The Store / Managing: Your Business Plan
How to Survive in Business
Create a plan for today's changing retail jewelry environment
by Keith Brown
More than ever, retail jewelers are searching for ways to survive in a turbulent marketplace. Consider that more and more suppliers are positioning their businesses vertically to control branding and pricing from manufacture to end consumer, that Internet and mass market retailers such as Wal-Mart are forcing prices 15%-20% below suggested retail and that higher end vendors such as Tiffany, David Yurman and De Beers are opening their own stores.
This convergence will lead to selective consolidation, with high-margin branded products available to fewer retailers. This means your chances for survival will be based on volume selling or reshifting business to more profitable areas.
The jewelry industry looks to be following the lead of the apparel industry, which evolved in the past few years into three primary sectors: low-price/high-volume stores such as Wal-Mart, department store chains such as Federated Department Stores and vertical brand retailers such as the Gap, J. Crew and The Limited. Along the way, the number of independently owned apparel stores fell dramatically as vendors of branded merchandise became more controlling of their distribution.
You cant afford to wait to find out whether the same will happen in the jewelry industry. Look strategically and evaluate every aspect of your business (see Evaluating Your Business).
If its time to move in a new direction, consider these options:
- Create new partnerships with vendors or even competing stores.
- Discard non-performing lines or non-profitable business segments.
- Allocate more resources to profitable business segments.
- Buy another business or expand into a new business category.
- Introduce new marketing initiatives.
- Make key personnel changes.
Dont take baby steps. Take a definitive stand for your business and then execute a plan thats justifiable to the market you serve and profitable to you.
|Evaluating Your Business
To begin the self-evaluation process, choose an associate or third party and then step away so that person can critically assess each part of your business independently. The person should help you review these points:
1. Define your unique selling proposition. You may have a terrific selection of diamonds, designer jewelry and watches, but your customers may be interested in only one of these categories. Do you have expertise that sets you apart from your competitors? Is it location, service, product selection, advertising?
2. Why do you carry the brands you do? Is your business solely dependent on a few superstar brands or is your store a brand also? If you sell a brand, there must be a strong basis to justify your investment. Remember you define yourself by the brands you represent.
3. What do your customers think of you? Their perception of your business may differ from yours. What do you offer thats unique, sustainable and loyalty-driven?
4. What are your business strengths? Do you have the financial resources, organization and personnel to support and sustain your existing business or a new initiative? Do you have reliable and trustworthy product sources? Is your customer base expandable?
5. Do the numbers. Does your business model make economic sense? Evaluate the margins, cost of goods and expenses for each category of your business to determine which ones are profitable.
6. Value your business. What are the tangible and intangible values of your business? Understand theres a subjective factor in all business valuations, depending on the needs of the market or a buyer.
Keith Brown is a director at MMG, New York City, an investment banking and consulting practice focused on the fashion, jewelry and diamond industries. He can be reached at email@example.com.