Think about this quote for a second and ask yourself, does this quote apply to the way you run your company?
You could be the owner of your store for the past 30 years. “If it isn’t broke, don’t fix it.” Not true any longer. It is broke, you just haven’t noticed it.
So what broke?
So lets go back 25-30 years and see how things have changed since you started the store or even how the store differs since you bought it from your parents or the previous store owner.
| |
1975 or earlier |
2010 |
| Markup on diamonds |
100-300% |
30-60% |
| Markup on gold products |
200-400% |
75-150% |
| Overall store gross profit |
65% + |
44-47% |
| Customer’s knowledge of our cist and markup |
Virtually none |
Internet makes competitive pricing a must. Do it or lose the sale. |
| Customer’s shopping the competition |
Looked at 5-7 stores, bought at one |
Goes to 15-17 internet sites 1st, goes to 2 stores, buys from 1. |
| Customer trusting the jeweler as a profession |
Jewelers words were trusted. |
Customer typically has better information than the sales person because of the internet. |
| Customer service |
Many employees in jewelry stores made a full time wage, able to support a family. |
Many jobs, including working in a jewelry store require both spouses to work and pay isn’t competitive and harder for mom and pop stores to get more than just “clerks”. Sales hurt because of this. |
| Repair department as a profit center. |
With high margins, giving away repairs was customer service |
With things so tight repairs must pull their own weight and bring in sales and profits. But the older generation just can’t grasp it. |
| Buying gold products as a gift. |
Price of gold at $300 or below an ounce meant that buying a nice gold bracelet might require the “typical” customer to spend a week’s paycheck to purchase one. |
Forget 3 months salary to buy a diamond (ala Debeers) it takes 4 weeks to buy the same gold bracelet. “It ain’t gonna happen’. |
| The store as an investment |
The store is likely to be given or sold to the children. Life is good. |
The children don’t want to work retail hours and with an education can usually make more money. |
| |
|
|
| Sorry Charlie, its just not the same as it used to be. “Time’s are a-changing” |
If you put a frog in boiling water he’ll immediately jump out. But put him in a warm water in a pan, turn up the heat and soon you’ll have “Boiled Frog’ for dinner!” Slowly he’ll never notice.
That’s the way it is with jewelers. Over time they just didn’t notice what happened in the chart above. Its time to jump out of the frying pan and start a new dish.
You’re insane if you think in 2011 you can run the store the same way as in the past. Customers demand
David Geller
Director of Profit
