Independents

On Data: A 5-Point Reopening Checklist

IndependentsApr 28, 2020

On Data: A 5-Point Reopening Checklist

Jewelers need to re-evaluate their sales forecasts, their inventory and their employees, writes Sherry Smith in this special edition of On Data.

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.
States are beginning to develop and roll out reopening plans, with some states collaborating on a coordinated, regional approach.

The reopenings are happening sooner than we anticipated, but you still have time to complete your preparation and planning for the post-coronavirus world.

When the future is uncertain, creating multiple forecasts helps us prepare for different possibilities.

Planning and forecasting can play a major role in driving your success or failure, and nothing will bring you more peace of mind than reopening with a well-thought-out and detailed plan.

While there are many things you still feel you need or may want to do, the following items should be checked off your list prior to reopening.

1. Sales Projections
It will be incredibly difficult to predict what post-COVID-19 business will look like as none of us have been here before, but this doesn’t mean you shouldn’t complete your sales projections.

Although a sales projection is basically an educated guess, it does set the standard for your expenses, profits and growth.

You should aim to have three sales forecasts completed: a conservative, a moderate and an aggressive one, and you should absolutely factor in your data.

Your aggressive sales plan should be the remainder of your 2020 forecast from when you reopen. While this was created prior to the pandemic, this represents our aspirational goal of fully returning to pre-coronavirus business.

Your conservative and moderate sales plans should factor in the many potential variables you will be facing, such as fewer number of employees, your area’s potentially restricted schedules (days and/or hours, number of people allowed in the store, etc.), and a decreased marketing spend.

A hypothetical conservative sales plan might be 30 to 40 percent of your aggressive or original 2020 sales plan, and your moderate forecast might fall between 50 to 70 percent of your original sales plan for 2020.

2. Cash Flow Worksheet
One of the most important things you can do for your business right now is to create a financial budget.

Budgeting, in its simplest terms, is an outline of expectations for what a business wants to achieve for a particular period of time and, as we stated above, it represents your financial position, cash flow and goals.

While budgets generally forecast an entire year, yours should focus on the remainder of 2020.

Budgets afford you the luxury of tweaking as necessary and that’s precisely what you will need post-COVID-19.

Create three cash flow plans that tie directly to your conservative, moderate and aggressive sales plans. 
Factor in your fixed costs as well as your variable costs.

Your revenue is made up of two components: your cost of goods sold and your gross profit. In theory, your cost of goods sold would cover your vendor payables and your gross profit should cover your operating costs.

If your sales plans (based on your gross margin) do not cover your operating costs, then you will need to look at either cutting some of the variable costs at least in the interim, or increasing your revenues or, preferably, both.

3. Savings
Hopefully, you’re a retailer who already saves a percentage of her or his revenue, but if you’re not, you must make this part of your business model moving forward.

Open a separate business account and determine the percentage you will start saving. I highly recommend 5 percent, but if you truly believe you cannot do that, start with 2 percent or 3 percent and work your way up to 5 percent, gradually ramping up to 10 percent.

The key is to start, and now is the perfect time. There are many benefits to having a business savings account, including being prepared for emergencies, budgeting for periodic expenses, and saving for future business projects.

4. Inventory Management 
Currently, there is a lot of advice out there when it comes to inventory management after COVID-19.
 
Simply put, one size does not fit all. Having said that, never has it been more important for a retailer to follow best practices when it comes to managing her or his inventory.

Start with performing a vendor analysis as well as a category analysis prior to reopening. 

This exercise typically shows that approximately 80 percent of your gross profit dollars are coming from as few as 10 to 15 vendors.

You’ll get the highest return on your efforts by starting with your top-performing vendors and categories.

Based on your findings, you should plan on remerchandising your store, not only to give your store a fresh look, but also to better align your top performers with your prime real estate.

One of your goals should be to work toward your optimum inventory level. Retailers can’t afford to have their working capital tied up in their inventory. 

Imagine if you had that several hundred thousand dollars (or more) as cash in the bank going into this pandemic instead of having it tied up in non-performing product in your store. This crisis would be a lot less stressful for you. 

When it comes to inventory, there are four areas to focus on and plan around.
 
