Sterling keeps rivals at bay with savvy staff

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Sterling keeps rivals at bay with savvy staff

By Michelle Graff

May 15, 2009

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Exclusive product ranges, like the "Open Hearts by Jane Seymour" collection, help Sterling stand out, says President and Chief Executive Officer Mark Light.

Editor's note: This Web-only exclusive accompanies the print-edition release of National Jeweler's State of the Majors 2009 and is the first in a three-part series in which NationalJeweler.com profiles some of the largest jewelry chains in North America. Look for our Zale Corp. profile on Monday, May 18.

Akron, Ohio--Sterling Jewelers has watched countless competitors drop out of the running recently, felled by a deadly combination of slow sales, too much debt and too little cash flow.

Financial woes forced Friedman's and Whitehall Jewelers to file for bankruptcy in January 2008 and June 2008, respectively, and ultimately both were forced to liquidate.

This year, Fortunoff Fine Jewelry and Silverware and Christian Bernard Stores Corp. also closed shop, opening up opportunities for competing stores that have survived.

Enter Sterling, a 1,401-store chain with headquarters in Akron, Ohio. A subsidiary of Signet Group, a British company with U.S. headquarters in Bermuda, Sterling operates Kay Jewelers and Jared The Galleria Of Jewelry stores, as well as a number of regional brands.

Though Sterling's same-store sales for fiscal year 2009 declined 9.7 percent, the company showed some improvement in the first 13 weeks of the new fiscal year, when sales fell only 2.6 percent and same-store sales dipped 2.9 percent, with Valentine's Day sales cited as holding strong.

While the chain's management believes Sterling has a number of strengths, President and Chief Executive Officer Mark Light says its main advantage is having a skilled staff, both behind the jewelry counter and at its corporate headquarters.

"You've got to start off in the jewelry industry having well-trained people with good attitudes waiting to help out our customers and our guests," he says. "After everything has been said and done, we believe our continued success all boils down to the people that work in this company."

That is why Sterling puts an emphasis on employee training, especially when times get tough.

In a recent filing with the Securities and Exchange Commission, Sterling states that in fiscal year 2009, the company focused its training programs on "developing selling skills appropriate for a challenging marketplace."

Elaborating on this training, Light says last fall, liquidation sales at mall competitors Friedman's and Whitehall, plus the major markdowns made by competitor Zale Corp., posed a challenge for sales associates.

"We weren't having those types of sales in our stores," Light says.

Sterling, instead, trained sales staff to emphasize quality, the warranty behind the pieces it sells and the overall strength of the company to shift the discussion away from price.

Another advantage in Sterling's court, Light says, is its exclusive collections, such as the popular "Open Hearts by Jane Seymour" line introduced last spring and presented over this past holiday season.

Moving forward, Sterling, like so many retailers, is keeping it lean.

After opening 104 stores in fiscal 2007, 108 in fiscal 2008 and 77 last year, the company plans to open just 15 new stores in fiscal 2010, according to the SEC filing.

In addition, the company plans to close 75 locations in fiscal 2010, the same number as it closed in 2008 and up from 17 in fiscal 2008 and 2007.

Regional brands are first on the chopping block.

"If a regional brand store is not being profitable, and we have a Kay store in the mall, it's more likely we're going to close the regional brand," Light says.

But the company, whose regional brands include Belden Jewelers in Kansas and the Northeast, and Friedlander's Jewelers in the Northwest, has no plans to exit the regional brand business entirely, he says.

Light also says the company has conducted experiments to see if any of its regional brands could be catapulted into a third national mall brand like Kay.

"As of yet, our tests have not been successful," he says.

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