So you’re thinking about running a sale event in your store. Maybe you want to move dated or slow moving inventory. Maybe you need to increase store traffic. You might even be thinking about retirement and closing your store. All good reasons for a sale. So, if you run a sale, how well will it do? What impact will it have on cash flow and your bottom line?
There are several factors that will help in determining how successful your sale event may be. Analyzing historical sales data for your store over the same period of time that you plan to run the sale is a good starting point. Historical numbers will give you a baseline to determine how a sale might improve your business. But beyond that there are several other factors which strongly influence the success of the sale: seasonality; store history and reputation; the theme of the sale; the propensity of the store to discount and run other sales; and the state of the national and local economy.
Seasonality. Typically a third of annual jewelry sales are generated during the November-December holiday time frame, and much of that volume is done 10 days prior to Christmas. But January is also a strong sales month as many shoppers look to spend gift cards and work bonuses. Sales tend to spike again around Valentine’s Day and continue on into the spring with Mother’s Day, graduations and the traditional spring wedding season. For most jewelers, summer is the pits. Even with a strong theme, good advertising and discounting it’s hard to move merchandise in July and August. There are exceptions, of course – most notably summer vacation resort destinations whose season mirrors that of the traditional jeweler.
Reputation. Stores that have been in the same location for over five years and have built a good reputation for customer service have a big advantage over newer establishments. For this reason, grand opening sale events for independent jewelry stores are a challenge. Unlike the big box, brand name stores with their hefty advertising budgets to announce the opening of a new location, customers tend to steer away from unknown, independent entities when it comes to buying jewelry.
An established store will hopefully have built a strong customer mailing list and can use this list to promote their sale event. And when it comes to inventory, independent jewelers also have a distinct advantage in being able to offer unique and different products. Having inventory that is distinctive will set your business and brand apart from the chains and can be an important building block in running a sale event.
Discounting. A store that is continually discounting or running promotional sales will have a tough time running another significant sale event targeting price points. They become known as a discounter and the impact of a sale event is less meaningful. It’s a matter of credibility with the buying public. By contrast a store that rarely runs a sale and is not known for discounting will have a far better chance of success in getting a customer’s attention; sale discounts are meaningful – not just part of the normal course of business.
Sale theme. This brings us to the most important factor in the success of any sale event: the theme of the sale. Over the last decade the American buying public has been educated and has been accustomed to looking for deals – especially in the recent economy. Store closing or store retirement sales are the best in terms of getting the public’s attention and moving significant amounts of merchandise. Customer loyalty is a key factor with store closing sales as store owners can appeal directly to their base of business offering private sale incentives for their best customers as a reward for their patronage over the years.
Store closing and retirement sales are the most effective themes, but there are a variety of promotional themes that work including anniversary or trade liquidation type events. Again the reputation and history of the store are key factors in predicting the success of the sale.
The national and local economy. You can lead a horse to water, but you can’t make him drink. Likewise you can advertise, discount and generate additional store traffic, but you have no control over the buying mood of the public. It’s been our observation over the last five years that while the response of the buying public may be marginal in some areas of the country; in others the response has been good. It just depends. While you cannot control the state of your local economy, you should be aware that it’s obviously a factor in determining the outcome of a sale event.
When planning a store wide sale event it’s important to take into account the impact of seasonality, store history and reputation, the theme of the sale, the propensity of the store to discount and run other sales and even the state of the national and local economy. A well planned and professionally conducted sale event can generate additional store traffic to help increase sales and positively impact your cash flow.
Bob Epstein is CEO of Silverman Jewelers Consultants. Since 1945, Silverman has been considered one of the premier sales consulting firms to the jewelry industry, specializing in improving cash flow and maximizing the recovery on distressed inventory through professionally conducted sale events. Bob can be reached at 800-347-3258 or by e-mail at firstname.lastname@example.org.