Speedy Repairs Fuel Franchise Growth

“We treat the customer differently. We’re not trying to sell them something when they just came in for a $1 or $2 repair.”– Fast-Fix franchise owner Ben Vargas

Jewelry stores in large shopping malls are used to keen competition from independents, jewelry chain stores, and department store jewelry counters. Now jewelers in an increasing number of malls are competing with a new type of business: a rapidly growing franchise chain that offers one-hour repairs.

Fast-Fix Jewelry Repairs already has 87 stores in 18 states, concentrated in the Southeast and the Sun Belt. Over the next three years, the company plans to expand to 175 stores, beefing up its presence in the Northeast, says Ken Marks, president of the firm’s West Palm Beach, Fla., holding company, Jewelry Repair Enterprises.

“Fixing jewelry in an hour while you shop is what drives the concept, and that’s why it’s been so successful,” says Marks. “Our design looks like a jewelry store. But we don’t want to compete with jewelers because they’re our customers for the most part. We’re like a trade shop with a front door.”

Marks believes the chain doesn’t really pose a competitive threat to jewelers. “A lot of jewelers don’t want to repair other firms’ jewelry or watches,” says Marks. “They’re geared to selling jewelry, and that’s where they make their profits. On the other hand, we’re geared toward repairing jewelry, and that’s where we make our profits.”

Maybe so, but David Geller, a specialist in jewelry repair pricing and the owner of Jewelry Artisans in Atlanta, perceives a threat nonetheless. “The risk is that it could hurt sales at independents in malls that have a jeweler on hand,” says Geller. “If I had my store in a mall that had a Fast-Fix, I would worry. The real competitive issue is the turnaround speed and being able to see the repair. The news media have given people such a scare that stones are going to be swapped that people feel more comfortable if they can see the work being done.”

Independents concerned about competition from firms like Fast-Fix should consider that:

• “Most jewelry stores say they don’t like while-you-wait repairs,” Geller says. “But what they really mean is that they don’t want to do the work faster for the same amount of money.” When one of his customers objects to a 10-day turnaround for a repair, Geller offers to complete it that day for 50% more. Most customers take him up on the offer.

• For customers concerned about stone-switching, Sue Zweiban, co-owner of Family Jewels in Plano, Texas, suggests making an appointment. “We set many large stones in the presence of the customer, and they just pull up a chair and watch.”

• As in any franchise operation, consistent quality among outlets is key. If one franchise location develops a poor reputation, it can damage other stores in the chain.

Geller questions whether talented bench jewelers would want to work in a Fast-Fix setting. Half the stores are simply kiosks. Repair areas in the firm’s growing number of in-line stores are open to view – either in the selling area or even in the store window. Bench jewelers have to work mall hours, including Sundays. “Most jewelers don’t like the pressure of having someone watch you,” says Geller. “A lot of the stuff that goes wrong when you work on jewelry is not detrimental, but if a customer saw it happen he would just go berserk.” Fast-Fix’s Marks says these issues haven’t affected recruiting or retention.

Fast-Fix franchises aren’t immune to competitive pressures from traditional jewelers, either. Ben Vargas, owner of a Fast-Fix in the West Covina Mall in Los Angeles, says, “There’s a lot of competition in the mall – 13 jewelers, of whom seven have bench jewelers on staff. It scares you at first. But the fact is we treat the customer differently. We’re not trying to sell them something when they just came in for a $1 or $2 repair. We’re happy with that, and they are too. We have the highest price for repairs in the mall, but our turnaround time is the fastest.”

Fast-Fix franchises open only in super-regional malls with 750,000 sq. ft. or more and several jewelry stores. “That’s a good sign that repair work is available, because a lot of customers who are buying jewelry will need repairs,” Marks says. The firm grossed nearly $22 million in 1998, and annual store revenues range from $250,000 to $700,000 with gross margins of 70% to 80%.

Foiling ‘3-Minute’ Burglaries

A phone call at 2 a.m. startled Jay Jones (not his real name), the owner of Jay’s Jewelers, an upscale guild store in a downtown business district. The police told him that burglars had broken into his store 20 minutes earlier that Sunday morning.

Jay immediately drove to his store, heart pounding. He wasn’t prepared for what he found. Burglars had rammed a vehicle into the front door, smashing it and the surrounding casing. They then entered the store, using hammers to break into two showcases. They cleaned out the cases and were gone in less than three minutes.

Jay shook his head. The items they stole were worth less than $5,000. But the damage would amount to a great deal more.

In this instance, the loss of the jewelry would be covered by his firm’s basic Jewelers Block policy. The damage to the store would be covered under the business owner’s policy. The merchandise in the showcases was lower-value jewelry, left to entice passersby. Fortunately, Jay had secured most of his merchandise in his safe when he closed his store on Saturday.

