Last week, I was doing a little research into the US census data on this website. The U.S. business census data is captured every 5 years, but there's a delay before the information is published. The 2012 was only recently published.
Shrinking Number of Retail Jewelry Stores
The data shows that there were only 16,847 corporations that classified themselves as "jewelry stores" in 2012, and there were 23,413 physical retail stores that year.
According to the census data, it looks like 7,285 of those 23,413 retail stores are part of a chain. That leaves 16,128 independent retail jewelers in the USA.
Compare this to the 2007 data that showed:
18,451 total corporations
27,484 physical retail stores
That's a 8.49% decrease in the number of independents and a 26.1% decrease in the number of chain stores over a 5 year period.
Remember that these numbers only reflect what the U.S. Government has on file for businesses that strictly classify themselves as jewelry stores. The Jewelers Board of Trade (JBT) tracks jewelry stores differently, and they report on it every year rather than every 5 years.
What's the Future of Your Store?
I'm presenting these statistics because I want to talk about the inevitable day that you will choose to retire from your own jewelry store. Before you get to that day, you need to figure out how to answer these questions:
- Are you going to pass the business along to your children?
- Are you going to sell the business to your children?
- Are you going to sell the business to someone else?
- Will you simply have a going out of business sale (GOB)?
The answers to these questions are not trivial. The reason jWAG exists is to help prevent jewelers from simply having a GOB sale. I takes some planning and a lot of implementation to change any small business around from week-to-week financial living to one that allows you to build profits. Those profits will attract a new buyer when you are ready to retire.
Do your Children Care?
In this wonderful world of opportunity there are a lot of other interests that will lure the next generation away from the family business. Even if they've grown up in the business, there's no guarantee that they will remain loyal to a family tradition that is not, or doesn't understand, their own generation.
Do your children even have the talent to run the business? It takes more than just being a bench jeweler to make a business successful. Successful entrepreneurs need to understand every aspect of the business in order to guide it to success.
Think about your own duties and how you manage the business and you should realize that your children will need to know a little about business planning, finances, inventory management, employee management, customer relations, and marketing.
Your children don't necessarily need to be bench jewelers, but some type of jewelry training and certification is required. This certification requirement should not be fresh news since every industry requires training and certification, and we all assume that the proprietor of any independent retail store has the training needed to own the business.
In fact, during one of my own training classes as a SCORE Mentor I learned about one of the more interesting ways that the U.S. Small Business Administration (SBA) determines your loan worthiness. When the SBA gives out loans for franchise businesses, they prefer to give loans to people who are more likely to manage the business and help it grow, rather than someone who will be hands on in the business.
As a volunteer SCORE Mentor, I'm always trying to help small business owners understand that they need to have a more managerial approach to running the business instead of doing it all themselves.
So it's okay if the next generation of family jewelers doesn't know everything, as long as they know how to manage the other people they hire to get the job done right.
Understanding the New Customers
Perhaps it's not just the new generation of customers you need to understand, but how to reach them.
JCK published a dismal outlook of the jewelry industry recently. One highlight from the article is that you can't use the same marketing methods to reach the new generations that you once used to reach the Baby Boomer generation.
Customers of today expect every business to be involved with their personal methods of communication and involvement. The Apple Watch that's coming out later this month is supposed to usher in a new level of personal communication between wearers. Instead of personal communication being restrained by the phone in your pocket, you will be able to lift your wrist.
But you don't have to be involved with the Apple Watch to be a forward thinking jeweler, you just need to understand your clients.
The above mentioned JCK article references women who adorn themselves with tattoos as their new jewelry, but that's not new news either. Facebook's Ad Manager and Audience Segmentation features will tell you a lot of amazing things about your customers between the ages of 25-35, including those details about large, openly visible tattoos.
Will the products you carry in the store and the marketing campaigns your creating appeal to this tattoo and tech touting generation? If not, you're in trouble.
Growing the Business For Future Sale
Growing any business to be profitable isn't easy. It takes a lot of hard work and some pretty long hours. While you might be worried about putting food on the table today, you also need to be planning your growth strategy for the future.
That growth strategy involves correctly pricing your products and services to include a reasonable profit margin. I'm talking about a profit that you can put aside and take as an extra owner bonus every 3 months.
Imagine having profits enough to pay yourself a nice bonus every quarter.
Being profitable doesn't mean you need to overcharge your customers, but it does mean carrying the right type of products that you can sell for a reasonable profit. If you can't sell your current inventory at reasonable profit levels, then you need to change the inventory.
When you're ready to sell the business a potential new owner will be very interested in those established profits you've maintained for a while. All they'd have to do is continue to follow your business formula.
Into the Future
It sure seems like the future for the independently owned retail jewelry store is bleak, but that doesn't have to be the case for your store.
If your business is headed in the wrong direction right now, or if you don't know how you will retire, then it's time to take action. Don't wait until it's too late to plan for your own retirement.
Don't be afraid to hire a business coach, have a business analysis done, then sit down and ask your children if they want to take over the family business. Regardless who you sell the business to, it needs to be profitable.