Maximising Your Return on Investment Per Jewellery Category: A 5-Step Plan for Store Owners

Maximising Your Return on Investment Per Jewellery Category: A 5-Step Plan for Store Owners

As a jewellery store owner, you know that margins are everything. Whether you’re dealing with sparkling diamonds, gold necklaces, or trendy silver rings, each jewellery category has its own unique potential for profit. The key to running a successful store is optimising those margins across all departments. Here’s a five-step plan that’ll help you review and improve your return on investment (ROI) for each jewellery category, boosting your bottom line.

1. Analyse Your Current Product Mix and Margins

Before you can improve anything, you need to know where you stand. Start by taking a close look at your current product mix and profit margins across each jewellery category. Break it down by material (gold, silver, platinum), type (rings, necklaces, bracelets), and price range (entry-level, mid-range, high-end).

Ask yourself these questions:

• Which categories/departments are performing best?
• Are there certain pieces that sell at a premium, or do you find yourself marking down a lot of stock? 
• Are you maximising the profit on your fast selling items
• What’s the cost of goods sold (COGS) for each category, and how does it compare to your selling price?

Once you’ve gathered this data, you’ll have a clearer picture of where your business stands. This insight allows you to focus on the categories and the individual pieces with the highest potential for growth and profitability. The 80/20 rule is alive and well within your business. Even a small margin increase on your most frequent selling items can lead to significant profit increases across a whole department.

2. Evaluate Supplier Relationships and Cost Control

The price you pay for your jewellery stock directly impacts your margins, so it’s time to review your supplier relationships. There's a tendency for most jewellers to cherry pick across all suppliers but by doing so you are losing the benefit of a strong supplier commitment. By devoting the bulk of your purchasing to one or two key suppliers in each category you are increasing your significance to them and they will be more willing to work with you to achieve a win/win for both parties.

It can also be good to keep an eye on any seasonal promotions or discounts suppliers may offer, and plan your buying accordingly where unique opportunities present themselves.

3. Adjust Your Pricing Strategy for Each Category

Once you’ve analysed your margins and cost of goods, it’s time to take a hard look at your pricing strategy. Many jewellery stores use a standard markup percentage across the board, but this can sometimes limit your ability to maximise profits in certain categories.

Consider adjusting your pricing based on the following factors:

• Market Demand: Categories like engagement rings or high-end watches can typically bear a higher markup because of their premium nature.
• Exclusivity. This can provide opportunities for premium pricing.
• Brand Perception: Are you positioning your store as a luxury destination, or are you more focused on affordable jewellery? Your pricing should reflect this brand identity.
• Competition: Keep an eye on what other local stores and online retailers are charging for similar products. You don’t have to match their prices, but you should ensure your pricing remains competitive.
• Proven sales. If an item sells quickly consider testing its margin with a small increase
• Price Pointing. Selling an item for $772 because the standard mark up adds to that can be leaving profit behind. Chances are customers will pay $799 without blinking.

4. Improve Sales and Upselling Strategies

Maximising ROI doesn’t just happen through pricing adjustments; it also comes down to how you sell your jewellery. Upselling and cross-selling can significantly boost your margins per transaction. Train your staff to recommend complementary items or upgrade options during the sales process.

For example, if a customer comes in for a simple engagement ring, your sales staff can suggest matching wedding bands, jewellery cleaning kits, or even a more luxurious diamond. In-store promotions like "Buy One, Get One 20% Off" or limited-time discounts on high-margin items can also increase the average transaction value.

Create bundling options across categories that make sense — for example, a necklace and earrings set or a bracelet with matching rings. These bundles not only increase your average sale but also add convenience for your customers.

5. Monitor and Track Performance Continuously

The key to long-term success is consistency and regular reviews. Implement a system for tracking your margins across each jewellery category, so you’re always up-to-date on which products are performing well and which need attention. Software tools can automate this process, making it easier for you to track trends and adjust strategies as needed.

Consider reviewing your product performance every quarter, adjusting your product mix or marketing strategies to account for seasonal changes, market trends, and customer preferences. For instance, if gold jewellery is seeing a spike in demand, you might shift your focus towards those pieces for the next few months.

Remember, ROI maximisation isn’t a one-time fix; it’s an ongoing process of refinement and adaptation.

Maximising your ROI across each jewellery category involves a combination of strategic pricing, savvy supplier relationships, and effective sales techniques. By following these five steps, you can optimise your margins, improve profitability, and keep your jewellery store competitive in a fast-paced market. Start today, and see the difference it makes in your bottom line!

‍