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Data-driven jewelers
For top jewelers, databases and inventory management systems have taken much of the guesswork out of the business of selling jewelry
By Beth Braverman
January 16, 2009
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| The owners of Ralph Miller Jewelers and Gallery in Erie, Pa., took the store from a receipts-in-a-cigar-box system deployed by the previous owner to a fully computerized operation. |
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When Daniel and Janice Niebauer bought Ralph Miller Jewelers and Gallery in Erie, Pa., 15 years ago, the former owner had been running the business with pen-and-paper ledgers and receipts collected in cigar boxes.
The system had worked for decades, supporting a successful store with a strong reputation for quality and service. But the Niebauers knew that to take the store into the 21st century, they would have to introduce computers and overhaul the shop's entire operational system, Daniel Niebauer says.
The company has since thrived using computers to handle back-end operations, while still maintaining the downtown vibe that has appealed to Erie customers for decades. Such foresight and focus has helped place Ralph Miller Jewelers and Gallery among the winners in the America's Best Jewelers (ABJ) Benchmarking Survey.
A reliance on data, documentation and discussion emerged as the key operational best practices among jewelers in the survey.
Winners who spoke with the National Jeweler say they use a mixture of information technology (IT) and stringent documentation policies to ensure that their stores run smoothly on a day-to-day basis. They use data gleaned from in-house IT programs to make plans about future sales and purchasing strategies.
The top scorers in the survey also say they hold staff meetings on at least a weekly basis to discuss data and best practices and to get employee input on store performance.
In a struggling economy like the current one, they focus less on expansion and growth and more on using data to make their stores more profitable and more proficient.
Relying on data
Constant evaluation of data allows jewelers to move nimbly when they sense a problem or change in sales or customer behavior, top jewelers say.
"I couldn't live without my computer and that data that comes out of it," says Susan Eisen, chief executive officer of Susan Eisen Fine Jewelry and Watches in El Paso, Texas. "It's like having an MBA person in your store at all times."
Eisen mines her computer system for all types of information, ranging from best-selling products or salespeople to previous purchases by customers. She can determine sales for any given day or department at any time over the past five years.
In addition, the store's guard performs double duty, not only maintaining safety measures but also keeping track of the number of customers who walk out of the store, their sex and their language. (With the store located in El Paso, Texas, it's important for Eisen to know how much of her client base is coming from south of the border.)
Recently, Eisen changed her advertising and product mix to focus more on men, when she noticed that the store was attracting more male customers than in years' past.
"It's a real lesson for me to learn how one year is different from another," she says. "I am a data person. I believe in using data to project and evaluate your business. I am always evaluating what's working and what's not."
Eisen goes to trade shows armed with reams of information about which SKUs from suppliers are selling and how many of each item the store already has in stock.
"We all think we know what's going on, but when you have it down on paper in front of you, it's so much clearer," she says.
The floundering economy makes it ever more important to keep track of which brands and styles sell best, winners say. They especially look for branded products and exclusive items, which can set them apart from the local competition. Many say they aimed to keep delivery time from suppliers short, enabling them to enhance the breadth of their inventory without spending on the depth of the inventory.
Eisen also uses old-fashioned pen and paper to correspond with her employees. Each employee has a notebook in which Eisen will leave notes about performance or reminders about policies or practices. Employees also fill out daily forms that serve as checklists and help keep track of sales.
"It's a simple thing, but it works incredibly well to keep track of things," she adds.
While none of the winners who spoke with National Jeweler identified specific process-improvement processes, many of their management philosophies seem to conform to the "lean thinking" philosophy of management, which aims to reduce wasted time, energy and money by focusing on those operational activities that add value to the store for its customers. Activities in the second category include customer service initiatives, store design improvements and proper merchandising. "Wasteful" activities include corporate red tape, overpaying for product and bloated receivable accounts.
