Why Strategic Store Closings
are Good Business

Despite increased spending in the fourth quarter for luxury goods and fine jewelry, economic improvement and jewelry market growth remains uncertain in 2011. This issue of Retail Jewelry Insights ™ will focus on Strategic Store Closings as a method to increase jewelry company profitability, reduce costs, strengthen market share, and mitigate business risk in 2011.


Now is a good time to consider what alternatives are available to store owners and business managers to improve strategic positioning and business operations in 2011. Whether a jewelry company consists of two stores or is a large multi-store chain, the short-term profitability and the long-term growth of the business depends in large part on the strategic decisions to open, expand, move, or close stores. A decade ago, jewelry store closings were typically the result of owner retirement or financial distress.

Today, more and more company owners recognize business contraction and sales consolidation is a viable strategic initiative to foster sustainable business growth. For example, according to the Jewelers Board of Trade, year over year jewelry store closings rose by about 50% in 2009 in the aftermath of Wall Street banks near collapse and the onset of the “Great Recession”. Granted, some of those closings were due to bankruptcy and retirements, but many were the result of strategic downsizing. A year later closings only decreased by about 3% in 2010 over the previous year, suggesting jewelry companies were still struggling as a jobless recovery frustrated policy-makers efforts to jump-start the economy...