Edge Retail Academy Blog

Keeping the Customer Happy – Should you Refund?

By David Brown
Let’s face it – we hate giving refunds. No one likes handing over money for nothing, especially when it’s a big-ticket item and you’ve already counted the sale as a done deal. It can feel like a real kick in the guts, especially if you feel you shouldn’t have to do it.

We all are faced with this situation from time to time. An unhappy customer or just one who thinks they can bring their custom-made item back just because the relationship ended, or they changed their mind.

There are two things you need to consider in these circumstances – the letter of the law, and good business practice. The letter of the law will deal with your legal obligations and what you must do in order to meet the consumer’s expectations. This is normally clear cut but doesn’t always help in those grey areas where the customer may or may not warrant a refund or is still insistent despite the fact you’ve shown them the law is on your side. You then need to consider the effect on your business – what makes sense for your long term operation.

It’s important to take account of the long-term benefit of the customer at this stage. I’ve seen so many examples of unhappy customers who are refunded and then come back to spend more that I’m more inclined to feel there should be a good reason to not refund than there is to refund. That said, every situation is different and you need to weigh the individual circumstances in each case. With the arrival of social media, it’s become much easier for an unhappy customer to share their experience whether they are right to do so or not and this should be considered.

Whatever way you deal with it, here are some pointers that will help you make it a more positive experience.

· If you refund, then do it promptly. A protracted argument that still leads to a refund will only harm your reputation and the chance of repeat business.
· Look at the big picture. Does it really matter in terms of your long- term business? Will you still be concerned about it in a week? Sometimes you’re best just to move on
· View it as part of your marketing budget. A refund you didn’t have to give can see a happy customer telling others. This sort of word of mouth can’t be bought
· See it as an opportunity. Anyone can look good when things go well – its how you handle customer problems that gives you the best chance to show what you can do
· Make your refund policy clear. Uncertainty leads to frustration and confusion. Make sure your policy is clearly stated in-store and on your website

Thank them for their feedback. An unhappy customer can show you weaknesses in your business. See it as a positive and thank them accordingly.

Avoid being defensive. No one likes criticism but it’s important to realize that it’s not personal and don’t let emotions get involved.

Listen. Customers just want to know they have been heard. They will be more accommodating to your viewpoint if you have given them a chance to air theirs.

Above all do it with a smile. This can be a rare opportunity to make your relationship with that customer even stronger. See it for what it is and embrace the chance to show how good you can be!

 

This blog originally ran in The Retail Jeweler.

How to Keep Your Designer Lines Alive

By Edge Retail Academy

Omaha, NE–One of the key reasons consumers purchase designer product is because they feel that they share an aesthetic with the designer. In other words, they fall in love with a line or product.

For instance, consider the women’s shoe designer Christian Louboutin, with his famous red soles, or even a mainstream upscale brand like Via Spiga. The likelihood is very high that customers who like those brands will find shoes they want each season, and it keeps them coming back again and again. They’re also willing to pay more knowing they can save time (a precious commodity for most of us), combined with the fact that the brands have proven themselves a quality product that will last and a style and fit that makes the wearer feel great.

This is a powerful dynamic which can also apply to your store as the brand. Repeat clients are the foundation of your business.

 

 

 

 

 

Christian Louboutin’s famous red-soled shoes.

This connection can be even stronger if your clients are introduced (this can take many forms) to the designer or creative force behind a brand. The more vividly we paint the picture, the more our clients feel as if they know the person–and of course, if you can create a special event for them to meet the designer in person, so much the better!

Shopping is still one of the top forms of recreation. And, we like to talk about our purchases, especially if there is an interesting story to tell. Oftentimes retailers know quite a bit about our lines – the country it was manufactured in, the specific manufacturing techniques, the design inspiration, the unique materials or gemstones. But, we fail to effectively communicate this to our clients.