  1. Fast-sellers. Commit to replenishing your fast-sellers. This is the very product driving revenue and creating cash flow.
  2. Memo. If memo is currently a successful part of your business model, then do not just blindly send it all back. You could find yourself starving your top-performing categories and vendors. Instead, do an analysis. Make sure your memo doesn’t compete with your assets, and never have aged memo except for the pieces generating orders.
  3. Aged. Given that cash flow is king, have a plan of action in place to aggressively target your aged inventory. Plan a clearance sale for your non-performing product. Your goal should be to recoup as much of your investment as possible and as quickly as possible. You should have a list of strategies ready to go for both reopening and ongoing management of aged inventory.
  4. Have conversations with your vendors. Collaborate on a preliminary sales plan and inventory goal for the remainder of 2020 you both feel comfortable working toward under these current circumstances.

5. Talent Management 
Our people are our biggest asset as well as our biggest liability, and there is no better time to evaluate your team than right now. 

When you reopen, you cannot afford to reopen with anything less than a really strong team, and that means having the right people in the right roles. This applies to both front and back of house. 

RELATED CONTENT: What Will Retail Look Like After COVID-19?
 It is imperative you have salespeople with the correct wiring. These are the very performers who will give your business the best chance of fulfilling your customers’ needs and wants by closing the deal, thus driving revenue and creating cash flow.

If you have a sales team member who is dependable, reliable and has a great work ethic but simply cannot close a sale, consider shifting them to a different role, but only if it’s the right fit and is beneficial to your organization.

If you’ve done all these things and they’re still not a fit, you’re not doing your business or that employee any favors by keeping her or him.

Wrap-Up
To recap, while there are many things you could be working on, you should focus on completing this five-point checklist prior to reopening.

1. Create your sales plans.
2. Create your cash flow plans.
3. Open a business savings account.
4. Perform a vendor and category analysis and draft a remerchandising plan.
5. Evaluate and assess your team.

Do the work now. Tackle one item per day and you can complete your to-do list in as little as five business days.

Having your completed plan and contingency plans will help you reopen in the strongest position possible.

And, stay positive and continue to focus on the controllable.

I wholeheartedly admit I’m an optimist or, at the very least, a pragmatist. Therefore, I believe there are many people like myself—anxious to dine out, see a movie, frequent my favorite brick-and-mortar stores and, first and foremost, book an appointment at my local hair salon.

I leave you with this from quote from “Reengineering Retail” by Doug Stephens: “In a world where almost every aspect of our lives has been somehow digitized, experiences that engage our bodies, our senses and our souls are at a premium.” 
Sherry Smithis director of business development at Edge Retail Academy, the leading jewelry business consulting and data aggregation firm.

The Latest

Benjamin Clymer and the Porsche Design x Hodinkee limited-edition watch
WatchesOct 04, 2024
Watches of Switzerland Clocks Another Acquisition—Hodinkee

The company said Benjamin Clymer will return to his role as head of the watch news website, which will maintain editorial independence.

Gabrielle Grazi
MajorsOct 04, 2024
Hearts On Fire Names Gabrielle Grazi VP of Sales, North America

The industry veteran is also the president-elect of the Women’s Jewelry Association.

Ray Griffiths Double Headed Snake Ring
CollectionsOct 04, 2024
Piece of the Week: Ray Griffiths’ ‘Double Headed Snake’ Ring

Slither into spooky season with this scary snake ring that boasts two heads with tsavorite eyes.

Article-Top-Image.jpg
Brought to you by
Enhance Your Expertise with IGI’s In-Person Courses in NYC

This fall, sharpen your skills in jewelry grading, quality control and diamond assessment.

 Hurricane Helene
Policies & IssuesOct 03, 2024
RJO, CERF+ Join Those Offering Hurricane Helene Relief to Affected Jewelers

Plus, how to apply for emergency funds and donate to recovery efforts.

Weekly QuizOct 03, 2024
This Week’s Quiz
Test your jewelry news knowledge by answering these questions.
Take the Quiz
Forevermark store Mumbai India
SourcingOct 03, 2024
How India Became the World’s Second-Largest Market for Diamond Jewelry

A strong economy, a growing middle class with an affinity for brands, and rapid expansion of organized retail have fueled the market’s rise.

Stock image of police cars with lights on
CrimeOct 03, 2024
Man Who Shared Spoils of $2.7M Smash-and-Grab on Social Media Pleads Guilty to Robbery Charge

Ladell Tharpe, 39, took part in a 2022 jewelry store robbery and then posted pictures of cash on Instagram with the text “Robbery Gang.”

1872x1052-Brought-to-you-By-Article-Image-Top (1).png
Brought to you by
Why You Can't Miss JA New York This Fall

Don't miss this one-stop-shop in October, curated with buyers’ needs in mind.

