The most common mistakes made by new and established jewellery retailers are made when it comes to stock and pricing. If you avoid these mistakes when starting out, you will find yourself well positioned to compete with even the best jewellery businesses.
Let me tell you a story from only last year. A new customer placed their first order with us. It was a good sized, respectable order of over 200 items, mostly necklaces and fashion rings. After viewing the details of the customer's order, I knew that we would never see that customer again, and I knew that within a year they wouldn't be in the jewellery business. There were a one hit wonder.
How did I know this?
They bought based on price. They bought over 200 lines of necklaces and fashion rings, and they bought only from the lowest price blocks available in our wholesale catalogue: £1 necklaces and £0.30 fashion rings.
There's nothing wrong with these lines in small doses. They sit well in the middle of more expensive items, and they do sell - in small doses. But when this is all you have in your jewellery display, when your customers are forced to buy cheap and only cheap jewellery, you can kiss your business goodbye.
Retailers who buy only cheap lines will not succeed as well as retailers who buy more expensive lines. And the reason for this is that women shoppers want the better lines. These retailers may not realise it, because they've always bought based on price, but their customers do not want cheap necklaces retailing at £5 or £6, they want stylish, classy necklaces that their friends will notice, and they're willing to pay £20 or £30 or more for them.
We have regular customers who started off buying cheap items every couple of months. Then one month, for whatever reason, they added a few necklaces at £5.50 each. And a week later they're back, and they're spending a couple of hundred pounds on the top end of the catalogue. Then they come back for a third time and they order in volume, probably for the very first time in their lives, and it's all high end stuff: chunky, colourful necklaces, heavy metallic necklaces, charm bracelets at £5 each, expensive fashion rings, and heavy sterling silver bracelets.
Why? Because the more expensive stuff sells!
This belief that price matters is ingrained far too deeply in some retailer's minds, usually those at the very bottom rung of the ladder or those just starting out. But the reality is, if they ever want to move beyond that bottom rung, they need to realise that Jewellery is never about price.
So what should that retailer have done if they wanted to succeed? They should have chosen 40 expensive items instead of 200 cheap items.
Sterling Silver Jewellery is timeless. Whether it's a ring, a pendant, or a pair of earrings, last year's fashions will look just as good this year. The same cannot be said for costume jewellery. I estimate that costume jewellery has an in-fashion life span of about 4-6 months. What was popular last year, simply will not sell this year. What sells well in the summer will not sell in the winter.
You need to change and update your stock frequently. Just because a particular range sold well at last year's Christmas Fair, does not mean it will sell well this year. If you try to sell the same items to the same people again and again, your customers will stay away or your party attendances will get smaller and smaller.
When everyone is on the bandwagon, that's a good sign that it's time to get off. Just as when everyone is investing in property, you can be sure that the next slump is around the corner, so too when every jewellery shop and stall is selling the same styles, you can bet that that particular style is not long for this world.
Time after time, we hear from retailers who bought items months ago, asking when we will be getting more of a particular necklace or bracelet that sold so well. The answer is, we won't, and neither should they. Jewellery retailers should be telling their customers what's fashionable, not expecting to be told. They should be setting the trends, not hawking last year's fashions.
Leave your competitors on the band wagon, and search out new styles. It's far more profitable, not to mention satisfying, to be selling fresh styles that nobody else has yet, than to be selling the same old stock that everybody around you is selling.
There's an old saying that you can't please everyone, and that when you try, you end up pleasing no one. You should take this to heart when starting your jewellery business, and in particular when you are sourcing your stock.
Who are you selling to? Who are your customers? If you plan to sell to everyone who wears jewellery, and your customers will be women of all ages, men and children too, then you need to take a step back and rethink your business model.
If your target market is young twenty something women, looking for fashionable, colourful and original jewellery - women who want to stand out from the crowd and be noticed - then all your purchasing decisions should be built with that woman in mind. If you are looking to sell to middle aged women - who tend to have deeper pockets and more elegant tastes - your buying decisions will be different. Brides and bridesmaids? Goths and emos? Children and teenagers? Men buying presents for wives and girlfriends?
Picture the person who will buy that necklace, that watch, or that ring. Picture this person before you buy your stock. Do they fit your customer base? Because if they don't, you should consider buying something else.
The amount of jewellery shops I've seen that have a little of everything is simply disheartening. Men's watches? Children's rings? Bridesmaid's bracelets?
You need to focus your mind, and you need to focus your buying decisions. Pick one customer, and buy only for that customer. Otherwise, you'll end up with a range of jewellery that is so diverse it pleases no one. The end result of which is no one talks about you, your shop, or your jewellery to their friends and your business wallows in mediocrity, just like so many other jewellery businesses.