Of the jewelers who took the ABJ survey, 36.8 percent implemented a lean thinking philosophy in their store and 32.1 percent had a formal continuous-improvement program.
Process improvements that were implemented in 2007 positively impacted sales for 60.6 percent of jewelers, while inventory management brought improvements for 49.3 percent of jewelers and customer service/support created positive results for 44.3 percent of those who took the survey.
Rely on industry organizations
In addition to focusing on data collected in-house, ABJ winners who spoke with National Jeweler say they use data from trade groups such as the Diamond Promotion Service, the American Gem Society and Jewelers of America to make purchasing and marketing decisions. They also often turn to these groups for tips and resources for employee training, which has also become a key part of operational efficiency.
"I believe we are very lucky in this industry to have so many organizations doing research for us," Eisen says. "We have to use that information to our advantage as much as possible."
Winners say they concentrate on keeping their stores environmentally friendly for the good of the community, to attract "green" consumers and to lower costs. They use recycled paper, energy-efficient lights and displays, and some sell pieces made of recycled metals and gemstones that are mined using socially conscious methods.
Winners who spoke with National Jeweler keep costs in line by performing as many functions as possible in-house. Many keep designers, watchmakers and goldsmiths on staff to provide better service and to eliminate the middleman. They also often employ full-time graphic designers, photographers and security personnel.
Eisen says when she cannot carry out a function in-house, she looks for consultants who can teach her how to do it.
"I try to milk people's minds for information and then pay them for it, rather than pay them to do something for me," says Eisen, who has worked with executive coaches, as well as advertising and design consultants.
A database of customers
At Michael C. Fina in New York City, staff members consult a massive procedure manual when they face a task with which they are unfamiliar. The manual will walk the employee through anything from shipping and receiving to quality control.
The store is also fully computerized, employs two full-time programmers and spends about $250,000 per year to keep the system up-to-date, says Steven Fina, the store's retail president.
Like most other winners who spoke with National Jeweler, Michael C. Fina has a central customer database that can provide a detailed purchasing history of each customer along with pertinent information about birthdays and anniversaries that the store can use for marketing purposes. Every time a customer calls--regardless of the reason--an entry noting the call appears in the computerized system under that customer's name.
More than half of the jewelers (53.4 percent) who took the ABJ survey say they employ a centralized customer database.
At Caves Jewelry in De Soto, Texas, owner Jerry Caves chooses to constantly invest and upgrade his information technology system. He believes that continual spending in such areas will save him money in the long run.
Jerry Gause, president of Gause and Son Jewelers, with stores in Gainesville and Ocala, Fla., says that he approaches his business as though it was a larger company.
To that end, Gause holds annual planning meetings in which his management staff gets together to review the previous year's performance and set specific sales goals and targets for the next year.
Gause also empowers many of his employees to change policies or negotiate with customers without having to seek management approval. Giving such authority to staff members gives them a greater sense of responsibility, he says, and boosts the company's ability to react to customer demands.
"We try to run our business like it's a large corporation, even though it's a small business in a small market," Gause says.
Best tips for operations
--Computerize. For a nominal investment, information technology systems can keep track of data and inventory in a far more efficient manner than any other approach. Jewelers who took the America's Best Jewelers 2008 Benchmarking Survey spent an average of 3.3 percent of sales on information technology.
--Hold regular staff meetings. Weekly meetings with employees offer a great opportunity for training and can alert jewelers to any changes that staff members see. They also give employees a greater feeling of ownership and involvement in the store.
--Use outside information. The jewelry industry has dozens of trade groups--organized regionally or by sector--that provide information on best practices and other operational issues.
--Plan ahead. Most winners who spoke with National Jeweler hold quarterly and annual meetings with staff to talk about operational issues and create sales goals and strategies for the future.
--Be nimble. Even though you have an annual plan, be aware of economic and social changes in your community and be ready to adjust your plan as needed.
Editor's note: This story first appeared in the December 1, 2008, print edition of National Jeweler.
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