Columnists

On Data: Retailing in a Recession

ColumnistsSep 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.

2021_Sherry Smith.jpg
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 … 

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. 

Sherry Smithis director of business development at Edge Retail Academy, the leading jewelry business consulting and data aggregation firm.

The Latest

Jemma Wynne Forme Toggle Necklace
CollectionsJul 25, 2025
Piece of the Week: Jemma Wynne’s ‘Forme’ Necklace

Anne Hathaway was seen wearing the toggle necklace three times while filming scenes for “The Devil Wears Prada 2.”

September Hong Kong jewelry show
Events & AwardsJul 25, 2025
Pre-Registration Open for September Hong Kong Show

Jewellery & Gem World Hong Kong is scheduled for Sept. 15 to 21, and buyer pre-registration will be available until Sept. 7.

Bulgari Celestial Mosaic spinel necklace
FinancialsJul 25, 2025
LVMH Sales Slip in H1 Amid ‘Prevailing Uncertainties’

Renovations at Tiffany & Co. stores ate into profits in the company’s watch and jewelry division.

rio-article photo-diamond.jpg
Brought to you by
Taking the Moment Head On: How Rio Grande Champions the Present & Future of Fine Jewelry

As a leading global jewelry supplier, Rio Grande is rapidly expanding and developing new solutions to meet the needs of jewelers worldwide.

Mark and Candy Udell
Events & AwardsJul 24, 2025
2 Retailers to Receive 2026 Gem Award for Lifetime Achievement

Mark and Candy Udell of London Jewelers will receive the honor at the 24th annual Gem Awards next March.

Weekly QuizJul 25, 2025
This Week’s Quiz
Test your jewelry news knowledge by answering these questions.
Take the Quiz
De Beers marine mining vessel the SS Nujoma
SourcingJul 24, 2025
De Beers Sees Diamond Production Sink 36% in Q2

While struggles continue at the mining and trading end of the pipeline, consumer demand for diamond jewelry is holding steady.

Francesca Villa Fantasia Collection The Crab Pendant, The Mermaid Pendant, Keep Dancing Seahorse Pendant, Keep Dancing Ladybug Pendant, Secret Dreams Pendant, The Puffer Fish Takes Flight Pendant
CollectionsJul 24, 2025
Francesca Villa Adds Dimension to Her Intaglio Characters

The “Fantasia” jewelry collection turns the intaglio animals from her “Close Encounters” collection into 3D characters.

an instructor and a student in a bench jewelry classroom
Brought to you by
Investing in the Next Generation of Bench Jewelers

The Seymour & Evelyn Holtzman Bench Scholarship from Jewelers of America returns for a second year.

Breitling’s special Eagles Super Bowl watch on gold bracelet
WatchesJul 24, 2025
Breitling Drops Super Bowl Watch Honoring the Philadelphia Eagles

The special Classic Avi Chronograph 42 with an Eagles-green dial is limited to 59 pieces, a nod to the Super Bowl Philadelphia just won.

Stock image of crime scene tape
CrimeJul 23, 2025
JSA Warns of Violent String of Smash-and-Grabs in California

JSA has received reports of mobs swarming jewelry stores, driving cars into the storefront or smashing through the windows.

Silvia Furmanovich Kasmir Collection Carnelian Bracelet and Sketch
CollectionsJul 23, 2025
Silvia Furmanovich’s ‘Kashmir’ Collection Is a Tribute to Northern India

The “Kashmir” collection features centuries-old craft techniques made in collaboration with the region’s master papier-mâché artisans.

Bench jeweler holding a bracelet and a tool
IndependentsJul 23, 2025
Montreal’s Ecksand Eyes Move to SoHo

Creative Director Erica Bianchini shared why the jeweler is looking to expand into the U.S. and how it’s putting Canadian craftsmanship on the map.

LAFD Fire Station 44 and Fire Station 16
IndependentsJul 23, 2025
IJO Raises Nearly $37K for LA Fire Relief

Two Los Angeles Fire Department stations plan to use the donations to upgrade their equipment and tools.

A Vanitas by Hannah Martin and Guy Berryman Sothebys
CollectionsJul 22, 2025
Jewelry With a Rock ‘n’ Roll Aesthetic Heads to Sotheby’s London

Next week, the auction house will kick off a selling exhibition of jewelry by British artist Hannah Martin and Coldplay’s Guy Berryman.

Cover of the book “Flawless: Inside the Largest Diamond Heist in History”
SourcingJul 22, 2025
Antwerp Diamond Heist Documentary Coming to Netflix

“Stolen: Heist of the Century” is based on “Flawless,” the book about the middle-of-the-night theft, and will debut on Netflix in August.

NY Now
Events & AwardsJul 22, 2025
NY Now’s Summer Market Returns in August

The wholesale trade show’s Luxury Lifestyle section will showcase established and emerging jewelry designers.

Jeweler setting a diamond into a ring
MajorsJul 21, 2025
Rio Grande Expands Personalization Offerings

As demand for custom jewelry grows, the company is expanding its services to support retailers.

National Associate of Jewelry Appraisers Logo
Events & AwardsJul 21, 2025
NAJA’s 2025 ‘Ace It’ Conference To Go Virtual

The mid-year conference for jewelry and watch appraisers is slated for Aug. 9 to 10 on Zoom.

Jacquie Aiche graduated turquoise beaded necklace
TrendsJul 21, 2025
Amanda’s Style File: Graduated With Honors

Graduated stones make for elevated tennis-style pieces and dramatic statement necklaces.

24th Gem Awards Show Logo
Events & AwardsJul 21, 2025
Gem Awards Now Accepting Nominations for 2026

Nominations in the categories of Jewelry Design, Media Excellence, and Retail Innovation will be accepted through July 30.

Lewis Heyman
MajorsJul 18, 2025
Lewis Heyman on Sourcing Gemstones, Post-Retirement Plans

He retired last month after 28 years traveling the world to source the very best gemstones for his family’s jewelry business, Oscar Heyman.

CCWW Designs Multiple Shell Charm Necklace
TrendsJul 18, 2025
Piece of the Week: CCWW Designs’ Shell Charm Necklace

The charm necklace features six nautical charms of shells and coral that founder Christina Puchi collected on Florida’s beaches.

The Plumb Club board members
MajorsJul 18, 2025
Plumb Club Elects New Board Members

The organization elected its youngest vice president as it looks to draw in fresh talent.

Jewelry industry veterans Brad Campbell and John Liebler
TechnologyJul 18, 2025
Brad Campbell, John Liebler Join Clientbook’s Executive Team

Campbell joins the company as vice president of business development while Liebler is the new vice president of operations.

Silver, Gold, and Bronze Medals for Italy Olympic Winter Games
CollectionsJul 17, 2025
2026 Winter Olympic Medal Design Symbolizes Unity

The medals feature a split-texture design highlighting the Games’ first time being hosted by two cities and the athletes’ journeys.

vimeo screenshot.png
Supplier BulletinJul 17, 2025
The INSTORE Jewelry Show 2025: Your Holiday Preparations, All Wrapped Up!

Sponsored by The INSTORE Jewelry Show 2025

Guinness
SurveysJul 17, 2025
The Most Recommended Brands in the World, According to YouGov

Globally, travel and transportation brands reigned, while in the U.S., alcoholic beverage companies and a lingerie brand took the top spots.

×

This site uses cookies to give you the best online experience. By continuing to use & browse this site, we assume you agree to our Privacy Policy