High-profit companies set the gold standard in Jewelers of America's 2004 Cost of Doing Business Survey
For many of you, mastering sales techniques is pretty clear-cut. Mastering profits maybe not so much. But jewelers who combine their focus on short-term sales goals with a vision for long-term growth reap some pretty major rewards.
High-profit jewelry retailers those who already know the short and long of running a business nearly doubled their profitability last year, according to the just-released 2004 Cost of Doing Business Survey, sponsored by Jewelers of America and Professional Jeweler.
The study defines high-profit jewelers as the upper 50% of all companies as ranked by the ratio of earnings before interest and taxes to total assets. That ratio rose from a respectable 10.8% in 2002 to an enviable 20.5% in 2003. The ratio for all companies surveyed rose from a paltry 4.2% to a nearly equally paltry 6.7%.
The secret of enviable vs. paltry profits lies in some business operation statistics that, admittedly, might cause your eyes to glaze and your mind to wander. But the Cost of Doing Business Survey makes it easier for you to understand the correlation between profits and sales per square foot, turnover frequency, gross margin return on inventory, payroll and overall operating expenses.
High Performance Yields High Profits
The accompanying chart shows that high-profit jewelers do better than the total group of respondents on all these and other key performance measures. The strategies they use to increase sales and profitability include:
Stellar inventory management, always having in stock the best-sellers and dropping slow-moving lines.
Interesting products, including ordering and making unique jewelry, watches and giftware that consumers cant find in other stores.
Staff training, including how to explain each product and how to appeal to each customer demographic.
Top-notch customer service.
Alternate markets, including the incentive market, fine giftware, and estate and antique pieces.
Setting their image through intelligent promotion and advertising, an Internet presence, product selection and store design.
Your Spot on the Spectrum
The full study allows you to compare your statistics with those of high-profit companies and other subsets, including high-end independent stores with annual sales under $1.5 million and over $1.5 million; midrange independent stores with sales under $500,000, between $500,000 and $1 million and over $1 million; designer/artist/custom stores; and jewelry chains with sales over $12.5 million.
The study includes other performance measures for each subset of jewelry stores. It also includes instructions on how to compare your financial numbers with the surveys, as well as the significance of each measure.
The 2004 Cost of Doing Business Survey costs $19.95 for JA members and $125 for non-members. To order, 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 55 of this issue.