Jewelry Business Insight

"Less is More" When it Comes to Inventory Amounts or Display Windows-en

"Less is More" When it Comes to Inventory Amounts or Display Windows-en

A jeweler recently posted a question to his fellow jewelers asking their opinion on his window display. He's in a jewelers building in a major city and of course the first floor gang has many advantages. Fewer people make it up to the upper floors and his thought was show'em what you got!".

Hit them with a large selection. Lots of items on display in neat rows.

As many know I'm a big proponent of having "so much inventory". The amount of inventory to own in total is about the amount in dollars you expect to sell this year at cost. Sell that dollar amount and you'll have a turn of "1.0". Simplistic but this is the place to start.

When I speak to jewelers I usually ask: "How much inventory do you own?"

I always get a dollar number: "Seven hundred and fifty thousand dollars."

This is what a Polygon jeweler 8 years ago said to me when I asked him the same question how much inventory he had: "1500 hundred pieces with 1200 under stock"

I said "you have 1200 pieces under the case or in the safe? Really? Why?"

His intention was never to do that but the cases were so full that it was a mish mash. He had 2700 pieces and it was too crowded so he decided to take half of it out and display 1200 pieces in the cases and spread them out. The rest went into the safe.

Of course I asked the question "so what happened when you reduced stock in the cases by half?"

He said: "Time to sell a customer dropped and the average dollar sale increased."

Too much is too confusing.

If he needs to show something that's not in the case he says: "Hold on, I have something special in the safe not shown here in our showroom, let me get it for you."

Everyone likes specials from the back room or safe.

I have my ‘number’ for how much inventory you should stock, here is my theory:

Most all jewelry over 1 year old is dead inventory. Keep inventory levels, as much as possible, equal to the amount of sales (at cost) you expect to sell in one year. (That’s a turn of "1.0" if you're successful.)

Very simple, reorder items that sold last week that were here for 6 months or less and get rid of year old inventory and you'll have very little debt, increased sales and cash in the bank.

So going back to the jeweler with 2500 pieces he gave me HIS ‘number’ for selling success.

"6 pieces in the case per linear foot."

A 6 foot long case should have no more than 36 pieces.

A short story about a jeweler who was given this advice=====

I visited a particular jewelry store every January for 7 straight years. I would help him with his QuickBooks and POS system along with his shop organization. Every January I did his projected budget for the year. He used my numbers for his sales goals each month.

He loved to buy jewelry, absolutely, loved it. So much so he'd give vendors post dated checks to get even more inventory.

It was a beautiful place. The cases were packed. Ring trays had 2 rings in each slot. Neck displays had 3 diamond necklaces, each held up in its spot with scotch tape. Many ring trays had drawers under the tray with even more rings.

So I shared the story about too many PIECES in the cases. His cases were like grocery store shelves. I really didn't expect him to follow my advice.

Because: He loved to buy.

A year later I come back for another budget session and was wowed by the difference in the look of the cases. The cases are awesome looking! A dramatic drop in quantity, in each and every case. They looked GREAT, things were spaced out. You could actually focus on one piece at a time.

I said "what the heck happened here? OMG!!!! Where is everything?" "In the vault"

"What happened when you reduced the number of pieces in the cases?"

I was amazed by his answer.

"Time to sell a customer dropped and average dollar sale increased."

Imagine that.

There is a fascinating short video on what happens when humans have LOTS of choices versus fewer choices. It’s on I love, weekly there's a different short video by world famous (and not so famous) people sharing terrific stories and how to's.

David Geller

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