Understanding why your jewelry stock turn slows down is vital to your jewelry store’s profitability.
It is only after we understand why it slows down that we can take the necessary steps to change it.
For most independent jewelers their largest asset is their merchandise, thus we have to ensure that it is working hard for us through higher, more profitable stock turns.
Consider this tidbit:
“Storage costs, insurance, pilferage, damage, obsolescence, taxes, and interest
on loans add up to 30% annually to the cost of the goods you carry”.
By Bob Epstein in an article dated August 2nd, 2010 in Southern Jewelry News
Common Reasons For Jewelry Stock Turn Slow Downs
– Broken assortments.
When you launched that shiny new product line you had a strong assortment of their top sellers, as well as, accompanying suites.
The display told a compelling story and as a result, sold well initially.
Today the top sellers are gone, suites are incomplete, and you haven’t reordered the fast sellers.
Now you are left with the less desirable pieces and thus stock turn drops.
At this point make a decision.
Either restock the assortment or,
When In Doubt – Markdown / Melt / Donate
– Expired merchandise.
How old is the merchandise in your case?
If your assortment has been seen by your clients for 12 months and is still in the case, then that should send a clear message to you.
As jewelers, we tend to fall in love with our purchases.
We find it hard to imagine our clients not loving it as much as we do, thus we begin to rationalize why it should sit in the case “just a while longer”.
Mrs. Jones just had to have this one of kind peridot, onyx, pink tourmaline, citrine stick pin in the shape of her lucky number “62”.
Since Mrs. Jones was a good client we only asked her for a 10% down payment.
Now the client has decided that “26” is her lucky number and the $2,500 retailed stick pin now sits in our case.
-Special orders/custom pieces.
It is through special orders and custom pieces that are not picked up / non-returnable that our cases slowly begin to fill with slow turning merchandise.
It is subtle, one piece at a time, and with each dead piece, your stock turn gets slower and slower.
Always require a non-refundable down payment on custom pieces or special orders that covers your cost and shipping.
If the item is not picked up then immediately evaluate the worthiness of the item to sit in your case.
– Redundant product lines.
Do you have redundant product lines in your store?
Are two lines fighting it out for the same client dollar?
If so, evaluate the two lines, make a sound financial decision, and drop one of them now.
We see this more often in gemstone programs where we are trying to be all things to all people.
Go back to your mission statement to determine the direction for your store and reevaluate the lines.
If you look at your product line assortment through fresh eyes you will be surprised how duplicate lines may have crept into your store and slowed your stock turn.
Merchandise sitting in your cases that is over 12 months old is slowly eating away at the profitability of your jewelry store.
Consider these four problem areas as you constantly evaluate how hard your largest asset is working for you.
Always remember that there are definite reasons why your jewelry stock turn has slowed down.
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The host of “Inside the Jewelry Trade” Radio Show – Jewelry Business Strategist – President of Four Grainer LLC. Author of the business books “A Reason To Chant,” and “A Reason to Chant – Jewelry Trade Edition.” Rod lives in Atlanta with his wife and two almost-human cats.