Jewelers of America's 2003 Cost of Doing Business Survey shows how high-profit companies pulled it off
Last year was challenging for retail jewelers, but some businesses managed to remain highly profitable, according to the 2003 Cost of Doing Business Survey, which was released recently. How did these jewelers do it? Heres an analysis.
The survey defines high-profit companies as those in the upper 50% of all companies as ranked by the ratio of earnings before interest and taxes to total assets. In the chart on the facing page, a number of median key performance measures for these high-profit companies are compared with the same median key performance measures for all the companies in the survey.
Its interesting to note that attention to detail may be what separates higher-profit companies from other jewelers. Higher-profit jewelers sell more per square foot, turn over inventory more frequently, have a higher gross margin return on inventory, hire sales associates who sell more and keep payroll and overall operating costs lower.
The survey also shows some other overall strategies jewelers use to increase sales and profitability, such as expanding into the incentive business, focusing inventory on best-sellers, dropping slower moving lines, buying or making unique items, selling more estate jewelry, emphasizing service, training staff to sell quality rather than price, using technology more effectively online and in the store focusing on professional women and considering joint promotions with non-traditional partners.
How Do You Compare?
Jewelers who wish to compare their numbers to others like themselves can order the full survey, which reports the same financial performance measures in the chart for various subsets, including high-end independent stores with sales under $1.5 million and over $1.5 million; independent stores with medium-priced goods and sales under $500,000, from $500,000 to $1 million and over $1 million; designer/artist/custom stores; and jewelry chains with sales over $12.5 million.
The full study includes other performance measures for each subset of jewelry stores listed above. It also includes full instructions on how to compare your stores financial numbers with the surveys, as well as the significance of each measure.
To order the 2003 Cost of Doing Business Survey, sponsored by Jewelers of America and Professional Jeweler ($19.95 for JA members, $125 for non-members), call JA at (800) 223-0673 or visit www.jewelers.org. You also may order the survey on www.professionaljeweler.com or by using the order form on page 60 of this issue.