There is a place for conservative jewellery. It's at a job interview. Every woman has one simple necklace she can trust will not get her into trouble at a job interview. But if this woman buys a lot of jewellery, she will only have one of these pieces.
You should not be stocking more than a handful of safe and unassuming necklaces or bracelets. Because a handful is all you will need, and nobody will ever buy more than one of them.
You need to be adventurous. You need to buying bright colours, big, garish necklaces, unusual rings and extravagant hair accessories. This is what women want, or at least it's what women who spend a lot of money on jewellery want. They want to be different; they want to be noticed; they want their jewellery to draw stares and comments from friends and strangers.
None of which will happen if they buy your dull, uninspiring lines of everyday, regular jewellery that they can find in every high street chain store and every jewellery stall at every market across the country.
You need to get into the habit of taking risks and trying out new styles, even it means not purchasing items you know to be strong sellers. Regular, repeat customers are far more valuable to your business than new customers who may buy from you only once. And how do you keep these regular customers happy? You buy new, fresh, exciting styles.
I am a grey haired man, I admit it. And I cannot pick jewellery that women want. I just can't do it. But I don't have to, because I am not a jewellery buyer. Our buyer is a thirty year old woman who knows fashion. She can look at a necklace and know immediately if it will be popular with the woman on the street, and if they will be prepared to pay what is required for it. And she is almost never wrong. One time in a hundred she will choose a dud that for whatever reason fails to sell, but the other ninety nine times she chooses strong sellers. There are times when I would look at what she is selecting and say: There is no way that will sell or Nobody is going to buy that. And it is invariably that style of necklace that will become the year's best seller.
Men can't buy jewellery that women want to wear, it's that simple.
Don't believe me? Years ago, when I worked retail, the week leading up to Valentine's Day was when we got rid of our dullest, most boring women's watches and necklaces - the drab grey stuff that women simply refused to buy for themselves at any time of the year. Men arrived in their droves to buy these items. No doubt there was many a fake smile on Valentine's morning, with promises of saving it for a special occasion, because it was too good to wear every day. Translation: she hates it but doesn't want to say so.
That same male inability to buy women's jewellery extends to retailers sourcing jewellery from wholesalers, and wholesalers buying from manufacturers. I can spot male buyers by looking at the contents of their order. It's not that they buy greys and blacks (women jewellery sellers buy a lot of these too); it's the absence of any strong colours and styles. Our male buyers rarely buy pink, orange, or blue jewellery, and they rarely buy large, gaudy items. It's as if their courage runs out after one or two red necklaces.
If you're a man entering the fashion jewellery business, you're in for a rough time, and the saddest part is you won't even realise what you are doing wrong. If you're a woman in partnership with a man, make sure that you decide on style and colour. Argue over cost, by all means, but do not let a man have any say in the selection process.
You are not your customer. No doubt you have your own style, but this should never interfere or influence the jewellery you decide to sell in your shop. If you are a twenty five year old woman, you may decide to target similarly aged women as part of your business, but there is huge variety in the tastes of twenty five year old women.
If you choose to buy only jewellery that you would be happy to wear yourself, you will find that you are missing out on a huge segment of the market. You should ignore your own personal likes and dislikes entirely and be guided in your purchase decisions solely by what actually sells and what is more generally fashionable in society as a whole.
While it's very possible that you decided to open a jewellery business because you love jewellery, don't use that as an excuse to stock your shop or parties with items you wear yourself.
Following on from mistake number seven, you need to learn how to leave your personal taste at the door. Poor stock choices can be fatal to a jewellery business. Just about everything else can be fixed, but if you are selling jewellery women do not want to buy, all the price reductions, sales, window displays and newspaper adverts will not help you. You cannot sell something people do not want.
A couple of years ago I was advising a young woman who had recently started her own jewellery business. She was selling at parties and online, and things were not going that well. So I looked at her stock. It was brown, it was black, and it was silver. When I asked her where all the colour was, she replied that she found bright colours tacky, and that she couldn't face having to sell pink jewellery all day. It was just too little girly, she said.
I shouldn't need to point out how ludicrous this position was, but she failed to understand that the reason she was not doing well was because she was not selling jewellery that women wanted to buy. She assumed that she had good taste, and that women would benefit from her taste and should welcome the opportunity to buy based on that taste.
What she forgot was that every woman has different tastes and styles. They don't want yours, why would they, when they have their own? So remember, what you like doesn't matter. You are not your customers. And please, whatever you do, remember that most women really do like colour - even pink.