Here are a few tips:

  • Don’t just rely on marketing materials given to you by the designer, call them up and see what other information you can glean.
  • Have a framed image of the designer beside the brand with a short bio/design philosophy
  • Put together a features/benefits, design inspiration, designer bio and facts sheet for each sales associate
  • Role play several sales presentations in a team meeting until every associate is well versed in the line
  • When marketing the brand, do not forget to include the aspects that differentiate the brand, not just the product
  • Have “Meet the Designer” events in your store – always have a breakfast training for your staff with the designer prior to the event

The Edge Retail Academy provides customized strategies for retailers and vendors to increase profits, optimize growth, reduce debt, create profitable inventory solutions, build effective teams, and enhance brand loyalty and profitability. The Academy is committed to helping jewelry businesses improve their bottom line while reducing uncertainty and stress. Edge Retail Academy software and its business advisors provide real world knowledge and advice for guaranteed results, all on a “no-contract” basis. Call (877) 569-8657, ext. 1, email Becka@EdgeRetailAcademy.com  or visit www.edgeretailacademy.com.

Reprinted from The Centurian.

5 Ways to Increase Your Jewelry Store’s Profit Margin

By David Brown

It doesn’t happen by chance.

Despite some positive business data coming out over the last two or three months, the economy is showing some signs of headwinds on the back of the tariff war being conducted by the government and some overseas economies. The uncertainty is beginning to show up in storewide figures across our sample data.

Sales showed a decline of 0.45 percent in rolling 12-month data for May, the fourth such month of declines in sales figures.

Individual monthly numbers reflect that decline.

Gross sales for May dropped 5.5 percent from last year’s monthly result. Sales units sold showed a similar trend, being down 32 units or 8.5 percent on last year’s numbers with an increase in average sale from $311 to $318, or 2.2 percent. Margin stayed on track compared to last year. This resulted in gross profit declining by $3,786, or 6.1 percent.

In these articles we’ve often spoken about the decline in gross profit margin being achieved. Preserving or growing your storewide margin doesn’t happen by chance – it is a strategy that must be followed in order to achieve results.

Here are some of the best proven ways to increase your storewide margin.

1. REDUCE DISCOUNTING. Easier said than done, right? Reducing discount is about choosing what you are discounting and when you should offer it. Not all inventory items are equal. As we’ve mentioned on many occasions, as little as 10-20 percent of your product is giving you 80 percent of your sales. That means offering this item at full price is conducive to a substantial lift on the margin you will achieve. Rather than crumbling every time a customer asks for a reduction on any item, choose the ones you can do it on. Say “no.” Haven’t you had a situation where you’ve been told that’s the price and bought it anyway? Advise your customer, “Unfortunately, that’s the best price we can do on that item; however, if you’re looking for a deal, I can suggest this as an alternative.” This can have your customers choosing between a profitable sale for you or a reduction on a lesser item you want to move anyway.

2. INCENTIVIZE STAFF BASED ON GROSS PROFIT, NOT SALES. Staff will focus on what is in their own best interests. If you’re more focused on gross profit than sales, your staff will become so as well, especially if you incentivize them from this perspective.

3. PUT YOUR PRICES UP. What do others sell this item for? If you access our KPI data, you will be able to see this sort of information. If another store somewhere else is successfully selling that diamond for $200 more, why shouldn’t you?

4. RE-PRICE FAST SELLERS. Not only should you avoid offering discounts on your best-selling items, you should also be looking to sell them for more if they have proven they can handle the price. Again a small percentage of your products will provide most of your sales – you need to make the most from these opportunities where you can.

5. REDUCE CLEARANCES. A few items on special are perfectly normal, but living constantly on sale is sending the wrong message to your customers. They will assume all prices are permanently negotiable, and this is not a position you want to put yourself in.

Managing your margin is an important part of your business and can yield huge returns on your bottom line. Don’t forget – every additional dollar of profit you can massage from each item will stay in your profit column without any additional costs being accrued.


DAVID BROWN is president of the Edge Retail Academy, an organization devoted to the ongoing measurement and growth of jewelry store performance and profitability. For further information about tfinhe Academy’s management mentoring and industry benchmarking reports, contact inquiries@edgeretailacademy.com or phone toll free (877) 569-8657.

