Many small businesses, not just retail jewelers, are caught in a tight monthly financial cycle. Those businesses teeter on financial ruin because the only thing needed to send them over the edge is a bad week of sales, unexpected loss of the star salesperson, tax penalties, medical bills, or the wrong choices of inventory. Each of these could be an unrecoverable setback.
According to the Jewelers Board of Trade, there was a total of 1,564 retail jewelers, wholesalers, and manufacturers in the United States and Canada that closed down in 2016. I can't help wonder how many of those 1,564 businesses experienced one of those unrecoverable setbacks.
The Risk Of Closure
If your business is not profitable right now, then you need to examine your current business model and make a plan for something better. Planning is something you need to work on every day by examining what you've done in the past. Did you make past mistakes that can be avoided? Did you have previous successful events that could be repeated? This is the type of stuff you need to review when trying to think up a new business model.
Typical reasons for store closings include economic slowdown, longer than expected economic recovery, retirement, and bankruptcy. While all those do contribute to business downfall, a retail store can survive each one, including retirement, with enough planning.
Are You Willing To Adapt?
The nature of retail sales has changed because consumer behaviors have changed at the speed of new technology, while leaving retail stores behind. The internet allows consumers to quickly price shop identical items and make a purchase decision based on return policies and free shipping. Over the years, many people have told me that consumers don't want to buy jewelry online in favor of trying it on first. This alleged saving grace is supposed to protect retail jewelers; meanwhile retail chains and e-commerce business have proven that wrong by making it easy to buy wedding jewelry and popular designer jewelry online.
The sales tactics that jewelers used prior to 1996 simply don't work anymore. Social media removes the need for consumers to try on jewelry because they can directly relate to the people in the photos they see online. The ownership experience portrayed in the photos you share, on Instagram in particular, will resonate with your target customers. The need to try things on disappears when they envision themselves as the person depicted in those shared photos.
My Biggest Pet Peeve With Small Businesses
I received an email from Instore Magazine right before I sat down to write this Golden Nugget. According to a recent survey, 17% of retailers are willing to give up their little finger if it meant saving their business for 10 years. Another 16% would give up their little finger if it meant saving their business for 20 years. Although this survey was just for fun, I was quite sickened by it, but not because of its macabre nature.
I get frustrated and sickened whenever I hear about business closings. I've been around long enough now to know there is always a turning point when the business owner gets the wrong advice or worse, gets good advice that they dismiss because they feel they know better than some outside consultant. I bet many of the 1,564 businesses that closed last year were looking for something to save them, maybe even sacrificing their little finger, yet their actions (or lack thereof) lead to inevitable business demise. If only they had sought out help a few years earlier.
They Are Still Buying; You Need To Learn How to Sell Again
Even though the jewelry industry seems to be losing retail stores at an alarming rate, people haven't stopped buying jewelry. They are just buying it differently than before. The challenge for retail stores is to transition away from their old model of business and into this new model of business, which includes e-commerce and a full breadth of online marketing techniques like paid ads, social sharing, and content building. Offline marketing is still very important to reach your existing customers and local area, but limiting yourself to your local community makes you susceptible to the sales, staff, tax, and inventory downturn causes I mentioned above. Business owners need to let go of their limiting beliefs that things can't be different than they are now, and that they are too old to learn something new.
Most small businesses limit themselves to online targeting within a reasonable driving distance, but that strategy limits your customer bases to only a few thousand potential consumers. While that approach has worked for local businesses for the past 200 years, by removing your limitations and launching an e-commerce website will expand your customer targeting out to the billions of people in entire world.
Don't Expect Too Much Too Quickly
Establishing your first e-commerce site isn't a small task; in my experience, it's about a 9 month process from the time you decide to do it to the day of launch. Once launched, it then becomes a continual task of adding new inventory and advertising what you sell. Success won't come overnight, it's more likely that jewelers on a tight budget will experience low sales their first year. It might even take 5 years before e-commerce sales accounts for 25% of the total annual sales. It all depends on the time and resources you can dedicate to your online success.
In 2003, my foray into the jewelry industry happened when I was asked to build an e-commerce site. Since then my team and I built more than 500 different jewelry related websites, yet each one had similar hurdles and experiences. There seem to be two universal truths with building your e-commerce website; first, you should start out by selling items less than $500; second, your photography needs to be good.
Jewelry below the $500 price point seems to sell pretty easily online. It's also easier to sell pendants, necklaces, bracelets, and earrings instead of rings simply because of ring sizing issues. Rethink your merchandise if you don't already have a good selection of items below $500, and make sure those items on your website are always in stock. Customers are more willing to wait a little longer for larger ticket items that have to be made, but less likely to wait a few extra days for lower ticket items.
Don't expect to sell engagement rings from your e-commerce website immediately. Selling wedding jewelry online puts you in direct competition with all of the other established wedding jewelry websites. It's more likely that your online wedding jewelry catalog will be a sales tool for your local audience than a generator of worldwide sales. There's a lot of internet competition when it comes to similar looking products, especially wedding jewelry, so you'll have to dedicate part of your marketing budget just to promote these sales.
Don't Compete On Price
Instead of trying to compete on price against other website selling similar products, you should partner with jewelry designers that do not have a big online presence yet. Price competition isn't a factor when you're selling product online that's hard to find or that no one else sells. In those circumstances those ownership experience photos you posted to Instagram will help you sell.
Are You Properly Planning Again?
Consumers want to shop online more and more. Online sales broke a lot or records during the 2016 holiday season; are you prepared for the 2017 season? Start planning now for your e-commerce inevitability; otherwise within 24 months you might be just another name on the JBT store closing list.
