For many store owners, 2013 will be the year they decide to retire, close or sell their store. This decision is a very emotional one, especially for store owners whose business has been their life, often for a period of several decades. Many owners hold on to their properties and miss the optimum window of opportunity to turn their inventory and customer goodwill into what could be a nice retirement nest egg.
As they approach retirement age, many store owners let their inventory dwindle down to next to nothing. Understandably so, they’ve been reluctant to go out and spend money on new merchandise, so what they do have is old and unwanted. Customer traffic has slowed. The store just isn’t what is use to be. The advice I give to store owners who are contemplating retirement is to go out at the top of your game. No doubt there’s plenty of emotion surrounding this decision, but there’s a critical point where you can reap the rewards of all the time you spent building your retail business.
Of course selling your store is an option, but the major difficulty with this strategy is the lack of qualified buyers. Many buyers do not have adequate financing and may want you to hold a note. The note may become useless if the jeweler does not run a successful operation, meaning you never get paid. Many buyers will only offer you a percent of your cost for the inventory, claiming that they would just as soon invest dollars in fresh inventory of their own choosing rather than in your dated stock.
A professionally conducted retirement or store closing sale will often generate as much as 1.25 on the dollar for inventory and achieve close to your annual volume in as little as 8 to 10 weeks. With a retirement sale you have the opportunity to convert all that customer good will you’ve built up throughout the years into cash.
With a retirement sale you only get one shot at success. There are no do-overs. Once the sale is finished, it’s done. With this in mind it’s extremely important to maximize this once-in-a-lifetime business opportunity and to do some advance planning.
Running a retirement sale is a unique business proposition, different from any sale event you may have conducted previously. For example, you must take time to make sure you are in compliance with both state and county laws regarding store closing sale events. These statutes regulate such things as the maximum length of time an owner can run a store closing sale and the ability to bring in or augment inventory during the sale. County laws may be different from state laws but take precedence. Determining what the laws are and where and when to file is an essential first step and will determine the timing of your sale.
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. Store closing sales do well no matter what time of year, but the holiday shopping season is best. Plan to start your retirement sale on or shortly after Black Friday in mid November and you will be able to run the sale through January – also a strong sales month as many shoppers look to spend work bonuses. Again, local and state laws determine the maximum time (usually 90 days) you can run the sale.
Making sure you have enough inventories in stock to last throughout the sale is critical. Many state and local laws prohibit the buying of additional inventory once the sale starts, so part of the planning process is a thorough inventory review. Your retirement sale will draw in many people who are not your normal customers. You should provide your customers with the opportunity to buy something for every occasion, every taste and every budget. You may stock up on merchandise you’ve never carried before. Make sure you have all price points covered and that you carry everything from unique gemstone jewelry, diamond jewelry, custom jewelry, necklaces, estate jewelry, earrings, pendants, pearls, bracelets and watches.
Advertising and marketing will play a critical role in the success of your retirement sale. You will want to reach out through direct mail and appeal directly to your loyal customer base offering private sale incentives to them as a reward for their patronage over the years. Having an updated mailing list is essential.
Beyond your loyal base of customers you’ve got to get the word out about your sale and the discount savings available to the general public. Every market is different. You must determine the most cost effective means of advertising in your particular market; perhaps a mix of space ads in local papers, and/or radio spots on morning or evening drive programs. Appropriate signage in your store window and in-store sale signage is also vital. If you are in a mall, there may be restrictions as to what you can advertise in your store window.
Advertised savings and discounts will draw traffic into your store. 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 retirement sales are the best in terms of getting the public’s attention and moving significant amounts of merchandise. There is a precise art and science in progressive discount strategy during your retirement sale event. A store that has a history of continually discounting or running promotional sales will have a tough time running another significant sale event targeting price points even during a store closing sale. 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. I strongly suggest that you not run any sort of promotional sale event six months or even a year prior to planning your final retirement sale.
There are many important details and lots of moving parts, but a well planned and professionally run retirement sale event can generate significant revenue, cash and profit. Remember, you only get one shot at this. Make sure your retirement sale is set up for success and enjoy your well earned retirement!
Bob Epstein is CEO of Silverman Consultants, LLC. Offering a legacy in sales strategies for jewelers since 1945, Silverman Consultants provides guidance to store owners seeking to turn around a business, sell off unwanted inventory, or liquidate an entire store. With offices located in Charleston, SC, New York City and Saskatoon, Canada, the company helps jewelry store owners and chains formulate strategies designed to maximize revenue in times of transition, whether due to retirement, store closing, or simply when needing a boost in sales. For more information visit www.silvermanconsultants.com or call Bob direct at 800-347-1500.