This story originally ran as an INSTORE Online extra.

Mark Up and Your Dated Product Strategy

By David Brown

To the uninitiated there would seem to be little correlation between the age of your product and the margin you achieve. Yet as business owners we all know that the older our selection becomes the more pressure on our margin to get rid of it.

Dealing with old inventory is a little like weeding the garden. You spend hours/days on it to get it under control, get distracted by something else and before you know it there are weeds (read old product) issues all over again.

The secret is to be working on it continuously, not spasmodically when your cash flow demands you do so. It would not be unusual for core old stock/inventory (over 12 months old) to be between 40% and 80% of a store’s stockholding. Taking a conservative figure of 50%, that represents a significant portion of your inventory range that is getting pricing pressure put on it.

Is the number large enough to get your attention? Would it put a spring in your step if a significant amount of that money was sitting in your bank account rather than on your shelves? If I said I’ll give you 80 cents on the dollar at cost would you grab the offer with both hands? (Sorry that wasn’t an actual offer!)

It’s Time to Do Something

So you agree you would do something, it’s just how much you will accept. The main question is do you have an aged inventory management process? Here are some tips on what it involves, not in any order of priority:

  • Does your staff have weekly/monthly targets for old stock sales?
  • Does your staff have a half dozen ‘go to’ pieces of old stock that they introduce as mix & match with other items?
  • Do you rotate “Special” priced pieces in and out of your windows and cabinets?
  • Do you have annual or bi-annual sales events?
  • Do you incentivize your staff with bonuses or spiffs if they sell old stock?
  • Do you have a ‘spend $XX on brand YY and select a discontinued item at half price’?

If you didn’t say yes to all the above I don’t believe you have an aged inventory management process in place. So what are you planning to implement to make sure a process is put in place?

Your store doesn’t need to look like it’s in permanent clearance mode. Mixing and managing activities properly will not give it this appearance. The key is – nothing changes if nothing is done.

If you receive Key Performance Indicator (KPI) reports you should be looking at the three year comparison for the average store and for your store. It may be easy to say (and see) that the markup % have declined. If this was happening for the average store in your group pool some people may say “that’s what’s happening in the marketplace, so that makes my numbers acceptable.”

Yet within the average store information, there will be stores that are making significant inroads into clearing their old stock. As an example, in one case I know that 39% of a store’s sales in the last 12 months were old stock with an obvious (and expected) reduction in their markup % achieved. However in their case it was a deliberate strategy to reduce old stock and free up capital.

Before you accept the fact that your markup % is declining (like other stores around you), you need to get the real story behind your numbers. Print out a sales summary of the last 12 months and see what markup %s are for fast/fastsellers (generally turnover in less than 3 months), fastsellers and old stock. Has the ‘Discount Syndrome’ spilled across all stock regardless of its saleability?

  • What percentage (and dollar value) of discount is being given on fast/fastsellers?
  • What percentage (and dollar value) of discount is being given on fastsellers?
  • What percentage (and dollar value) of discount is being given on old stock?

More discounting does not automatically produce greater volumes of sales. If your results are not part of a planned strategy, you need to address the issue urgently.

In the case of fast/fastsellers and fastsellers you are giving away precious profit that is the lifeblood of your business. You are also educating your customers and your staff that rampant discounting is acceptable in all aspects of your business, not just those areas that you need to move on.

David Brown is President of the Edge Retail Academy, an organization devoted to the ongoing measurement and growth of jewelry store performance and profitability. For further information about the Academy’s management mentoring and industry benchmarking reports contact inquiries@edgeretailacademy.com or call 877-569-8657.

This piece originally ran in Southern Jewelry News in June, 2018.

Keep it Turning: In With The New, Out With The Old

By The Edge Retail Academy

There is very little that is more important than managing your most valuable asset — your inventory. You can achieve unprecedented metrics for your company by paying special attention to the three critical areas of inventory management: Replenishment, New Purchasing and Aged Inventory.

All three areas are of equal importance. Focusing on one and neglecting the other two will not get you the results that you want.

