jewelers began paring their assortments of products when tabletop companies got greedy and began expanding their distribution of what had been highly selective lines to retail stores that focused largely on price. By around 1985, jewelers had virtually abandoned non-jewelry gifts to focus on expanded—and more-profitable—jewelry assortments. As malls became more important at retail, jewelry stores became smaller and smaller, and rents got higher and higher.
Jewelry is a slow-turning business, with better stores turning their inventory 1–1.5 times per year. Tabletop and gifts, while not a barn burner when it comes to inventory turn, was significantly better than jewelry, with a 2–3- or sometimes 4-time turn. Additionally, this category of product provided year-round traffic for jewelry stores by attracting consumers looking for fine gifts other than jewelry. The wedding business is a year-round business. What’s one of the biggest challenges jewelers have today? Could it be traffic?
Our daughter is of an age when her friends are marrying and having babies, occasions that result in many gift-giving occasions. Recently, she was talking with her mother about what to get for two of her friends who recently had babies. She was looking for more of a memento gift rather than an outfit that would be outgrown in a few months. Kathy, my wife, referred Sheila to a jewelry store that had a good selection of nice baby gifts. When Sheila visited the store the assortment had dropped to a single digit: one! Does the word selection come to mind? Does the concept of reordering?
When mother and daughter talked again the conversation turned to the lack of selection and the disappointment of not finding just the right gift. Mother/gift counselor was ready with another recommendation: a jeweler in a nearby community. Sheila went expecting to be disappointed again. To her delight, the store had a nice assortment of unique and fine gifts appropriate for memorable baby gifts. She bought two and spent over $200. The jeweler got more than the $100-plus gross margin. He got a customer! In Sheila’s circle of friends, there will be many more occasions for engagement, wedding, and baby gifts. The second jeweler will profit because of appropriate assortments and an inventory investment to attract and keep customers like our daughter.
Have you focused your store too much in one direction at the expense of traffic, inventory turn, and margin? Food for thought?