ColumnistsAug 23, 2022
The Smart Lab: How To Plan An Effective E-Newsletter StrategyColumnistsSep 14, 2022
On Data: Retailing in a Recession
Current jewelry sales trends portend tougher days ahead. Sherry Smith shares six things retailers can do to make sure they are ready.
Sherry Smith is director of business development for data and consulting company The Edge Retail Academy. She can be reached at sherry@edgeretailacademy.com.
In the article “Navigating inflation in retail: Six actions for retailers,” McKinsey & Company states, “Retailers are facing the possibility of persistent inflation—but they can meet that challenge in ways that streamline operations, retain customers, and drive profitable growth.”
Despite the National Retail Federation’s decision to stick with their original projection of 6-8 percent growth in retail sales for 2022, there remains a great deal of uncertainty in today’s economy.
If there is, in fact, growth, we know it will not apply equally across all retail sectors. This is all the more likely for the jewelry business, given the record-setting year in 2021.
The indicators of tougher days ahead can be seen in the numbers.
The last few months have seen a decline in units sold and, for the first time since the onset of the pandemic, a slight decline in gross sales despite the price increases that helped prop up gross sales in the earlier months of the year.
Nonetheless, there are concrete actions retailers can address to help navigate potentially choppy waters in the coming months.
Here are six areas we would suggest you should examine to maximize returns.
1. Expect more from your inventory.
Inventory is one of your biggest costs, and you might potentially see a slowdown in turn during a recession. However, it is precisely at times like these that you should measure your inventory turn and hold yourself to the highest possible standard.
Converting inventory into cash can be a real salvation in more challenging economic times, and there are two tenets that should not be compromised if you are to do so effectively.
The first is that you should never be out of stock on your best-selling products. They are the lifeblood of your business, even as some retailers become bored with products often not deemed to be “sexy enough.”
Sexy is a profitable business and a well-managed inventory.
The second area is to not be shy about aggressively moving out slow and/or discontinued products or brands. This is not the time to be tentative in liquidating slow-moving products or struggling to let go of buying mistakes of the past. There’s a reason it didn’t sell, so move it on.
A better stock turn creates positive cash flow, and no business was ever less well-off for being profitable.
2. Have a slush fund.
We strongly recommend retailers have a business savings or emergency account. You should have enough cash on hand to cover at least six months’ worth of operating costs, including payroll.
If you don’t have a slush fund, start one today by putting a percentage of every deposit into your business savings account. You’ll be surprised how quickly this can become an ingrained habit.
Although retailers will often say they can’t afford to do this, I would strongly argue that you can’t afford not to do this.
Related stories will be right here …
Despite the National Retail Federation’s decision to stick with their original projection of 6-8 percent growth in retail sales for 2022, there remains a great deal of uncertainty in today’s economy.
If there is, in fact, growth, we know it will not apply equally across all retail sectors. This is all the more likely for the jewelry business, given the record-setting year in 2021.
The indicators of tougher days ahead can be seen in the numbers.
The last few months have seen a decline in units sold and, for the first time since the onset of the pandemic, a slight decline in gross sales despite the price increases that helped prop up gross sales in the earlier months of the year.
Nonetheless, there are concrete actions retailers can address to help navigate potentially choppy waters in the coming months.
Here are six areas we would suggest you should examine to maximize returns.
1. Expect more from your inventory.
Inventory is one of your biggest costs, and you might potentially see a slowdown in turn during a recession. However, it is precisely at times like these that you should measure your inventory turn and hold yourself to the highest possible standard.
Converting inventory into cash can be a real salvation in more challenging economic times, and there are two tenets that should not be compromised if you are to do so effectively.
The first is that you should never be out of stock on your best-selling products. They are the lifeblood of your business, even as some retailers become bored with products often not deemed to be “sexy enough.”
Sexy is a profitable business and a well-managed inventory.
The second area is to not be shy about aggressively moving out slow and/or discontinued products or brands. This is not the time to be tentative in liquidating slow-moving products or struggling to let go of buying mistakes of the past. There’s a reason it didn’t sell, so move it on.
A better stock turn creates positive cash flow, and no business was ever less well-off for being profitable.
2. Have a slush fund.
We strongly recommend retailers have a business savings or emergency account. You should have enough cash on hand to cover at least six months’ worth of operating costs, including payroll.
If you don’t have a slush fund, start one today by putting a percentage of every deposit into your business savings account. You’ll be surprised how quickly this can become an ingrained habit.
Although retailers will often say they can’t afford to do this, I would strongly argue that you can’t afford not to do this.
