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Articles from FASHION JEWELLERY (276 Articles)


 










When the going gets tough…

When sales stall in tough times it's tempting to cut staff and slash prices. Deborah Jane Goon finds that if the tough want to up their ante, they should do just the opposite.
All business people have had the proverb, “When the going gets tough…” said to them at least once in their lifetime. Whether it was because of a challenging situation at work, a personal dilemma or the onset of the economic downturn, the inspirational phrase and iconic Billy Ocean jingle certainly holds much wisdom. The fundamental truth rings through in the second and perhaps more important part of the saying, “…the tough get going” suggesting that only the strong will succeed. So to put it plainly, in order to survive and get through difficult times, you’ve got to ‘shape up or ship out’.

But how can retailers that are already facing the ripple effects of the Global Financial Crisis, increased interest rates and decreased consumer expenditure hold onto this notion and emerge as one of the tough?

Here, Jeweller speaks to the experts to gain some practical tips businesses can employ to cut costs, stay competitive and weather the storm.

Inventory control
Since costs associated with inventory are usually the biggest area of expenditure, this should be the first area of defence.

According to Australian Retailers Association executive director Russell Zimmerman, retailers should evaluate their stock management system in order to cater for the needs of their customers better. “One way of cutting costs is to stock more of the stock that sells frequently while minimising or reducing unpopular product lines.”

Brian Walker, managing director of retail consultancy the Retail Doctor, advises businesses to concentrate on their strengths to boost sales and improve profitability. “Retailers must examine their products and look at the return they are getting. They need to understand what products sell at what margin and concentrate on what they do best,” says Walker.

Another area that jewellery retailers need to keep a close eye on, according to Zimmerman, are their business strategies. He advises small businesses to make sure they’re not paying more than they should on taxes, rent or merchant fees.
“Members of the Australian Retailers Association are kept up to date with issues such as fair work requirements, tax laws, ER advice, tenancy advice and general advice on their industry, so being part of an association can be a cost saver and good support during tough times,” he explains.

Pricing strategies
When sales are dropping and customers are bargain-hunting for better deals, the instinctive response is to cut prices and offer dramatic discounts. While this might appear to be a good short-term solution, such a quick fix approach can also result in price wars, tarnished customer relationships and a diminished reputation.

According to Walker, discounting is often an outcome that results from not knowing your demographics well.

“Stores turn to discounting when the actual value of the goods has not been defined properly, when they do not have a unique offer in the minds of their customers or they have ordered too much stock so sales people have trouble selling,” says Walker.

Sue Barrett, managing director of business consultancy Barrett, warns that unless retailers have a real commodity offering or are deliberately positioning themselves as a cheap option, they should be wary of discounting. “It cheapens you and your brand,” she warns.

And at times like these, when customer perception is already being tested, jewellers could do without creating any further uncertainty. Rather than turn to discounting, retailers need to think outside the box.

Zimmerman suggests offering an alternative to discounts by value adding and finding innovative ways to maximise customer loyalty and spending. “Some examples of extra services are private styling sessions for groups of friends, in-home wardrobe audits and advice, and re-merchandising the store to make it more attractive.” In jewellery stores, perhaps this could translate into advice sessions on how to wear certain gems, or tutorials on looking after diamonds, for example.

Savvy retailers could start by examining their loyalty programmes and make existing customers feel exclusive. “This could be through a special event or product launch which gives guests an exclusive look at new ranges or creating a list of VIPs who get to be the first to know about Sales and new items,” says Zimmerman.

He also suggests using loyalty programmes and incentives for bringing family and friends in store.

Sigrid de Kaste, founder of Sigrid de Kaste Marketing, suggests retailers could use VIP product launches or introduce new lines to generate traffic. But she warns that for such initiatives to be successful, they have to be highly targeted. “Offer only one type or style of product or a theme and make sure first you know who wants that. Go back to your target customers and then devise the message they are looking for and work your product launch around that,” says De Kaste.

Before becoming a consultant, De Kaste owned a jewellery store and was one of the first on the Gold Coast to stock Pandora jewellery. She recalls carrying out a tedious database survey involving contacting all her customers who had ever bought silver in order to really get an accurate picture of target customers before introducing the brand. “We then put on a new product launch offering incentives when bringing friends and relatives along,” says De Kaste.

Looks matter
Just because times look bad, it doesn’t mean your store can take a beating. In fact, it is imperative to always keep stores looking clean and welcoming while paying special attention to store windows since this is the first place customers look.

“Retailers should ensure their displays are changed regularly for frequently passing customers. This will not only draw their attention to new products, but also draw attention to existing items they may not have noticed,” says Zimmerman.

It is, after all, the overall shopping experience that counts. It is essential to “create an emotional connection by having a conducive, warm environment that has a certain elegance”, advises Walker.

People power
Even though cutting staff might seem like the best way to cut costs, it will leave you with fewer hands on deck. The last thing you need is a lost sale because there weren’t enough staff to serve customers.

Joshua Zarb from the Leading Edge group advises retailers not to make hasty decisions when times seem bad. “When things slow down a bit, the first thing retailers should not do is panic. Retailers need to stick to their business plan to control costs, this does not mean laying off staff.”

De Kaste agrees with Zarb; conversely she suggests that better training be provided in slower times. “Instead of cutting staff, look to training them properly. Trained staff make better sales.”

It is astounding how many retailers do not realise that they have a tremendous long-term capital investment in their employees. And when companies lay off staff, it can create a climate of uncertainty that often results in a lower quality of service. Instead of simply laying people off, consider maximising their potential, as Zarb suggests.

He says, “Staff should have been hired for a specific role in the first place. Yes, staff can multi-task – but don’t compromise their strengths either. Key sales professionals need to be available to engage every customer. If traffic is down – you want the best experience possible for those that you get.”

Advertising
In difficult times like these, uncertainty can become the common currency and some jewellery retailers might be tempted to either stop or cut back on advertising. Before you do that, consider the age-old mantra that suggests the best time to advertise is during a recession.

First off, it is likely that your competition will already be scaling back. This creates less clutter which means ads you place will get more attention because there are less competing ads. Quite simply, De Kaste says, “Your advertising will work because many of your competitors will cut their advertising.”

A study by research firm McGraw-Hill of 600 US companies found that those who “maintained or increased advertising expenditure,” during the 1981-82 recession, “had significantly higher sales growth”. Those who maintained or increased their ad budgets during that period experienced a 256 per cent increase in sales compared with those who cut budgets, the study found.

And since some companies will still be cutting back on advertising during this period, there will be good deals out there because media companies will be more likely to negotiate rates. “It does pay to talk to your local newspaper. Sometimes you are able to negotiate great value when other businesses may not advertise due to tough business conditions,” Zimmerman says.

Ultimately though, succeeding while others flounder in tough times is about having a constant voice and communicating your point of difference. Get that right, and your message will resonate loud and clear.









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Tuesday, 10 December, 2019 09:18pm
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