Replenish wisely. Putting time, energy and focus into replenishing your stock requires discipline and dedication. But the financial rewards can be significant. There is probably no greater factor in increasing your inventory turn than replenishment. And, inventory turn is what generates cash flow; it is what pays the bills.

Follow this process:

  • Replenish weekly, without fail. This might be the most important point, period.
  • Break out your open-to-buy by replenishment dollars and new purchasing dollars.
  • Make sure that you are replenishing in concert with your strategic plan. For example, if you want to build your bridal business, be aggressive in replenishing those SKUs.
  • Review reports that identify quick sellers, and measure the days it took to sell.
  • Flag programs such as wedding band grids, diamond stud earrings, etc. as never-outs, and replenish these automatically.
  • Factor in lead time when placing orders — you may need to order multiple units to assure an in-stock position at all times.
  • For high-velocity SKUs, ask your vendors to shelf stock — for them it is a guaranteed sale, and you get 24-hour delivery.
  • Make sure that your projections for your shelf stock is realistic, not best case — your vendor won’t want to continue if the product is not moving off the shelf.
  • Invest time and effort to categorize your best sellers so you can manage them efficiently.
  • Monitor your never-out SKUs monthly to identify a downward trend, and evaluate whether to discontinue.

Your replenishment strategy can also be a way to increase profits. Target your high-profit categories and replenish them first if you don’t have enough dollars for everything. Leverage your high-profit SKUs by carrying them in other versions, or expand the assortment.

One profit opportunity is to re-mark your inventory based on current cost — not what you paid on all your replenishment SKUs. While you are doing this, look at the piece with perceived value in mind, and you might mark it up even further.

Replenishing your fast-selling merchandise is like fuel for the engine of a car. No matter what, you will always need to have available dollars to replenish the product that is flying out your door. Put aside your opinions and remember: Your job is to give clients what they want, and there are many styles that just keep selling.

The Edge Retail Academy provides customized strategies for retailers and vendors to increase profits, optimize growth, reduce debt, create profitable inventory solutions, build effective teams, and enhance brand loyalty and profitability. The Academy is committed to helping jewelry businesses improve their bottom line while reducing uncertainty and stress. Edge Retail Academy software and its business advisors provide real world knowledge and advice for guaranteed results, all on a “no-contract” basis. Call (877) 569-8657, ext. 1, email Becka@EdgeRetailAcademy.com  or visit www.edgeretailacademy.com.

This piece originally ran in June, 2018 in Centurian. 

Here’s How to Diagnose Your Business When Sales are Down

By David Brown

In my last two columns, we’ve discussed how to diagnose your business in terms of profit and inventory performance. In this third part, we’re going to discuss sales — the most commonly measured benchmark of business success.

Almost every business owner can compare their sales to previous periods, but diving into these numbers in depth and determining specifically what they mean and how you can correct them is another issue. 

The Five “W” Questions

So sales are down. It’s time to ask the five ‘W’ questions: Where, What, When, Who and Why.

Where: Determining sales are down is just the start. Which departments are down? Use your department and comparison reports to discover which areas have fallen relative to previous years. Are your sales down consistently across all departments? This might highlight a wider issue. If they are down in just one or two key areas, you need to determine which areas they are.

What: What product specifically within those areas has declined? It’s one thing to say diamond product has dropped off, but is it bridal? Earrings? Anniversary? Is there a drop in solitaires? Is the market turning to drop earrings while you are still trying to sell studs? You may be simply suffering a mismatch of inventory compared to what your customers now want, but without asking the question, you will never know.

When: When did the trend start? Chances are it began sooner than you noticed. Pinpointing the beginning of the trend will play a big part in determining why it has happened. What other factors occurred at this point in time that may have contributed? (A new competitor, a key staff member leaving, etc.)

Who: If sales have fallen, then there must be an equal drop in sales per staff member. Is this consistent across all staff? Are there one or two staff members who have dropped the most? It may be a staff-related issue.

Why: Having answered the first four questions, you are now in a far better position to determine why it has happened and take action to rectify it. 