Sheryl Jones
MajorsOct 03, 2024
JA Appoints New Board Director

The trade organization welcomed Sheryl Jones to its board of directors for a three-year term.

Pandora chief marketing officer Berta de Pablos-Barbier
MajorsOct 03, 2024
Pandora Names 3rd CMO in Past 5 Years

New Chief Marketing Officer Berta de Pablos-Barbier has worked for LVMH’s champagne brands and Kering-owned Boucheron.

Assael earrings
TrendsOct 03, 2024
Amanda’s Style File: October’s Arrival

Transition to fall with this month’s birthstones of opal and tourmaline.

Dame Shirley Bassey’s
AuctionsOct 03, 2024
Dame Shirley Bassey’s Diamonds Are Ready for Their Encore

Sotheby’s will auction jewelry belonging to the “Diamonds Are Forever” singer Oct. 10 in Paris.

New Lightbox campaign with Emma Breschi
Lab-GrownOct 02, 2024
Lightbox Continues as a Brand, While Supplies Last?

The De Beers-owned lab-grown diamond company is rebranding and creating new collections, though its long-term future remains unclear.

Jane Goodall Brilliant Earth Campaign
CollectionsOct 02, 2024
Brilliant Earth Debuts Jane Goodall Collection

The collection is part of the retailer’s new “Rethink Everything You Know About Diamonds” campaign.

Tom Brady and his diamond-set Audemars Piguet Royal Oak watch
AuctionsOct 02, 2024
The GOAT’s Stash: Watches Owned by Tom Brady Going Up for Auction

The sale includes the custom-made, diamond-set Audemars Piguet watch the QB wore for Netflix’s “The Roast of Tom Brady.”

Armenian Jewellers Association logo
Events & AwardsOct 02, 2024
AJA’s Design Competition Now Accepting Entries

The Armenian Jewellers Association is hosting its design competition for the second year, with winners showcasing at GemGenève in May 2025.

Retiring Signet Jewelers CEO Gina Drosos
MajorsOct 01, 2024
Signet Jewelers CEO Gina Drosos to Retire

The jewelry retailer has named her successor and also will expand the role of Chief Financial Officer Joan Hilson.

Woman wearing many rings
MajorsOct 01, 2024
Kay Jewelers to Revamp Brand

The Signet Jewelers-owned banner has a new campaign and plans for store redesigns.

JV Insardi Solar Campaign
CollectionsOct 01, 2024
JV Insardi Inspires Curiosity in New Collection

Creative Director Jen Insardi brings a new take on classic gold bead designs to her “Solar” collection.

Stuller 2024 Milestone Anniversary Banquet
MajorsOct 01, 2024
Stuller Celebrates Long-Serving Employees

The manufacturer recognized several team members at its 2024 Milestone Anniversary Banquet.

Oscar Heyman emerald ring
AuctionsSep 30, 2024
Oscar Heyman Jewels, Paraíba Pieces Shine at Bonhams Auction

The single-owner collection sale, which took place in New York last week, achieved $4.8 million, with almost every lot finding a buyer.

Yvonne Leon Noeud Ring
TrendsSep 30, 2024
Amanda’s Style File: Dainty Delights

While statement pieces always shine, it’s time for everyday staples to be the star of the show.

Jewelers of America Fly-In
Policies & IssuesSep 30, 2024
JA Fly-In to DC Focuses on Russian Diamonds, Retail Crime

Jewelers of America leadership and members recently headed to D.C. to share the industry’s top concerns with lawmakers.

Graphic with headshots for My Next Question 2024 holiday season
Recorded WebinarsSep 27, 2024
Watch: Prepare to Shine This Holiday Season

Three members of JA's 2024 "20 Under 40" class join Amanda Gizzi and Lauren McLemore to share their tips for seasonal retail success.

Lalaounis Archaeological Revival Necklace
CollectionsSep 27, 2024
Piece of the Week: Lalaounis’ Necklace is an Archaeological Revival

The necklace, inspired by ancient artifacts, celebrates strength, endurance, and the natural world.

Woman wearing Rocksbox jewelry
MajorsSep 27, 2024
Signet-Owned E-Tailer Rocksbox to Launch on Amazon

Rocksbox is the first banner owned by Signet to sell its jewelry through the retail giant.

Black and white image of Bulova clock
EditorsSep 26, 2024
This New Bulova Documentary Is Perfect for History Buffs Like Me

“America Telling Time: 150 Years of Bulova” dives into the watchmaker’s storied past, from its ad campaigns to the first women’s wristwatch.

×

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