Charging too little for your jewellery is a mistake common to market traders and internet sellers (eBay sellers in particular). If you charge too little, your customers will be happy, but your bank manager will not be. Your objective should not be to break even, it should be to make a profit, and a substantial one at that. Your pricing should reflect this.
When working out a retail price, a number of factors come into play. The most obvious are your own costs: wholesale costs, taxes, packaging, displays, rent, etc. You need to add up all these figures and work out the true cost of a particular necklace. The difference between the true cost and the retail price is where your profit lies.
Say for example that you calculate the true cost of a necklace that you bought wholesale at £4.50 to be £7.75. Not unrealistic at all. A respectable retail price for this necklace might then be £17.50. If your customers are happy to pay this, then you are on to a winner. You may even decide that it's selling so well that you could charge more, at which point you'll be jumping up and down.
A common mistake is to take the basic cost price of £4.50, assume that retail mark up should be about 40%, because you read that on an online forum, and set your retail price at £6.50. Which means you will be making a loss of £1.25 on every necklace you sell.
This can happen to new businesses for a number of reasons. Firstly, they fail to identify the true cost of an item they are selling. Secondly, they fail to correctly gauge the market, assuming that because a jewellery seller down the road is selling junk jewellery in the £6 range, that this is the only price the market can stand. And finally, they undervalue their own stock. This retailer may have been happy to pay £17.50 for this necklace herself in somebody else's shop, but because it is hers, she assumes it is worth less.
This happens far more often than you might expect, and retailers who fail to learn from this mistake early on, will find themselves out of business very quickly, often not understanding why, as the jewellery may have proven to be very popular with consumers.
The lesson here is: understand the real cost of every item you sell, and set a retail price as high as the market can stand.
While under pricing is a mistake made by one section of new retailers, over pricing is common amongst a different section: in particular, jewellery party planners and bricks and mortar shop owners.
What happens is this: a jewellery party organiser hosts her first party, usually at a friend's house. She invites all of her friends and family members and arrives early to set up, having spent many weeks preparing: sourcing the perfect stock, buying tasteful packaging, and getting her display ready. And she does really well, turning over more than £1,000. A week later she runs another party, this time at the home of a casual acquaintance. She doesn't know anyone at the party, and sales are dismal. What went wrong?
Family and friends are not a good barometer of the market place. They will often feel obligated to buy something from you, or tell you that they love your stock not because they do, but as a show of support. The fact that a party attended by a large group of family and friends did well is no indication that you have gotten your stock right, and it is certainly not an indication that you have gotten your pricing structure right.
I have known jewellery party organisers who would have attempted to sell that original £4.50 necklace for £30. And while their mother may have bought one, nobody else will.
Over pricing is a problem that also happens to shop owners, and often not at the early stages. Shop owners, especially gift or shoe shop owners who are not solely reliant on jewellery sales to keep their doors open, have a habit of over pricing. They wrongly assume that because a necklace might retail at £15 on a market stall or at the Christmas fair, that they should charge £25 because they are a real shop. This sort of mentality is far from uncommon amongst shop owners, and is one of the reasons so many traders can outperform their bricks and mortar competitors.
Two things make you stand out from the crowd: the uniqueness of your stock, and your presentation. One without the other is a recipe for failure. It doesn't matter how good your jewellery is if it's displayed in an unflattering manner. And it doesn't matter how fancy your display is, it will not help you sell junk jewellery.
By showing your goods off at their best, and making it as easy as possible for people to try them on, you make the buying decision that little bit easier. You're not fooling people into buying something they don't want, what you are doing is removing some of the barriers that may prevent them from buying in the first place.
Some time ago I was browsing jewellery auctions on eBay, and something struck me about many of the auctions I visited: I was unable to work out if I actually liked any of the jewellery on offer. Now, chances were that much of that jewellery was good stock, but the quality of the displays and images were such that I simply could not decide.
And this does not only happen in the online world. Not long ago, walking through one of Ireland's larger indoor markets, I was drawn to a small stall tucked away in a corner. The stall owner was selling French Ikita jewellery (I won't even speculate as to how he got hold of it), and every single necklace was sitting in a large pile on a flat table - tightly wrapped in plastic. Despite the popularity of Ikita, no one was stopping; and no one was stopping because most people didn't even realise he was selling jewellery. With a proper display, and a little effort, this could have been the most popular stall in the market. Instead, the owner packed up and went home early, probably never to return - no doubt telling his friends that Irish women just weren't interested in jewellery.