It’s one thing to know why sales have dropped, but another to analyze and do something about it. There is a feast of information available in your computer system that can provide you with the insights you need to take action — it’s just a case of asking the right questions to discover the source of the problem.

DAVID BROWN is president of the Edge Retail Academy, a force in jewelry industry business consulting, sell-through data and vendor solutions. David and his team are dedicated to providing business owners with information and strategies to improve sales and profits. Reach him at david@edgeretailacademy.com.


This article originally appeared in the June 2018 edition of INSTORE.  

How to Run a Successful Sales Training Session

By David Brown

Staff sales training has almost become a cliché in business. Everyone knows they should do it but finding the time (50% of sales managers say they can’t put the effort into it that they know it deserves), or knowing how, can cause a problem.

Sadly, sales training does wear off over time, like an exercise class or a good shower. Research shows that 84% of all sales training is lost after 90 days. Given the investment in time and energy this may make it seem pointless, but further analysis has shown that every dollar invested into sales training can yield up to $29 in results, and staff can improve their performance by up to 20% with the benefits of sales training. Few other areas of a business can offer this sort of return. If you’re serious about growing your store you need to be serious about sales training.

So how do you make sure your sales training is effective?

Here are 7 steps that can help you get better results from an effective training program:

1. What is your objective with the training session? (It could be to know the ‘story’ of a new product line, to understand the benefits of 18k, different settings, etc.). Ideally, by the end of your training session all of the staff attending will be able to achieve the objective you have set.

2. Encourage interaction of staff about the topic. Do not let them take the session into another direction. If a staff member interrupts with a topic not relevant to the training, please let them know you will chat to them about this at a later time.

3. Rotate the leader of the sessions, enabling staff to take ownership of researching about product, etc.

4. Role Play at the end of the presentation so staff can show their understanding of your expectation.

5. Add a questionnaire at different times to reward staff that are listening and remembering the content.

6. Go back to your objective to check you achieved your goal.

7. Ask for feedback from your team to ensure you are adding value to their performance and productivity.

So how does sales training make a difference to results?

1. A higher percentage of salesperson budget achievement. A well trained sales force is more likely to achieve their goals than those who aren’t. Research company CSO Insights discovered that goals were 8% more likely to be achieved by salespeople in an organization where effective sales training was in place

2. Better conversion rates. Those companies who employed training programs that were deemed effective were also inclined to increase their sales conversion rate by 30% compared to those companies where staff believed sales training failed to meet expectations.

3. Meeting customers needs and expectations. Salespeople who have been adequately trained are much more likely to meet customers’ expectations and to make suggestions that more suitably meet customers’ needs than those without good sales training. This obviously converts into better sales results

4. Lower staff turnover rates. Research has shown that companies with strong sales training have greater employee retention, in some cases almost double that achieved by companies who do little in the way of training, or whose training is considered inadequate.

Training the staff may seem like the first step in the process, but often having an effective sales training policy can begin with ‘training the trainer’. Companies that also invest in good sales coaching training programs for their trainers will also see a much stronger correlation between their training efforts and goal attainment.

Sales training is an important business investment. Neglecting this area is a false economy that will restrict your business performance now and into the future. In the same way that giving up on the gym will ultimately lead to poor health and other complications, giving up on sales training will lead your business towards illness and a less healthy profitability.

Make a decision that you are willing to commit a portion of your time and expenditure to this important area of your business and enjoy the rewards that it can bring you.

David Brown is president and founder of The Edge Retail Academy, a company offering industry benchmarking and management advice to increase profits. If you would like more information on how The Edge Retail Academy can help you control your inventory and add more dollars to your bottom line contact carol@edgeretailacademy.com, call 877-569-8657 or visit www.edgeretailacademy.com.

This article originally ran in Mid America Jewelry News.

This Might Be the Best Change You Can Make in Your Business … And Too Many Jewelers Fear It

By David Brown

It’s quick, easy and highly effective.

