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Many experts believe that when it comes to the jewelry industry, basic items account
for as much as 50-60% of total sales. These best sellers are usually essential,
staple items that any customer needs for their jewelry wardrobe. In terms of diamonds,
basics would include classics and timeless diamond bridal and fashion items like
diamond stud earrings and pendants, diamond solitaires, diamond wedding and anniversary
bands, diamond crosses and hearts, basic diamond hoop earrings, and other must have
items.
Ashi Diamonds recognizes how critical it is for our retail customers
to have a strong basics program. That's why we have developed the Ashi Essentials
Program, which offers you a wide range of stylish, high-quality, competitively priced
basic items and extensive merchandising/marketing support to give you the edge you
need in the marketplace this coming holiday season.
Here are just a few of the key reasons why you need to have a strong presence in
the basics category this holiday season and beyond:
BASICS GENERATE MORE SALES, PROFITS
According to studies such as Jewelers of America’s highly regarded Cost of Doing
Business Study, most jewelry stores turn their inventory only about 1.2 to 1.5 times
per year. Meanwhile, better diamond fashion and bridal items with higher price tags
and higher margins only turn about 1.0 time per year on average. It’s hard trying
to make a living as a retailer with such slow moving inventory. That’s one of the
main reasons why being strong in basic items is so critical.
Studies show that basic jewelry styles can turn from 3.5 times per year to as much
as 4 times per year on some categories. This means that basic items can turn several
times in the time it takes you to sell the rest of your jewelry inventory. This
represents a HUGE percentage of your sales and profits for the
year. Inventory turn is the KEY to PROFITABILITY!
While it's important for you to stay competitive on basics in terms of margins (which
is why margins on basics tend to be substantially less than on other categories),
you more than make up for it in terms of inventory turn. Your net profit will generally
be higher on basics because you are turning them far more frequently than other
items.
This is illustrated by the numbers in the chart below. Return on Investment
(ROI) as it is most commonly used by the jewelry industry is determined
by Mark-Up x Inventory Turns.
|
Category |
Avg. Turns/Yr. |
Avg. Margin |
Avg. Mark-up |
APP. Return on
Investment (ROI) |
|
Basic Styles |
3.5-4.0x |
48-52% |
100% |
350% - 400% |
|
Medium Fashion |
1.5-1.8x |
54% |
117% |
175.5% - 210.6% |
|
Better Fashion/Bridal |
1x |
58% |
138% |
138% |
When looking at actual dollar sales, the formula above illustrates why basics can
be as profitable as, or even more profitable than, more expensive items in your
store.
A basic item retailing for $300 has an average mark-up of 100% ($150). With an average
yearly turn of 3.5-4, ROI on this item is $525-$600.
A medium-priced fashion item retailing for $600 has an average
mark-up of 117% (app. $324). With an average yearly turn of 1.5-1.8, ROI on this
item is $486-$583.
A better fashion/bridal item retailing for $1,000 has an average
mark-up of 138% (app. $580). With an average yearly turn of 1, ROI on this item
is $580.
As you can see from the numbers, basic jewelry is one category you just can’t afford
to ignore – especially in a tough economy!
BASICS MAKE YOU MORE COMPETITIVE!!!
The bottom line is that if you are not a leader in basic jewelry categories, you
will lose this substantial business to others in your market. Why should you give
up this lucrative slice of the industry to other, larger jewelry stores, jewelry
chains, department stores, catalog and online retailers, and other competitors?
In effect, you would be conceding 50-60% of your sales to the Jareds, Kays, Macys,
Zales, and Helzbergs of the world – and you would be conceding a crucial category
that is more "recessionproof" (consumers will always need basic fashion and bridal)
and has substantially more growth potential than other product categories in your
store.
BASICS GENERATE NEW TRAFFIC, NEW SALES OPPORTUNITIES
A strong basics presentation will drive new traffic to your store, as new jewelry
customers are always looking to build their jewelry wardrobes with the essentials.
Drawing them into the store to buy basic items also gives you an opportunity to
generate add-on sales with these customers, get them to “trade up” to a more expensive
piece of jewelry, and develop a long-term relationship with these customers that
can lead to valuable repeat business. Remember, many new customers will come into
your store looking to buy their first pieces of jewelry – which will often be basic
items. If you give them a good experience, they will come back again and again for
all of their milestones and gift-giving occasions and to update their jewelry wardrobes
– and they’ll recommend you to their family members, friends and colleagues as well.
Without a strong basics inventory, you’ll never know how many of these customers
you’ve lost because they will never have walked into your store in the first place!
BASICS MAKE YOU A GIFT DESTINATION
In addition, becoming known as a jeweler who is strong in the basics is a powerful
branding statement for you and will help give you immediate credibility and rapport
with customers looking for basic items in bridal and fashion. Basic jewelry items
make ideal gifts for friends, family and loved ones. Having a strong basics presentation
makes you a leading gift destination for consumers.
BASICS HELP YOU MAINTAIN BUSINESS IN A DOWN ECONOMY
Of course, the current weak economy makes it even more essential for you, the retailer,
to make sure you are maximizing your business in the basics. Now is the time to
revisit your tried and true best sellers. You need items in your cases that are
proven performers. Basics will ensure regular sales and profits even in a market
downturn. Also, with many cash-strapped consumers cutting down on jewelry and other
luxury purchases, it’s important for you to offer them affordable, basic items that
are versatile and durable enough for them to wear every day.
At Ashi, we understand the jewelry market and how tough retail sales can be. With
many consumers cutting down on expensive fashion jewelry and other luxury purchases,
it’s important for you to offer them affordable, basic items that have a proven
track record and that are classic, timeless styles with versatility for everyone
and for everyday wear. Ashi Essentials is this collection, which has been specifically
designed to help you successfully bring in sales all year round.
That's why it's crucial for you to enroll in the Ashi Essentials Program.
We want to be a partner in helping you to succeed. Contact us today to find out
how our unique Ashi Essentials program can give you the "Ashi
Edge!"
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212-319-8291 | 800-622-2744