Most Jewelers Block policies require that you keep a certain portion of your goods in a safe or vault when closed for business. With advances in technology, safe or vault break-ins have become difficult and infrequent. The more common loss these days is the one this jeweler experienced: a “three-minute burglary.” The objective of the thieves is to break into the store, take the jewelry left out of the safe, and flee before police can respond.

Here are some tactics to protect yourself against these types of losses:

• Review your insurance policy to make sure you’re storing the proper value of merchandise in your safe or vault. Contact your insurer for clarification if necessary. Some policies require that you store any item over a certain value in the safe, while others require that a certain percentage of the total value of merchandise be stored.

• Merchandise left out of the safe shouldn’t be visible from outside the store. Consider keeping it in a drawer or container that is out of sight. On the other hand, cloths, drapes, or counter covers imply you’re concealing valuable merchandise; they’re a temptation, not a deterrent.

• When you’re notified of an alarm, verify the caller’s identification before you leave your home. Hang up and call the police department or alarm company right back. You don’t want to rush out to your store only to be robbed or taken hostage.

• Do not authorize your alarm company to approve any irregular opening of your premises when you’re closed for business. If you must enter the premises after business hours, personally sign in at your alarm company’s monitoring station before entering your premises.

• Consider installing burglary-resistant glazing material in place of plate glass in doors or windows. Other options: iron bars or gates, particularly for high-crime areas.

• If you display jewelry in a window after business hours, use glazing material equipped with appropriate alarms. Also verify that your insurance covers items displayed after store hours.

In most burglaries, merchandise stored in the safe or vault isn’t easily accessible. Instead, thieves take whatever they can find – typically inexpensive watches and low-value jewelry. While the loss in dollars may be minimal, the time required to clean up the mess, replace broken showcases, and file police and insurance reports makes it advisable to avoid the experience in the first place.

This is one of a series of case studies prepared by Ronald R. Harder, president and CEO of Jewelers Mutual Insurance Co.

Safes That Aren’t Safe

Most jewelers know it’s not a good idea to leave jewelry unsecured in their hotel rooms, but they might not realize that hotel liability insurance may not cover items stored in hotel safes. Hotel liability for stolen property is governed by statutes known as innkeeper laws, which limit the hotel’s liability to between $250 and $1,000 per item, depending on the state. The limit in California is $250, for example, and in Georgia it’s $1,000.

“If you do take jewelry with you, make sure it’s been officially evaluated and that you keep documents and photos on file,” says Thomas A. Dickerson, author of the book Travel Law, who was quoted in a recent Wall Street Journal article. If jewelry is stolen from a hotel, “you’re going to have to prove what it’s worth.”

Bill Herrbold, vice president of claims for Jewelers Mutual, recommends that jewelers who travel with expensive jewelry check their own personal insurance (typically on homeowners’ policies) for risks during travel. He notes that some policies might cover jewelry left in a room safe because it remains virtually in the owner’s custody. He doesn’t put much stock in hotel safes: “You never know what kind of security you’re going to get. It could be a luggage room, a safe, or a vault. There are also too many questions about who has access.”

Sue Fritz, a spokeswoman for Jewelers Mutual, shares Herrbold’s concern. “Often the hotel safe is a room with a locked door and a whole bunch of people have keys,” she says. “There are some real problems with that scenario.” Also, remember not to check jewelry in luggage when you’re flying. “If you store it in carry-on luggage, keep very close tabs on that luggage,” she adds, noting that “we’ve had a number of losses where jewelers on their way to a convention or vacation have had tote bags stolen out from underneath them.”

Independents Attract Higher Diamond Sales

Women spend more on diamond jewelry at independent jewelry stores than at any other source. In fact, they spend more than three times as much at independents ($611) as they spend at a discount store’s jewelry counter ($181).

Recently released data from a J. Walter Thompson marketing survey show how much women spend on diamond jewelry at various categories of retailers. The data come from a 1997 survey of 63,000 women asked about pieces that cost $5,000 or less.

Diamond Jewelry Self-Purchase Trends

The amount that married women are willing to spend on a piece of diamond jewelry tends to increase in relation to age. Among single women, the average price for a piece of diamond jewelry also rises over time, but it’s not a steady line upward.

However, the highest proportion of self-purchase spending (overall, not per piece) tends to take place among women during peak career-building years. Overall spending on diamond jewelry peaks between the ages of 35 and 44 for married women and between the ages of 25 and 34 for single women. Among single women most jewelry spending occurs before age 45, tailing off significantly in later years.

The data come from the Diamond Marketing Group of J. Walter Thompson, which commissioned a survey of 63,000 women in 1997 covering diamond jewelry purchases of $5,000 or less.