3. Always operate within your budget.
Retail owners understand more than most just how challenging it is to create an annual budget.
Nonetheless, it is a vital tool that should factor in historical sales, your marketing calendar, your fixed and variable costs, and gross margins.
Also, you will want to make sure you factor in anomalies such as a one-off large sale from the previous year, an inventory reduction sale that will not be repeated, business interruptions due to remodeling within your store, or external construction projects that might negatively impact your business.
Your annual budget goes hand in hand with a cash flow projection. You need to plan for the months that have a negative cash flow by utilizing a line of credit, and/or proactively and respectfully negotiate for longer payment terms from your vendors.
Following a budget can present opportunities to identify and cut costs.
4. Don’t stop advertising.
When sales decline, there is often a knee-jerk reaction to slash marketing spend.
However, this can be a great opportunity to build your brand awareness, and at a more favorable price, when your competitors are sitting on the sidelines waiting for the storm to pass.
Be sure to adjust your marketing efforts to meet current consumer habits. Today’s consumers shop across multiple channels, so you need to be more strategic with your targeted messages to stay top of mind.
Maintain regularly scheduled communications such as email, social media, texts, and more traditional vehicles such as billboards (if they work in your market) and a structured system of phone outreach.
Most importantly, you must track your marketing results; don’t fall for the fallacy that marketing results cannot be measured.
You should measure the key performance indicators (KPIs) of your marketing, and you should only continue with the campaigns that are achieving the desired results.
If there are any flippant takeaways from a marketing perspective it is this: no marketing or lousy marketing efforts will deliver lousy results.
5. Be customer-centric.
Loyal customers are the lifeline of a retailer’s business, but the relationships must be nurtured.
Customers aren’t always excited about shopping around. They would prefer to go to retailers they know, trust, and have a relationship with, especially in times of uncertainty.
Existing customers also purchase more often and typically spend more per transaction than new customers. However, you must have a clienteling strategy in place because sometimes, all customers need is a little nudge.
For those retailers who don’t have a loyalty or rewards program, there’s no better time to introduce one than during an economic downturn.
There are good systems available so make sure to talk to your peers, mentors, or business advisers for help.
6. Assess your workforce needs.
It is imperative that you have top talent in the right positions at all times, but never more so than when business is more challenging.
While cross-training can benefit many businesses, it doesn’t always serve the retail store or your customers well.
For example, having administrative/support staff help on the floor with customer overflow is an OK stop-gap measure, but isn’t necessarily in the best interest of your business. Those interactions typically result in a close rate that is below reasonable expectations and an average ticket that will hurt your business.
When foot traffic is down, you must put your customers in front of your strongest salespeople to ensure the customers’ needs and wants are met in a meaningful way that is good for your customers and good for your business.
Ultimately, there is no higher goal in running a retail store.
Loyal customers are the lifeline of a retailer’s business, but the relationships must be nurtured.
Customers aren’t always excited about shopping around. They would prefer to go to retailers they know, trust, and have a relationship with, especially in times of uncertainty.
Existing customers also purchase more often and typically spend more per transaction than new customers. However, you must have a clienteling strategy in place because sometimes, all customers need is a little nudge.
For those retailers who don’t have a loyalty or rewards program, there’s no better time to introduce one than during an economic downturn.
There are good systems available so make sure to talk to your peers, mentors, or business advisers for help.
6. Assess your workforce needs.
It is imperative that you have top talent in the right positions at all times, but never more so than when business is more challenging.
While cross-training can benefit many businesses, it doesn’t always serve the retail store or your customers well.
For example, having administrative/support staff help on the floor with customer overflow is an OK stop-gap measure, but isn’t necessarily in the best interest of your business. Those interactions typically result in a close rate that is below reasonable expectations and an average ticket that will hurt your business.
When foot traffic is down, you must put your customers in front of your strongest salespeople to ensure the customers’ needs and wants are met in a meaningful way that is good for your customers and good for your business.
Ultimately, there is no higher goal in running a retail store.
More on Columnists
The Latest
CrimeOct 03, 2022
Delaware Jeweler Viciously Attacked During Robbery The jeweler was left in critical condition after a suspect pistol-whipped and beat him before stealing jewelry out of the display cases.
CollectionsOct 03, 2022
Vrai, Brides Magazine Partner on Lab-Grown Diamond CollectionReaders are taking a “strong interest” in lab-grown jewelry, said Brides’ editorial director.
WatchesOct 03, 2022
‘Unicorn’ Cartier Cheich Watch Sells for $1.1MOne of only four in existence, it more than doubled its pre-sale estimate at the Sotheby’s Paris auction.
