Latest News
|
|
|
America's Best Jewelers: Inventory Management
How do you keep merchandise on the move? Some of America's Best Jewelers share tips.
By Michelle Graff
February 22, 2009
Having the right inventory is a key component of operating any retail store, but it's especially crucial for jewelers, who face the challenge of selling expensive merchandise that often turns at a notoriously slow rate.
Four of the retailers chosen as members of the first class of National Jeweler's "America's Best Jewelers" program discuss their inventory-management strategies.
Jewelers who participated in this discussion were: Scott Brown, vice president of Benari Jewelers in Exton, Pa.; Steven Goldfarb, president of Alvin Goldfarb Jeweler, with stores in Seattle and Bellevue, Wash.; Lucian Lee Jr., owner of Hale's Jewelers in Greenville, S.C.; and Rex Solomon, chief executive officer of Houston Jewelry in Houston.
Question: Which tools and tactics, including software systems, do you use to forecast sales and purchase the right merchandise?
Goldfarb: Our software system [we use Applications Systems Corp.] gives us great information. That being said, the system is only as good as the person using it. We re-order fast sellers on a weekly basis and use the information to double up on best sellers as we approach the holidays.
We [also] make use of RMSA, an inventory-consulting firm. They analyze our information and create an open-to-buy plan. They have a much more dispassionate way of looking at my business.
Lastly, I don't underestimate the ability of my salespeople to sell something they truly are excited about. We have been known to deviate from our plan when a special opportunity or item presents itself.
Brown: We use RMSA to forecast open-to-buy in various departments. We do a weekly fast-sellers report on key brands--Hearts on Fire, David Yurman--and watches, to make sure we are always in stock on our best sellers.
Lee: We use a software and management system called Focus Business Management. It gives us a daily, weekly and monthly view of each vendor's inventory: age of inventory, best sellers, etc. This has become an important part of our daily business.
Solomon: We have used Radiant System's Counterpoint since 1993. I look at category sales, compared with the last year, trends, price points and margins. I then look at the inventory on hand and see if the levels are appropriate to support the projected sales. I look at items that have sold, how long the items were in stock, when they sold and what was the return on those items. Lastly, I look at aged inventory.
Question: What is your strategy for selling slow-moving merchandise?
Brown: Spiffs are the key--let the staff make some extra money and they will solve this problem. We also have a customer-appreciation event once a year for dated merchandise. We don't discount throughout the year, so this day has become huge, and clients understand why they are getting the price.
Solomon: (We) stock balance (swap slow-moving merchandise for new items) what we can. If we can't, it goes into our clearance case, and I offer a spiff of $25 per unit sold.
This case is in one of the highest traffic areas of the store, by the main cash register and, as a result, there are a large number of add-on and impulse purchases. If an item doesn't sell in that case after a while, we restyle it, or break it up and scrap it.
Goldfarb: We re-price goods to better fit better price points. We have a special value case where our old dogs go to live.
We also scrap and melt down goods. Yes, we lose money on this, but we lose money on the older pieces everyday.
It is actually very satisfying to rid yourself of some of these things.
Lee: We tag merchandise, give spiffs and work hard to keep the staff informed of aging inventory.
I try to remember that it is an asset, and try not to just give it away. We try to trade back with vendors, but this is not the entire answer for us, or our vendors.
Question: What impact has the credit crunch had on your ability to obtain merchandise in recent months, and what do you expect in the coming year?
Solomon: No impact so far; in fact, we have been inundated with offers of memo merchandise from scores of vendors. Some we haven't worked with in years, [and] others we have never worked with.
Brown: We were very conservative with our inventory in the fourth quarter, so our payables are down. Like most people, we have enough inventory to have another Christmas right now, so we are not worried about getting new merchandise.
Goldfarb: I expect it to have a dramatic effect on our industry. Banks will be tighter with both suppliers and retailers. We will have to work together better, basically pooling our credit. It is not a good time to have too much debt.
Lee: The credit crunch and the economy have certainly affected our sales [but] so far we have been able to obtain merchandise. I am sure as the tightening continues, we all will be affected.
Question: What are your thoughts on obtaining goods on memo?
Brown: As far as memo, we do very little of it, unless it's a key category where the vendor is supporting a program. We try to stay away from it. Often, you are creating an invoice when you could have sold another item.
Lee: Memo is an asset if it is understood and managed the right way. It is a small part of our strategy and we will continue to use [it], assuming we have willing vendors.
Solomon: Absolutely; there is a lot of talk from vendors about being "partners" with a merchant with memo, which is truly the case.
If a manufacturer is confident in his products, then he/she should not be worried about sending goods on memo, and a good merchant should be glad to have more merchandise to sell that only comes with a contingent liability.
Goldfarb: I have always made use of memo but have tried not to abuse the privilege. My current goals are to sell down as much of my inventory as I can. Right now, memo is not my friend.
Editor's note: This story first appeared in the February 2009 print edition of National Jeweler.
|
|
More Brand Profiles
A night out at the New York City Ballet or Jazz at Lincoln Center is bound to be memorable, but Movado hopes to help make it more so with a new version of its iconic "Museum" watch. Read More
|
Small multi video player located on right rail of NJN site
|
Save
E-mail
Print
Most Popular
RSS
Reprints
