Five Business Solutions to Help Jewelers Cope with Inflation
After enduring a pandemic, businesses in almost every industry are facing another headwind: inflation. This new economic normal means navigating through the rising costs of raw materials, supply chain disruptions, decreased consumer confidence, fiscal policy volatility, higher overhead costs and tighter profit margins.
While it’s true the jewelry industry has been booming in recent years, there is an expectation that a slowdown is coming. Inflation only compounds this reality. The good news is, there are tools to help you tackle the crisis head on, weather the storm and even thrive.
Did you know?
The U.S. Bureau of Labor Statistics reported that jewelry prices between 1986 and 2021 were 82.21% higher. Inflation went up around 1.73% per year on jewelry. A $100 purchase in 1986 was worth $182.21 in 2021.
Jewelers Mutual is here to help and has curated a list of five business solutions to help you prepare and adapt to current and upcoming inflationary trends.
1. Keep Your Pricing Relevant
As the market fluctuates, it’s important to keep up with the changes in the values of your inventory on the floor. Update retail prices to make sure you’re selling at market rates that allow you to generate margin.
If your software allows, add the re-cost value to your items to get a better idea of the replacement value of your current stock. This should be updated regularly, especially when vendors send you an updated price list or you notice a change in a certain category.
2. Perform Procurement Audits to Optimize Your Budget and Revenues
Since the cost of goods sold is higher and supply is in flux, you’ll need to find ways to optimize your buying budget. If business is good and your sales and volumes are up – your first instinct is probably to buy more. However, this can be difficult when product is scarce.
The question then becomes – do you replenish and stockpile your product to leverage and ease the impact of inflation? The potential downside is having an inventory surplus during a time of low demand. The best way to deal with this dilemma is to go back to procurement basics, namely take the time to manage your inventory.
- Identify where your revenues are sourced and review your open-to-buy reports; scrutinize budgets for novelties and replenishments for every brand and every category.
- Build inventory programs for your fast sellers and make sure your core inventory is based on this.
- Work closely with vendors on your core inventory and negotiate!
- Don’t buy out of habit or vendor pressure or emotionally – stay focused on the bottom line.
3. Look for Opportunities to Save on Costs and Improve Business Practices
Inflation will have an impact on your sales at some point. To prepare for the inevitable, look for ways to recalibrate your business to save on costs and improve business practices. Jewelers Mutual offers several value-added products and services and other programs via the Zing platform to support you in this effort.
The Jewelers Mutual Shipping Solution, for example, is an easy-to-use platform that enables you to ship high valuables in a fast, secure and cost-effective manner. If you are insured with Jewelers Mutual, you can take advantage of even more features including:
- Receiving deeper discounts on shipping and insurance costs
- Waiving the requirement to declare value to the USPS on Registered Mail
- Syncing jewelers block coverage with the platform
4. Make Sure You are Adequately Insured in the Event of a Loss
During a period of inflation, the value of your business increases – which means you have more to lose. Don’t risk being underinsured. We highly recommend reaching out to your insurance agent before your renewal date to make sure you are adequately covered in the event of a loss, for: your jewelry stock, personal property, equipment and other high value items.
While Jewelers Mutual does automatically adjust your coverage amounts to help mitigate the effects of inflation, it may not be enough to fully protect your business. Therefore, it’s best to work with your insurance agent to make any updates or changes to your policy, including increasing coverage limits or adding cost plus (coverage for the cost of an item plus a multiplier or percentage increase that is over and above).
Also stay vigilant for an uptick in crime during these turbulent times and leverage the best loss prevention practices.
5. Emphasize Value Proposition to Keep Consumer Confidence High
For a retailer, anything that distracts a customer from buying goods and services can spell trouble for their business. Unfortunately, inflation is a big distraction – not just financially but psychologically. Every time a person goes to pump gas or get groceries, it’s a reminder that market conditions are volatile. This slowly chips away at their confidence and tightens their wallets.
The best way to deal with customer uncertainty is to remain positive in your interactions with them. Selling is still about making personal connections. Remember that what you’re offering is based on good value. Jewelry represents the special moments in people’s lives – an engagement, wedding, birth of a child, anniversaries, promotions and more. These are items they will keep for a lifetime. Reassure them it’s worth it. And if you’re in a position to do so, offer financing or layaway to help them make the purchase.
For more information on how to navigate the impact of inflation, check out this panel discussion with jewelry industry insiders.