Would you invite my wife Renie and me to your home for Thanksgiving?
I’ve asked many a store owner this question after assisting them in their store or helping them by connecting to their computers over the internet and showing them were inventory is killing them.
Bluntly, I help a lot of jewelers make money from the shop in addition to helping them reduce unwanted and unprofitable inventory.
Inventory that does not sell is the #1 killer of jewelry stores. It ranks above slow traffic and low repair prices.
So I plod along, day in, day out getting jewelers to make more money from the shop and get them to understand HOW to read inventory reports, particularly from The Edge and Jewelry Shopkeeper.
So I then ask them THIS question. Their responses are indented:
“Now that I’ve helped you out, would you invite my wife and Renie to your home for Thanksgiving?”
“You betcha! It would be a pleasure and honor.”
“What day is Thanksgiving?”
“Why, it’s always Thursday, the 4th Thursday of November.”
“O.K., so if we fly in Wednesday, could we possibly stay in your home?”
(Slight pause) “Sure, we have room”
“Great, thank you and we’ll be there. Would it be a problem to stay over through Sunday?”
“No, that would be a problem.”
“Any possibility if we would have to, to stay through the following Wednesday?”
(Bigger pause) “I’m not sure; I’ll have to ask my wife.”
“How about staying for a month?”
“Now, you’re pushing it David. I’ll have to say without a doubt, NO!”
“So let me get this straight now. I have easily helped you gain an extra $50,000.00 in shop profits, helped you set up your QuickBooks correctly and showed you the secrets to inventory control and you won’t let me stay ONE MONTH IN YOUR HOME!!!!!!
But you’ll buy inventory that doesn’t move in a year and you will NEVER ASK IT TO GET THE HECK OUT OF YOUR STORE, but David Geller’s got to go after a month!”
Man jewelers are GREAT at buying, but even though they think they can sell (which moves product) they’re not so good at moving ALL products.
See for every action there has to be an equal and opposite reaction!
So if you BUY 500 pieces of jewelry in a year, then you must MOVE 500 pieces of jewelry in a year!
So if you sell 385 pieces then you still have to move the remaining 115 pieces within months 12-18. They can’t stay around to see month “19”.
Why? Simple:
1. There’s a difference between making money and having money.
a. If you buy 10-$100 chains from Leslie’s, you’ve spent $1000. If you keystone, a $100 chain sells for $200.
b. If you sell one chain for $200, did you make any money? If you said “no”, you’re wrong. You indeed made money, a $100 gross profit.
c. The question is “Do you HAVE any money?” At the moment the answer is NO. You made a profit selling one chain, but you owe Leslie’s $1000 and only took in $200. Hopefully you’ll sell all 10 years within 12 months. If you do, you’ll
i. Make money
ii. Have money
2. Inventory levels over 1 year old usually equals a store’s total debt within 15-20%. Just look at a report of aged inventory over a year and then add up total bank loans, officer loans, accounts payable and credit card debt and you’ll be quite surprised.
3. No different than clothing, you must get rid of over 1 year old inventory because:
a. It will go out of style.
b. It for sure “goes out of money”
c. You’ll need the money, even if you only get your cost out of it, to pay for newer merchandise.
If you did nothing other than copy Macy’s, JC Penny’s, Neiman Marcus, Office Depot and car dealers and got rid of inventory at the end of the season, you’d then make money and have a LOT of money.
But thanks for the offer, I think Renie and I will have Thanksgiving dinner with our family here in Atlanta after all.
David Geller
Director of Profit
www.JewelerProfit.com
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