Jewellers must focus on their ability to sell diamond product, a sector that receives less competition from non-jewellery retailers than other product lines such as silver and watches. Furthermore, diamond product offers a higher average sale and good profit margins when executed correctly.
How do your diamond sales compare to other stores not only within your area but across the industry as a whole?
Given the amount of comparison data now available, all jewellers should know how they shape up against the rest of the trade.
It can be hard to compare a $1 million store with a $4 million store but these three criteria will allow comparison across stores of different sizes.
1. Margin
Diamond sales can take many forms. The biggest concentration is usually in the area of rings; however, stores can fail to give adequate attention to other lucrative areas, including pendants, bracelets and earrings.
Even within the ring market, storeowners can focus too much on the bridal market, neglecting opportunities that exist in anniversary, gift and right-hand rings. Loose stones also offer a chance to add good sales and healthy margin to the bottom line.
2. Sales per unit
You may make fewer unit sales than a larger store but that doesn’t mean your average sale, your percentage of sales attributable to diamonds or your achieved mark-up have to be any different.
Once you have drawn a comparison, consider how can you lift your percentages in those product areas that perform worse than other stores.
Let’s start with diamond rings – how does your percentage of sales compare to others?
How does your average sale and margin compare? Do the same exercise across each diamond department and determine where you are ahead and where you are behind.
3. Percentage
The average store benchmark for diamond jewellery as a percentage of total storewide sales has been in the high 30 per cent to low 50 per cent range. This means that the typical jeweller will be getting half of their total sales from diamond product.
This number took a dip during the most popular period in the bead market but has now bounced back substantially.
In fact, as competition in other areas has increased, our comparison of monthly store data shows that diamond sales are now at their highest historic level for many jewellers in terms of contribution to sales and profit.
Diamonds in the spotlight
Step outside your store and look at your windows. Does your store say ‘diamonds’? This is your most prominent marketing channel; you can invest all you want in promoting diamonds but if your store windows don’t say diamonds, you won’t be in alignment.
Do you have effective lighting? This is one of the main areas where storeowners can let themselves down. Diamonds must sparkle if you want to get the results. Are the gems displayed as though they are special or do they look like part of the rank and file? Are your tickets tidy and clear to read? Are they fresh or tatty?
What happens when your consumers step in-store? Does the store itself reflect the inventory in the window?
I know storeowners who display everything out front but then have nothing to appeal to customers who enter – the window may say one thing but the store says something else entirely.
Current styles
You need your internal inventory to match the external. It is also imperative that tickets are well displayed and prices are easy to read.
Are your styles current and popular or are you filling your displays with items that have sat around for two or three years and aren’t earning their keep? Are you guilty of carrying too much product?
Research has shown that a customer will make no selection at all when given too many choices.
Good restaurant owners know this by ensuring their menus only offer sufficient choice to meet the customer’s needs. This is a great lesson for any storeowner to consider.
Diamonds must be a key focus of any jeweller’s overall business strategy.
Taking the time to compare your performance to others can be the most effective benchmark of all.