jewelers should meet the new challenges and change

jewelers should meet the new challenges and change

Before you continue enacting the changes the experts have been recommending, such as--A) Redecorate the store B) Retrain your salespeople C) Create a Web presence D) Develop a store brand E) All of the above--let's take a look at one independent jeweler that has done few, if any, of the tasks above, and is prospering nonetheless.

In fact, the store I refer to reported a 21 percent sales increase for the first two months of 2010, as compared to the same period of 2009. It had a slight sales dip of 2 percent in 2009. The store is "nicely" profitable, the owner told me, and has never shown a loss in its past 20 years of business.

How is that possible, you ask, with all the changes that jewelry veterans, myself included, have vociferously deemed necessary for jewelers who want to meet the challenges of the new economic and retail landscape?

Maybe some of the recommended changes aren't needed after all.

Using "Capfield Jewelers" (the name has been changed at the bashful owner's request) as a kind of a laboratory experiment, let's put the store's operation under the microscope and see if it might provide a lesson or two for all of us.

Below, I've graded the operation's various components either Good, Fair or Poor. You may want to assign different grades.

Location: The store is in the middle of a small, high-traffic strip mall in a middle- to upper-middle class town with a population in the neighborhood of 60,000. The mall has ample and convenient parking. The other retailers in the mall-a military recruiting office, a Subway sandwich shop, a hair salon and a video store-are generally busy. The mall is across from a national grocery chain and a large hardware store.

Competition: Capfield's competition stems from two large malls nearby, each of which contains an abundance of nationally known jewelry stores, although several have disappeared. Another rival is a large jewelry store which is operated by a regional chain and is located in the center of town. That store lacks both convenient parking and small-town flavor, however.

In-store merchandising and sales strategy: The Capfield store is rectangular-shaped, moderate in size, brightly lit and efficiently laid out. The displays, light camel in color, are more basic than fancy. Inventory seems plentiful, although again, the merchandise is more basic than fancy. Capfield feels strongly about buying from U.S. manufacturers only, and usually purchases one of each style. The owner does not operate a Web site and, by extension, he does not do any social networking.

While most of the store's sales are of gold and diamond jewelry, the jeweler does sell some watches and sterling silver. There is no Capfield brand.

There is also no formal product discounting or any storewide merchandising philosophy. The three salespeople, a team that includes Mr. Capfield, are extremely well trained.

Rating: Fair

Local advertising: Mr. Capfield targets the local, adult female who seeks basic jewelry designs and services. He markets his store as being run by a reliable, friendly staff that offers competitively priced merchandise. He is a regular radio advertiser who also places ads in the local newspaper and in the ad slots provided on shopping carts at the large grocery store across the street. He is well-known in the community.

Financial position: Although Mr. Capfield did not grant me access to his financial statements, it is obvious that his cash flow and profitability ratios are in good health. He uses no bank financing. Evidentially, he does not believe in taking merchandising, inventory or advertising risks. There is no way of telling what would happen--positive or negative--if he did.

It is safe to say, however, that had Mr. Capfield taken a greater risk position, be it deeper inventory, more brand development, store expansion and the like, he could have been caught in the turmoil of the 2007 through 2010 recession.

It would be easy to say that, generally, any jeweler who takes a conservative and practical management style in managing his store will come out ahead. Capfield Jewelers is a good example of such conservatism.

On the other hand, it is difficult and takes great discipline to turn down some of the growth opportunities facing today's business owners, in general, and today's jewelers in particular. Eventually, a few jewelers will step up, regardless of the risk, take a deep breath, look forward and take a plunge. Good luck to them.

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