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Post-Christmas Blues

Now that the Holiday season is over it is time for the store to get back to normal. During the holidays traffic in your store was at a high and sales were easier to close especially the few days prior to December 25. But now things have suddenly changed. Store traffic has slowed and store morale is at its’ most vulnerable point. This period has been called the ‘post-Christmas blues’. These blues are brought on by the sudden change of pace in the store. Let’s explore several ways to avoid a negative response to a predictable and normal flux in business and maintain morale and momentum now that the holidays are over.

Attitude is the key critical factor for both you and your staff. The sudden slowdown in pace and exhaustion of a busy season can leave the entire store’s staff both mentally and physically drained. The first quarter is an ideal time for small vacations or time off such as alternating long weekends for staff members. These extra days can serve as a reward for jobs well done during the holidays and also allow the much needed rest for maintaining a positive mental attitude.

Another approach to maintaining high morale is to focus on activities that went lacking during the holiday rush. Some positive options might include updating client files with future sales opportunities or sending thank you notes and appraisals for merchandise purchased during the holidays (your customers will appreciate your promptness and follow-up). Positioning the post-holiday period as an opportunity to build relationships, secure a customer for life, and separate your store from the competition allows you to seize the chance to “Exceed your customer’s expectations”. This is the true definition of customer service. Unfortunately, with technological evolution, the service industry in today’s retail marketplace often goes lacking. Utilize the post-holiday period to recapture the service standards of the past while taking advantage of the latest computer technology to automate the follow-up process. You will find this positions you to be more responsive and compete more vigorously.

Re-doing your store’s display is an important project. Moving the merchandise around and changing the displays gives your customers and staff alike the feeling that something is new and fresh about their surroundings. This is also a good time to clean your merchandise and replace worn tags. As I work with hundreds of jewelers throughout North America, they are always amazed at how a good cleaning and fresh tag makes the product interesting again and thus more salable.

New window display themes are vital in increasing interest in your store. This will both help you create customer traffic and stimulate the staff to be involved. Window displays should feature your best or easiest-to-sell merchandise. Your clients are looking for the styles and types of merchandise they want to buy, which may be different from the majority of the merchandise you have in stock.

One of the biggest obstacles to sales success that exists within the industry today is buying what you hope to sell versus buying what your customers want to purchase. This may sound simplistic; however, it is incredibly powerful. During the year 60% to 80% of your sales are coming from product that is less than five months old. However, this merchandise accounts for less than 20% of your total inventory. The key to ending this trend is to replenish that merchandise which is selling quickly. During the first quarter you should be replenishing predominately those items which sold quickly over the holiday season. This practice will insure you have the right mix of merchandise for your customers. Meanwhile, new goods flowing back into your store will keep your sales staff motivated and energized. We find that our clients who practice this have better sales in January, February and March than they had ever thought possible. Most jewelers would like to buy new merchandise in the first quarter but find they cannot because of cash concerns. If you are low on cash, then an alternative to re-defining inventory mix in your store is to redesign old pieces into products that are proven good sellers. For example, consider breaking up an old diamond ring and making it into diamond pendants and earrings. Stock balancing with your vendors can also be a good technique to improve your inventory mix. Be cautious of buying new merchandise styles that you have not sold before during this time of year. When you have a limited open to buy you must first replenish your fast selling merchandise and concentrate on increasing your cash flow.

The biggest challenge to replenishing proven sellers is cash flow. Most jewelers have cash flow concerns eight out of twelve months, and this time of year can be exceptionally dangerous. First quarter cash flow shortages can often be linked to overbuying at the holidays and payables now being due. Couple this with slow first quarter sales and it can get a little tricky. The steps to resolving this problem are to first identify whom you owe, and secondly to establish if you are making enough gross profit to cover your operating expenses, such as payroll, rent, etc.

Once you have ascertained these two things you can begin putting together a realistic plan. The first step is budgeting enough cash for operating expenses. This can come from sales during the first quarter plus cash reserves from Christmas. If your gross profit is high enough during the first quarter to cover your operating cost, then you can afford to replenish your best selling merchandise. However, if your gross profit is not high enough, which is the case of most jewelers, then you must carefully calculate how much you can spend on replenishment. Once you have calculated the dollars needed for replacing your best sellers, you can then utilize the cash from Christmas and other assets. Remember, replacing your best sellers is the absolute key to the success of your store’s sales and you cannot afford to neglect them. Now that you have an idea of the cash requirements for the first quarter you can use the remaining cash to pay bills incurred during Christmas such as inventory, advertising, and other debt.

If you come up short of cash to pay your debts, then you must look at assets you can successfully convert to cash to address them. The largest asset for most stores is inventory and more importantly, dated inventory. Dated inventory can consume up to 70% of your total inventory investment at cost. If you need to generate cash you may be faced with having a sale, with the goal of turning old non-selling inventory into cash to reduce your debt. If you choose this option it is imperative to alter your future buying habits so you are not faced with this same dilemma again. I have often found that the hardest habit of any jeweler to break is buying more than you are selling.

In order to identify what to put on sale it may be necessary to take a physical inventory. This time of year you will more than likely be taking inventory to prepare year-end financial statements, calculate taxes, and make sure your books are in order anyway. This is often dreaded, but none the less a necessary function. Most jewelers close their store for a day, bring in staff, and count every piece of merchandise on hand. Someone then adds it up and compares the results to the stock files and after a few weeks decides, ‘it’s close enough’. There is a better way. I recommend investigating the new electronic scanners for inventory. By using bar code tags and a scanner you can take a physical inventory in an average store in approximately four hours, with two people, and the store can remain open. After the physical count is completed you may then proceed to match up your stock list and determine your variance. You will find the accuracy improved and the completion of the task to be within days versus weeks. The new development of smaller bar code tags for jewelry can revolutionize the way you take inventory and can save you tremendous dollars in both payroll and shrinkage.

Practicing these activities is the prescription to overcoming the post-Christmas blues. As you embark on the new year you will be in a better position to enjoy the benefits of higher staff morale, renewed client interest, better balanced inventory and a working cash flow plan.