Understanding Change
Leads to Performance Improvement
Part 2 of 3
KEY POINTS FOR THIS SERIES OF RETAIL JEWELRY INSIGHTS™
Specialty jewelry store sales growth to date has been influenced by changes in consumer expectations and perceptions about different competitors in the marketplace. Specialty jewelry store performance has also been affected by the consumer’s unanticipated reaction to cumulative changes in specialty retailer’s merchandising, marketing, and operational practices including 1) one-time changes due to sales declines caused by the “Great Recession” and 2) equally unexpected reactions to previously successful merchandising, pricing, marketing, advertising, and promotional strategies.
What is becoming apparent is that specialty jewelry store operators cannot assume that what once worked successfully, will be equally successful today. Assuming some of the traditional drivers of sales and profitability for specialty retail jewelers is no longer effective, while others are less efficient, understanding the effects of change is a key first step in developing solutions to improve business performance and mitigate other forces that are inhibiting specialty jewelry businesses from achieving full performance potential.
Decision-makers must 1) put in place methods to identify, continuously, business strengths and weakness, 2) plan processes to develop solutions to problems that arise from change, and 3) find ways to manage and integrate those solutions into the businesses operating practices much faster than in the past. For an in depth discussion about how understanding change can lead to performance improvement, read the entire article.
This issue of RJI is the second of a three part series discussing change and the effects on jewelry retailing in the U.S. market place.
Unanticipated Consequences of Change
Specialty Jewelry Stores Lose Market Share
Developing competitive advantage has never been more important to jewelry storeowners as now. Using government sales and consumer spending information, jewelry storeowners lost market share to “other retailers” selling jewelry in 2010, despite achieving about a 5.1% annual sales increase. In fact, jewelry sales of “other retailers” selling jewelry increased at twice the rate of jewelry stores, growing about 10.1%. Bottom line, today’s jewelry storeowner accounts for only 47% of U.S. jewelry sales and the market share trend is declining as seen in Figure 1.
Not surprising, say some analysts, suggesting lower price points, and discounting drove jewelry store market share down, especially after the Wall Street bank collapse. However, historical trends, illustrated in Figure 1, show jewelry stores began losing market share in 2005, during the middle of the housing bubble and well before the beginning of the “Great Recession” in September 2008, when sales were still robust. The fact jewelry stores sales increased about 30.1% between 2001 and 2007 probably overshadowed the fact that the rate of average annual sales growth declined from 4.3% per annum between 2001 and 2004 to 2.8% per annum for the period 2005-2007, before the financial collapse...
May 31 - June 6, 2011
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