April data across our platform of same-store information shows a slight drop in sales achieved compared to April 2017. This month’s result of $103,546 comes in nearly 3 percent lower than last April’s $106,715. The average sale for April was $380, up from $364, an increase of approximately 4 percent, with a decline in units sold from 263 to 227.

The decline in margin continues to be a cause for concern across many stores, with the data pool indicating a drop from 45 percent to 44 percent in monthly margin in just 12 months. Obviously one month represents a snapshot, but our other data has shown this to be a trend. Any average obviously has extremes, and there will be store owners who are encountering an even bigger decline than this. Every $1,000 of sales will translate into $10 less dollars of profits achieved purely from the lower margin, and thus the drop of 3 percent in sales becomes a decline of almost 4 percent in gross profit.

This is the multiplier effect of margin. Just a 1 percent drop in margin achieved can increase the decline experienced in profit by 33 percent over the decline experienced in sales (3 percent to 4 percent). Let’s make some assumptions about the more extreme figures that might exist for an individual store.

Let’s assume Duncan’s store has seen sales drop from $100,000 to $90,000 for the month, a larger decline of 10 percent. Let’s also assume that Duncan has better-than-average margin but experiences a drop in margin from 50 percent to 48 percent. Last year Duncan’s gross profit would have come in at $50,000 ($100,000 of sales at 50 percent margin). This year they come in at $43,200 ($90,000 @ 48 percent margin).

The 10 percent drop in sales translates into a 13.6 percent drop in profitability – the margin decline has accelerated the sales decline by a further 36 percent (10 percent to 13.6 percent).

The same can be true in reverse. Helen’s store has seen her sales increase 10 percent, from $100,000 to $110,000. She has also managed to improve her markup from 50 percent to 52 percent. What effect does this have on her gross profit?

Last year’s profit of $50,000 has now increased to $57,200. Her 10 percent increase in sales has been accelerated to a 14.4 percent increase in her gross profit. Just two percentage points extra in margin gives her an extra 44 percent profit on those additional dollars.

It’s easy to view small percentage changes in margin as insignificant; a percent here or there would appear to have little effect on the outcome of a businesses profit. However, as the numbers show, the effect on the bottom line can be considerable. In Jane’s example, the extra margin has made a difference of $2,200 over what she would have made without it. Her $10,000 of extra sales has delivered $7,200 in extra profit by the combination of increased turnover and increased margin. She didn’t need the extra sales to get the margin benefit, but the two together create a healthy improvement on the previous year.

Increasing margin costs almost nothing to do, doesn’t require extra staff or product, and doesn’t require additional space. It doesn’t affect rosters or double the time spent having to clean. It offers an infinite return on money and time that virtually no other business improvement can provide. It can be the quickest and easiest strategy to implement, with the only true risk being that the customer may say no.

Unfortunately, many small business owners say no for the customers without giving them the chance to decide for themselves.

Don’t be this type of business owner. At least give your customers the chance to reward you more handsomely for what you already do.


DAVID BROWN is president of the Edge Retail Academy, an organization devoted to the ongoing measurement and growth of jewelry store performance and profitability. For further information about tfinhe Academy’s management mentoring and industry benchmarking reports, contact inquiries@edgeretailacademy.com or phone toll free (877) 569-8657.

This story originally ran as an INSTORE Online extra.

It’s Showtime! Are You Ready to Buy?

By David Brown, Edge Retail Academy

Omaha, NE—Whether dealing with sales representatives in-store or attending jewelry trade shows, the process of buying stock is ongoing.  There are store owners who have a good handle on what they need when purchasing but there are plenty who don’t. In fact, retailers might find they are not well-informed enough to make strategic buying decisions when the time comes. So, are you prepared to buy?

Retailers are always prepared to buy new items – a look at their increasing product levels readily confirms that – but what it really means to be prepared to buy is whether retailers have done enough groundwork before heading to buying group meetings and trade fairs.

As a starting point, look at your stock reports for the last six to 12 months.

Has your product holding increased? Do you have more stock now than at the beginning and if so, was it planned and have sales increased as a result? If not, this is a sign that cash flow could shortly become an issue. If you are holding more product – and you’ve paid for it and not achieved increased sales – then that also means a corresponding reduction in available cash or an increase in debt. This can only be sustained for a short period of time.

