#### Here are some ideas for solving the problem.

This month our KP data across all sample stores showed a drop, with rolling 12-month sales figures down by 0.33 percent on August 2017 results. Average sales YTD are at \$1,598,493, down from last month's \$1,603,719 for the 12 months ending in August.

September yielded average store sales of \$104,429, down \$5,226 from last year's September result of \$109,655 – a decline of 4.7 percent.

The table above compares data for the month of September across the last three years and reveals a declining trend in sales being achieved. Since 2015, September store sales have dropped from \$112,239 to \$104,429 – a decline of \$7,810, or just under 7 percent. The most disturbing factor is the rate at which unit sales have dropped. 419 units were sold on average per store in 2015, and this is now down nearly 39 percent in just a two-year period. The increase in average sale achieved from \$247 to \$368 is not sufficient to make up for this decline.

Although sales are down 7 percent, the decline in margins from 46 percent to 45 percent has seen profit for September drop by over 9 percent from \$51,648 to \$46,675. This is a significant drop – in most cases costs will not have declined in this time and, in fact, will have probably increased in the two most significant areas, rent and wages.

The increased cost of running a store is now being borne by lower gross profitability. (The above figures don’t allow for expenses other than cost of goods sold.)

A worrisome number is the percentage contribution to overall sales. Despite the decline in numbers, the contribution to the year’s results is unchanged, showing that this shortfall is not being made up elsewhere and that the annual data is most likely following the trend.

As the chart below, which shows annual sales units, indicates, this trend has been happening for some time.

In fact, September 2015 represented the peak in a small rise that had begun in mid-2014 and began to taper off from early 2016. It would be easy to dismiss the decline on a lower level of sales in the bead market, but as the graph shows, the impact of this fall off was happening back in 2013 – the larger decline in the graph. For a time, jewelry stores were seeing a bounce back in units sold, which has now reversed during 2016 and 2017.

The question is – where have all these customers gone? Are they spending elsewhere or just not spending at all? Do they still visit? If they are unrelated to a drop on the bead market, then what has caused them to stop buying so much?

You can start with a door counter. Any measure of sales has to begin with the question, "Are the customers coming in and not buying or are they just not coming in at all?" Your door counter will show a drop in foot traffic if the customers have disappeared. If your door count is still being maintained but the unit sales have fallen off, then this shows an internal issue that needs to be dealt with – most likely your inventory selection or your staff.

So if customers have stopped coming in, how do you combat this? There are two options:

• Get more customers back into your store.
• Sell more to the ones who are already coming in.

Let’s address the second issue, because it can be the cheaper and easier one to solve. I’ll begin with a question: Who is more likely to purchase from you — someone who doesn’t know you or someone who already shops with you? The answer is, of course, the second one. Let’s take this further. Who is more likely to spend with you — a regular customer whom you are marketing to at home or a customer who is standing in front of you in the store? Again it’s the second due to the proximity and interest in your product at that point in time.

Let’s take this idea to yet another level — who is most likely to spend with you, a customer in your store who hasn’t made a purchase yet or a customer who has just bought? Logic would suggest the first one; after all, they still have a need to be satisfied. However, customers who have overcome their resistance to buying are more likely to buy again, and offering them another item while their "defenses are down" has a high chance of being successful.

Don’t believe me? How frequently do you see this in other businesses? McDonald's add millions of dollars with its add-on of fries, and Amazon generates a large percentage of its sales by suggesting other items that customers who bought "this product" have also bought.

So if you want to improve your unit sales, start with the customer you already have in front of you.

You may be surprised at the response.

DAVID BROWN is president of the Edge Retail Academy, an organization devoted to the ongoing measurement and growth of jewelry store performance and profitability. For further information about the Academy’s management mentoring and industry benchmarking reports, contact This email address is being protected from spambots. You need JavaScript enabled to view it. or phone toll free (877) 569-8657.

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