How does your percentage of diamond sales compare to where it used to be? Jewelers need to focus on their primary point of difference - the ability to sell diamond product. This is an area where there is relatively little competition from non jewelry retailers compared to other product lines such as silver and watches. Furthermore this area offers a high average sale and good profit margins when executed correctly.
The average store benchmark for diamond jewelry has been in the high 40% to low 50% range in terms of percentage of total storewide sales. This means that the typical jeweler will be getting half of their total sales from diamond product. This number took a dip during the most popular period in the bead market, but has now bounced back substantially - in fact as competition in other areas has increased our monthly store data comparison has shown diamond sales are now at their highest historic level for most jewelers in terms of contribution to sales and profit.
Of course diamond sales can take many forms. The biggest concentration is usually in the area of rings, however many stores fail to give the level of attention that is necessary to many of the other lucrative areas including pendants, bracelets and earrings. Even within the ring market many store owners become obsessive about bridal, often neglecting opportunities that can exist in anniversary, gift and right hand rings. Loose stones also offer a chance to add good sales and healthy margin to your bottom line.
So how do your diamond sales compare to other stores a) Within your group? B) With the industry as a whole? Given the amount of comparison data now available there’s no excuse for not knowing how you are comparing to the rest of the industry.
The key areas to draw comparison are:
- Average retail sales per unit
- Diamond sales as a percentage of store sales
- Margin on diamond sales
In terms of raw numbers it can be hard to compare a $1 million store with a $4 million store, but these three criteria will allow comparison across stores of different sizes. You may make less unit sales than a larger store but that doesn’t mean your average sale, your percentage of sales attributable to diamonds or your mark up achieved has to be any different.
Once you’ve drawn a comparison how can you lift your percentages in the areas that are lower than other store owners?
Let’s start with diamond rings. How does your percentage of sales compare to others? How does your average sale and margin compare? Do the same exercise across each diamond department and determine where you are ahead and where you are behind.
Start with the physical aspect. Step outside your store and look at your windows. Does your store say diamonds? This is your most prominent physical marketing channel. You can invest all you want in promoting diamonds, but if your store doesn’t say diamonds you won’t be in alignment. Do you have effective lighting? This is one of the main areas where store owners can let themselves down. Diamonds must sparkle if you want to get the results. Are they displayed as if they are special or do they look like part of the rank and file? Are your tickets tidy and clear to read? Are they fresh or tattered?
What happens when consumers step in your store? Does the store itself reflect the inventory in the window? I know many store owners who display everything out front but then have nothing to appeal to customers when they walk in. The window says one thing but the store says something else. You need your internal inventory to match the external. Tickets must be well displayed and prices easy to read.
Are your styles current and popular or are you filling your displays with items that have sat around for 2-3 years and aren’t earning their keep? Are you guilty of carrying too much product? Research has shown that when given too many choices a customer will make no selection at all. Good restaurant owners know this by ensuring their menus only offer sufficient choice to meet the customer’s needs and this is a great lesson for any store owner to consider.
Diamonds must be a key focus of your overall business strategy. Take the time to compare your performance to others – it can be the most effective benchmark of all.