If stock levels are higher (than your optimum stock level) then you need to address how you will fund any new purchases. Do you have the money to do it or will you need to reduce your current levels of product to provide the cash for new product? If not, then you probably don’t need to buy. In fact, your cash flow may have already told you that. Unfortunately, when completing this exercise, most storeowners have a higher level of stock than they did six to 12 months earlier. Few have less.

In the majority of cases, this is not natural growth but an oversupply of product that hasn’t moved, which is jamming up the works and preventing a business from growing. If you don’t control the old product, it will soon choke the new like weeds in a garden.

Prepare the right way. 

In preparation for buying group meetings and/or trade shows, retailers need, at the very least, a buying plan and budget that matches their sales plan. By all means, research new product lines and suppliers, but if you buy product that wasn’t included in your original buying plan you will need to increase your sales plan accordingly. For example, if you invest $20,000 in a new entrepreneurial line that isn’t part of your existing sales budget, then you need to increase your sales budget by say $50,000 ($20,000 x 1.2 stock-turn = $24,000 x 110 per cent mark- up = $50,400) to include it. Either way, the buying plan needs to match the sales plan or the sales plan needs to match the buying plan.

Print out a supplier report by gross profit for the last 12 months. Are there any suppliers on the first page that have a closing inventory that is level with or greater than their sales? That’s a problem to address urgently. If they are on the first page of the report then they are amongst the better performers so there is an opportunity to discuss ‘stock balancing’ – replacing fast-selling items and returning for credit current models that haven’t sold. Retailers should focus on the top 10 to 12 lines for reasons that will be later explained.

Are there any suppliers that have similar closing stock levels but significantly different sales? Look at this example: Supplier One has sales from you of $85,038 with a closing stock of $13,049, while Supplier Two has sales from you of $20,836 with closing stock of $13,017.

Why is there such a huge variance in performance? Isn’t this something to discuss with both of them? Supplier One has a stock- turn of 2.4, which is great (and no, they are not a bead supplier)

With this in mind, should retailers broaden their Supplier One range a little? Should you re-order twice weekly rather than once a week? Does Supplier One consistently have a high-order fulfilment percentage? This occurs when most of the orders are completely filled. Is there anything still on backorder? Why?

Supplier Two has a stock-turn of 0.6 and much of their stock is on consignment and unpaid. Being on consignment is not an excuse; customers don’t know that and knowing it wouldn’t influence them to buy more anyway. That product that hasn’t worked – for you or them – needs to be exchanged as it isn’t doing either of you any good.

Retailers don’t need to analyze this for all suppliers. Focus on the top 10 as these suppliers are probably providing you with 80 per cent of your store sales anyway. Your report may contain three or four pages, but the majority of information is in the top few lines and this is where your attention needs to be.

This comparison of where product is sourced is a very useful exercise. Naturally, suppliers whose products sell well at a good margin are the ones you should reorder from, while those whose product doesn’t sell well should be paired back.

The 80/20 rule is alive and well, when it comes to stock purchasing.

Jewelers need to concentrate their efforts with those suppliers that provide them with the bulk of their sales. The idea is to become more and more important to fewer and fewer suppliers. By being suitably armed with correct information that supports the sales plan, retailers can ensure they are in the best position to make those choices.

The Edge Retail Academy provides customized strategies for retailers and vendors to increase profits, optimize growth, reduce debt, create profitable inventory solutions, build effective teams, and enhance brand loyalty and profitability. The Academy is committed to helping jewelry businesses improve their bottom line while reducing uncertainty and stress. Edge Retail Academy software and its business advisors provide real world knowledge and advice for guaranteed results, all on a “no-contract” basis. Call (877) 569-8657, ext. 1, email Becka@EdgeRetailAcademy.com  or visit www.edgeretailacademy.com.

Originally published in The Centurion.

