Retail jewellery sales in the US dropped an average of 3.5 percent last year, according to the Jewelers of America 2009 Cost of Doing Business Report.
However the decline was not uniform – designer/custom retailers weathered the downturn with only a 0.8 percent sales decrease while independent high-end retailers dropped 1.3 percent, mid-range retailers dropped 5.5 percent and chain stores fell 13.2 percent.
The report also found that industry profitability was down, with specialty jewellers experiencing a median 3.6 percent net profit as a percentage of net sales compared to 4.6 percent in 2007.
According to JA, the report demonstrates that effective management is even more critical during economically challenging times, with high-profit firms experiencing overall sales growth of 3.1 percent, versus their low-profit counterparts, which had an average sales decline of 12.6 percent.
“High-profit stores not only had greater sales per store in 2008 ($1,290,372 on average compared to $1,176,100 for low-profit stores), but they had higher sales per full-time employee and sales per square foot, with lower payroll and operating expenses. Additionally, high-profit stores continued to experience a 20 percent greater inventory turnover than low-profit firms,” the report said.
“High-profit retailers were able to soften the impact of the down economy by containing operating expenses in 2008. They spent 9.6 percent less on total operating expenses than low-profit companies.”
JA director of member services David Peters said the current state of the economy has forced jewellers to take a closer look at their balance sheets in order to better identify where they can cut back, and how to prepare for future growth.
The 2009 Cost of Doing Business Report is an invaluable tool in accomplishing this task,” he said.
“The 91-page Report makes it easy for retailers to benchmark their business operations against those of their competitors, with data tables organised by jeweller category, size and high- or low-profit firms.
“(It) helps storeowners better understand the basic, but critically important, measures that drive their business. They can use these metrics to benchmark and develop strategies that will steer them through the current economy, so they’re poised for better days ahead.”
The 2009 Cost of Doing Business Report is available on compact disc or via email.
For more information visit www.jewelers.org