Brought to you by
Sarine’s Second Generation AI-Based Diamond GradingThe diamond industry is dramatically evolving from manual to AI-based 4Cs grading. Stay up-to-date and discover the new AI-powered advances.
IndependentsOct 03, 2022
Day’s Jewelers Names New VP of MarketingLong-time employee Nikia Levesque takes on the role as former owner Jeff Corey retires.
Weekly QuizSep 29, 2022
This Week’s QuizTest your knowledge of the latest jewelry news with this quick test.
AuctionsSep 30, 2022
Red Diamond Earns $1.8M at AuctionThe final hammer price blew the pre-sale estimate out of the water.
EditorsSep 30, 2022
The Best of Betty White’s Jewelry Sold at AuctionMichelle Graff recaps the cats, fortune cookies, and charm bracelets that caught her eye while covering the late actress’ estate sale.
Brought to you by
6 Steps to Start a Dynamic Company CultureLearn how to better serve your employees, customers and community by having a dynamic and supportive company culture.
Policies & IssuesSep 30, 2022
Voting Is Open for the Fairmined 100 Challenge’s Best CollectionThe winners, picked by a group of judges and voted as the public’s favorite, will be announced in a webinar on Oct. 11.
CollectionsSep 30, 2022
Piece of the Week: Fewer Finer’s ‘Family Bracelet’The engravable piece is a perfect family heirloom.
GradingSep 30, 2022
GSI India Names Ramit Kapur Managing DirectorKapur has spent nearly two decades working in the gemological labs sector of the jewelry industry.
Supplier BulletinSep 29, 2022
How to Create an Engaging Experience and a Sparkling ReputationSponsored by Synchrony
SourcingSep 29, 2022
Q&A: Constantin Wild Celebrates 175 Years in the Colored Stone Business The family business’ fourth-generation eponymous owner reflects on the milestone and the market today.
AuctionsSep 29, 2022
See the Top Lots in Christie’s Upcoming Rare Watch SaleAccording to Christie’s, the auction is its most important single-owner watch collection ever.
CollectionsSep 29, 2022
Trove Has a New Proposal: Ring BoxesThe jewelry box brand is expanding with both single and double ring boxes in red, mint green, and white.
SourcingSep 29, 2022
AGTA Names Jennifer Heebner Editor-in-Chief of its PublicationsThe association has also hired a new marketing manager and announced two staff transitions.
Policies & IssuesSep 29, 2022
JA Members Return to Capitol Hill to Voice Jewelers’ ConcernsThe topics up for discussion with lawmakers included inflation, rising interest rates, hiring challenges, and crime.
AuctionsSep 28, 2022
The 18-Carat ‘Fortune Pink’ Diamond Could Sell for $35M The pear-shaped fancy vivid pink diamond will lead the Christie’s Geneva Magnificent Jewels auction on Nov. 8.
SurveysSep 28, 2022
Consumer Confidence Rises in SeptemberU.S. consumer confidence rose for the second consecutive month as gas prices fell.
MajorsSep 28, 2022
Artistry’s 2023 Catalog Is Out NowThe jewelry catalog features an updated layout and 160 pages of product.
MajorsSep 28, 2022
JFC’s 2022 ‘Hope for the Holidays’ Program Is an Adorable Menagerie There are three designs to choose from this year, all featuring animals drawn by kids who have had wishes granted through Make-A-Wish.
AuctionsSep 27, 2022
In Betty White’s Blockbuster Estate Sale, Jewelry Held Its Own Fine jewelry comprised three of the auction’s top 10 lots, though it could not top her director’s chair or scripts from “The Golden Girls.”
CrimeSep 27, 2022
3 Suspects in Beverly Hills Smash-and-Grab Robbery ArrestedA total of four suspects are now in custody with police still on the lookout for the remaining two.
MajorsSep 27, 2022
Stuller Releases 2 Updated Catalogs Ahead of the Holiday Season “Mountings 2023-2024” and “Diamonds & Gemstones 2023-2024” offer a vast selection of options to create custom pieces.
Events & AwardsSep 27, 2022
ICA’s 2023 Congress Will Be Held in Dubai The event will be hosted by the Dubai Multi Commodities Centre from Feb. 15-17.
IndependentsSep 26, 2022
Roberson’s Fine Jewelry to Close After 42 YearsThe store’s liquidation sale will showcase the mix of classic and unique jewels it’s known for stocking.
CollectionsSep 26, 2022
Go ‘Inside the Dream’ of Bulgari Via a New Documentary on Amazon Prime It follows Creative Director Lucia Silvestri as she crafts the brand’s high jewelry collections.
