This message contains excerpts from the second half of an article I wrote for Canadian Jeweller magazine in its April/May 2012 issue.

Reorder Fast Sellers

One of the key principles of running a jewelry store is to stock and reorder fast sellers. I consult for Focus Business Management Institute in Henderson, Nevada. They categorize jewelry as fast-fast sellers, and fast sellers. A fast-fast selling item will sell in 90 days or less. A fast seller will sell in 180 days or less. Their reports pinpoint for their clients exactly what sold quickly and what they need to reorder immediately, which is critical to proper inventory management.

Often, jewelers think that if an item sold quickly, it won’t sell again. Too often they fear flooding their market with the same item. What makes us think that selling the same item will flood a market of 50,000 people? A fast selling item will sell and sell and sell again month after month. A piece that sells in two or three weeks will often sell 20 times in a 12-month period. This is why we must reorder fast sellers immediately. When an item sells quickly, it’s like a bulletin from your customer. They liked it and bought it. And others will buy if you reorder the item and keep it in stock.

It’s Not the Economy

Jewelers have a tendency to blame slow business on the economy, but 2012 will likely be the biggest year in history for jewelry sales in North America. It is really just the jewelry economy in your area that is important. Sales are being made throughout the community, so the key is how you compete with others in your area. But most jewelers need help to compete effectively. They need an inventory management system to employ disciplines that will help control and manage their business. They also need training on how to use the system, how to work with (and negotiate with) suppliers, and how (and why) to reorder fast sellers immediately.

The Dilemma of Trading Down

The Great Recession in recent years caused a tremendous upheaval in the industry. Many jewelers traded down to silver, bought and refined gold, and purchased diamonds from consumers to stay alive. While these were in some cases business-saving measures, they may not be longer-term strategies to depend on.

Despite the need to hit key price points for consumers, trading down in unit sale is not a good long-term strategy for a fine jeweler. An average store does about 5,000 total transactions each year. If the average transaction (including repairs) is $100, your store will do $500,000. If the average transaction is $200, you’ll do $1 million. The key is to raise your average transaction price in order to raise your overall sales and gross profit. You can only do this by stocking better and better merchandise, and not falling into the trap of doing what you have always done in the past.

Target the Better Customer

Raising your average unit sale by purchasing better and better jewelry will help you target a better and better customer. The image of your store and business – even yourself – is determined in large part by what you stock. Often people will bring you beautiful merchandise to repair that they bought from your competitor because they think of you for repairs and not for fine purchases. To change that, you need to change your thinking about who you are and what you stand for. If you want to be a slave to the bench, keep doing your own repairs. If you want to be a fine jeweler who sells superior merchandise, you have to target the better customer by stocking what they want to buy.

It’s a Tough, but Fun, Business

There are many challenges to running a jewelry business today. You need capital, so you need the bank and a line of credit. You may have interest to pay and liquidity issues. But you need to run your store in such a way that you can make a good livelihood and a good profit in return for your hard work. There is no substitute for having an inventory management system today, and learning how to use it to run your store as a business.

Here are a few Business and Life tips to think about:

Business Tips

• As a retailer, it is better to lose a sale because you won’t give a discount than lose a sale because you don’t have the right stock.
• Leaders are learners. They constantly improve and innovate as a result of being propelled by their own initiative.
• Compromise isn’t a cop-out. It’s an intelligent way to reconcile differences. You can have team unity without having uniformity.

Life Tips

• Stop sitting on the sidelines waiting for others to lead. You have it in you to do much more. It’s time to move forward with conviction.
• We tend to take ourselves and others far too seriously. Isn’t it time to back off a little, relax, and laugh more? You’ll have a lot more fun, and likely be more successful.
• Insecure people fear revealing their true selves, and instead try to dominate others. Stand tall against such weak people.

Tags: Advice, Business Tips, Crisis Management, Leadership Skills, Management, Project Leaders, Reality