A simple plan to track which diamonds are selling helps you know which
ones to buy
|PLAN FOR PROFITS
Diamonds hold the biggest potential for profits and pitfalls in jewelry
stores. Several seminars organized by Charlotte Preston Catalysts, White
Bear Lake, MN, at the Reed/JCK Show in Orlando, FL, discussed diamond profits.
Beginning on this page we highlight three of the seminars.
How to stock effectively isn't one of the glamour topics of jewelry store
management. It ranks right alongside budget reconciliation and janitorial
Effective stocking may seem to require a magic formula known to a lucky
few. In reality, it's a simple matter of spending a few hours each month
to track and analyze what you sell so you know what to buy. Mark Moeller,
president of R.F. Moeller in St. Paul, MN, explains how this can improve
It all begins with a K.I.S.S. (keep it simple, stupid), says Moeller.
First, develop simple goals. If you sold $100,000 in diamonds last year,
plan to sell $110,000 this year. The amount isn't as important as setting
the goal. Second, plan how to reach these goals. If you notice there wasn't
much demand for certain sizes of diamonds last year, for example, invest
that money instead in sizes that did sell. By following his own advice,
Moeller increased his total annual sales from $750,000 to $6 million in
the past decade. "The results may not come tomorrow, but they will
come," he says.
Right Diamond, Right Price
The key to having a good diamond stocking system is having the right diamond
at the right price at the right time. When this happens, your turnover increases,
which increases your cash flow.
To make sure you have the right diamond when the customer wants it, develop
good relationships with vendors. Remember it's a two-way street. A return
privilege is reasonable to expect from your vendor, he says. It's also reasonable
for your vendor to ask you to keep a certain stock in the store, he says.
Stocking effectively also requires you to limit your number of vendors
so you become more important to them by virtue of the size of your orders.
You'll be able to buy better and get more competitive pricing, he says.
To make effective use of this retailer/ vendor relationship, Moeller creates
simple Excel spreadsheets for each major category of diamond: round, fancy,
off-make, etc., for each of his two stores. Across the top of each page,
he lists 14 carat weight categories. For each one, he creates two columns:
one to list what he would like to carry (pared down for budgetary reasons
from an original wish list) and the other to list what he has in stock.
Down the left side are all the color and clarity grades he carries. "It
looks complicated, but it's simple to understand and analyze," he says.
"Within 10 minutes, I can analyze my stock and order what I need."
He then takes a matrix to a supplier and promises to keep everything
on the list in stock if the supplier commits to keeping enough of each size
and quality on hand with certificates for quick replacement.
Moeller analyzes the matrixes monthly, semimonthly or weekly depending
on the time of year to make sure he's meeting his goals.
Don't avoid this because you think you're too small, he says. It's often
easier for smaller operations because there's not as much information to
track. "I guarantee a huge increase in your diamond business,"
by Ren Miller
Copyright © 1999 by Bond Communications.