Shake, Learn and Roll, What Does It Take To Sell?

In our discussions with the market, we often hear a complaint from retailers, mostly in the U.S., about the tough economic conditions and the threat posed by Internet retailing. Online sales have no doubt changed the retailing landscape. However, it can’t cause the complete abolishment of the physical store.

Our research, backed by that done by many others, found that first time buyers start by gathering information online. At some point, they talk with friends and family members and gain some extra information, and just before making a purchase online - usually when they have a pretty firm idea of what they want to buy - they stop by a local jeweler to see what a DEF / SI+, 2 carat diamond looks like. It’s an important, if not essential, part of the buying process often ending with the young man going back online to make a purchase.

How come a “hot” buyer who knows what he wants to buy and how much he plans to spend, walks out of a store without a diamond ring for his fiancé? There is no simple answer to this. Many online retailers have an excellent return policy and after sale service. They also have highly-trained staff to provide assistance over the phone. They are perceived to be much cheaper, which they are not (they are somewhat cheaper). So price perception is an issue.

In a recent series of articles, analyst Ken Gassman dissected successful strategies of large jewelry retailers. In a few other articles, he examined a number of issues that provided further insights into successful retailing.

This is what he found:

There is nothing like a strong brand name. Tiffany’s 5th Ave store in New York City generated 9 percent of its total revenues in 2009, though it is just one out of 220 stores world wide. A brand is something that is built over time, great effort and expense. That is no reason to delay it endlessly.

Sterling, for example, spends about 7 percent of sales on advertising, well above the industry average of about 4 percent. Start advertising!

Sales mix is important too. Tiffany’s sales mix is 90 percent jewelry; but it does not stop there. If you walk into a store and see three dozen rings next to each other, they all look the same. Reduce it and differentiate. Tiffany and Sterling do that, and so can you. Differentiated merchandise accounts for up to 30 percent of Sterling’s sales.

Raise prices! Sterling raised prices in late February on about 30 percent of its line. So can you. They didn’t loose market share - in fact, they gained market share. Have you ever looked at how much Tiffany charges on a silver keychain?

Get a good management information system. It will reveal secrets about your business - like what is selling in each price point.

You can’t over train staff. Tiffany generates about $322,500 in sales per employee, about 60 percent above the industry’s average. That is a result of top quality training.

Finally, we found that business owners who read research materials, talk with their peers and donate to their community have an edge - because they know more, they learn how to implement new ideas and they are respected for giving back.

To be practical, the Internet - as well as online retailers - is here to stay. Storeowners need to fight for their niche, and it can only be done with knowledge.