Merchandising Checklist For The Upcoming Shows

By David Brown, Edge Retail Academy

Omaha, NE–Creating the perfect product mix is an elusive goal–but certainly worth shooting for!

The high energy of a tradeshow is not always conducive to strategic purchasing. Everyone’s excited to see their friends and attend glamorous events, plus factors such as poor lighting, rushing around to appointments (and, of course, those late nights) can affect smart buying decisions. In addition, we always see more compelling product than we have dollars for, which is why before every show we recommend jewelers have a plan and stick to it.

Here’s our checklist leading up to show time. Ideally, you already began planning about a month before, but even if you start now, you’ll still be in a better position to avoid impulsive decisions that can negatively impact your bottom line.

First:

  • Review your Strategic Plan and your Merchandising Plan to refresh your memory as to your objectives
  • Or, brainstorm with your staff on unclosed sales and missed opportunities
  • Compare your YTD results with your objectives. At five months into the year you should have a pretty good idea if you are on track
  • Ask yourself what you are trying to accomplish at the show. Think about what type of product will fulfill your objectives, and what buying strategies will get you to your year-end goals?

Here are a few examples of possible strategies:

  1. Attract female self-purchasers with bold, fun fashion rings
  2. Expand your bridal clientele with new bridal product
  3. Increase margin with in-house branded collections

Next: 

  • Calculate your Open to Buy (OTB), making sure that you allocate dollars to replenishment. Don’t forget to factor in your on-order, accounts payable commitments, GL inventory adjustments, and pending return to vendor. (Note: The Edge Retail Academy can help you create your OTB, if needed; see contact info below.)
  • Start running the appropriate reports that you will need for your buying decisions – by vendor and by classification – to get a general idea of what you need to procure
  • Determine what are your top selling products, and what are your best performing vendors
  • Equally important, review your aged inventory visually – you want to learn from these buying mistakes
  • Start setting up your vendor appointments – don’t count on “swinging by”

2 weeks before the show:

  • Now it is time to get specific! If you have determined a need for bridal semi-mounts – drill down in your reports – what metal, shape melee, head shape/size, price point range?
  • Lower your risk by leveraging your top selling product – is it available in another diamond total weight, with a different size/shape center stone, in a different metal?
  • Print out your Vendor Appointment forms for your existing vendors that you will be seeing at the show
  • Run reports so you can fill in the Vendor Appointment form completely
  • Print out several sets of the New Vendor forms, and any of the Agreement forms that you think you may need – remember, negotiate upfront

1 week before the show:

  • Re-calculate your Open to Buy – based on sales and receiving your dollars may have gone up or down
  • Do not underestimate the importance of being organized and professional in front of your vendors – prepare all your reports and forms
  • Re-confirm your appointments, and get cell phone numbers so you can contact if you need to

At the show:

  • It is pretty easy to get behind schedule at times, but do call your vendors for a heads-up or to reschedule
  • Ideally, get pictures and pricing, so you can review back at your office or store
  • Gather information on potential new vendors, even if you don’t have the OTB dollars this season – start a file for the next show you will be attending

Post show:

  • Once you have all your pictures and pricing, fill out a New Purchasing Analysis Form for each designer, collection or group of like-product
  • Review the forms with your manager, or with your staff and decide what kind of a fit you have with the vendor and which product will help you accomplish your goals
  • Send in your purchase orders with specific ship dates
  • Develop a Product Launch plan, or schedule trainings to ensure the successful sell through of the wonderful product you have just purchased!

The Edge Retail Academy provides customized strategies for retailers and vendors to increase profits, optimize growth, reduce debt, create profitable inventory solutions, build effective teams and enhance brand loyalty and profitability. The Academy is committed to helping jewelry businesses improve their bottom line while reducing uncertainty and stress. Edge Retail Academy software and the unique talent pool of their business advisors provide real world knowledge and advice for guaranteed results, all on a “no-contract” basis.  877-569-8657, ext. 1, Becka@EdgeRetailAcademy.com  or  www.edgeretailacademy.com

This article ran in Centurian.

Categories

Tags


Follow us on LinkedIn