Almost daily I find myself talking to a retailer or a supplier about how tough business is at the moment.
There’s no doubt that we’re seeing some of the most difficult retail trading in a long time, and not just for jewellers. All retail sectors are struggling, but I think jewellery retailers are doing it particularly tough, and no one seems to know why.
Consumers have money; they’re just not spending it – well, not as they used to.
Some people blame nervousness in the world economy, especially the continuing problems in Europe, while others point to a so-called slowing of China. Many with whom I speak say that the current Australian government has much to answer, and point to the upcoming election as a reason why consumers have stopped spending. Others say internet retailing is the cause.
It’s probably a combination of all of these and nothing changes the fact that it’s tough out there.
During one conversation with a retailer, I asked what he was doing to counteract these difficult times. He explained that he had tried to turn a negative into a positive and had taken the opportunity to clear-out all his old stock. In fact, removing his dead stock had become a mission for him, and he’d been using a whole raft of strategies to achieve it – some of which he found in this magazine.
His aim was to turn all that dead stock into cash, no matter what he had to do, which would mean at least some revenue was coming in. If successful, he’ll also have cleared up his inventory for when the bad times break. His mantra? Cash is king!
He started by using dead stock as promotional giveaways in the hope of stimulating sales of newer and more valuable stock, and has avoided the need to discount the new items. After that, he introduced heavy discounting on all dead stock, up to 75 per cent off – the older the item, the higher the discount.
Also, he kept the display filled with similar products and didn’t mix-up the product range. That way, if someone was interested in buying a bracelet at a heavy discount then he found they were more inclined to buy a second one if other discounted bracelets were also displayed, rather than, say, a watch. “At that price madam, I think they might all be gone tomorrow, so would you like another for your daughter or a friend”.
To supplement this, he never displays all his discounted items, so it appears there is a limited supply and that customers have to make a decision there and then. He then displays something entirely different the next day to give the impression the previous items are sold and to attract people who weren’t interested in yesterday’s offering.
“To turn the stock over, you have to turn it around,” he told me. Rather than focus on doom and gloom, his store now has a fun atmosphere. He started by adding brightly-coloured balloons to the front of the shop.
He rewards his staff for every sale of a discounted item and has even found a way to make it fun so that is isn’t always a cash reward. He writes down the day’s reward and seals it in an envelope keep staff guessing.
Sometimes it’s cash, or a free lunch, a movie ticket or something else entirely.
He also said none of the staff were allowed behind the counter as the shop looked busier when staff were “money side”, as he called it.
The other interesting thing he did, once he’d turned that dead stock into cash, was to return to his supplier to ask for ... more dead stock!
He’s found that his better suppliers have been happy to provide old stock on consignment, provided he pays them as soon as it sells – one supplier was even happy to swap some old stock for other old stock that the retailer was better able to sell.
Smart suppliers will use any economic downturn as a time to strengthen relationships with their customers, so retailers should work with them wherever possible.
A little creativity and flexibility in the supplier/retailer relationship will ultimately mean everyone is selling more stock, which is one way to make sure the cash keeps coming in.