By Ashley Bailey
, Friday, October 20, 2006
Jewelers of America (JA), a national organization for retail jewelers, has released their 2006 Cost of Doing Business Survey, which analyzes member stores’ financial data from 2005.
According to JA the growth of sales in this country took a drop in 2005 to 3.9 percent. This is down from 6.1 percent in 2004. The survey analyzed data from independent high-end retailers (27.8 percent), independent mid-range stores (56.9 percent), chain stores (6.4 percent) and designer, artist and custom firms (6.1 percent). Chain stores and high-end retailers saw the most growth at nearly 5 percent, while mid-range stores experienced growth of 2.5 percent. Store profitability gained slightly to 4 percent in 2005, compared to 3.9 percent in 2004, but gross margins decreased to 48.4 percent in 2005 as opposed to 49.2 percent in 2004. The 2005 figure is the lowest mark since 47.4 percent in 2000.
Diamonds capture the greatest share of sales. Diamond jewelry accounts for 33 percent of all sales in 2005 and loose diamonds accounted for 15 percent. Colored stone and gold jeweler, at 10 and 9 percent respectively, commanded the next two largest shares of sales.
A dramatic increase was the amount of sales brought in by repairs: 10 percent in 2005 up from 1 percent in 2004.
The traits of high-profit firms were identified. High profit firms spent less for operating expenses such as occupancy; 4.7 percent as opposed to 5.6 percent for low profit firms. In terms of total operating expenses high profit firms spent 39.4 percent, whereas low profit companies spent 45.6 percent. High-profit firms spent an average of 18.8 percent on payroll, compared to a 20.7 percent overall average. High-profit retailers are typically those who choose products with the greatest return, turn over inventory more frequently and sell more per square foot. These initiatives combine to allow them more sales growth (7.1 percent) than the typical store (3.9 percent).
JA released these figures and other data as part of its “2006 Cost of Doing Business Survey.” The 75-page report can be ordered by calling Jewelers of America at 800-223-0673, or visiting JA online at www.jewelers.org. JA members who participated receive the survey for free.