If Goldilocks Owned A Jewellery Store

0
2156

Increase your sales with one simple strategy

by Larry Johnson

Have you ever had irrational customers? The irony is that irrationality can be predicted, psychologists say. If that’s true, then wise retailers can anticipate these actions in the way their business is conducted.

In order to get insight into how you can put these human tendencies to work for you, I strongly recommend “Predictably Irrational”— a book by professor Dan Ariely of Duke University, which is undoubtedly the best book on human behavior I have read.

 Think of Goldilocks’ decision-making process

As you will recall, Goldilocks avoided extremes in chairs, beds and food. When the bowls of porridge were too hot or too cold, she proclaimed the middle option was “just right.”

When you offer choices of similar but different sized products in your showcases, such as diamond studs, diamond crosses or pearls, always offer one choice that is much higher priced. For example, if your current stud assortment stops at 1.5 carat total weight, add a 2.0cttw size. The two-carat pair now becomes the “too hot” option making the 1.5-carat pair “just right.”

Make that middle choice at full-margin and at about a 20 per cent higher price than your average sales ticket from that category because you are going to sell more of it. Avoid promoting items in your cases that bring down your average ticket for that case. The easiest way to grow your sales by 20 per cent is to raise the average ticket for each case in the store by 20 per cent. By making the middle choice at a price that elevates your average ticket by 20 per cent you’ll raise your entire store’s sales.

Recently, I consulted with a store in Chicago that proved this strategy very well. The store had three platforms in one of their cases each with “Your Choice” selection. The price points on the platforms were $1,999, $2,999 and $4,999 respectively. The two lower prices were strong but the owner wanted to sell more $4,999 items. I suggested we add the fourth platform featuring “Your choice $6999.” Ninety days later, his sales of $4,999 items were up by 35 per cent, plus he had sold several pieces from the highest priced platform. With the fourth platform, the $4,999 one became the “just right” selection.

This strategy also works in restaurants. Have you wondered about the $500 bottles on a wine list and who actually pays that much? Hardly anyone. The high-ticket item, called a “decoy” in the food trade, does prompt people to open their pocketbook more generously and order a $75 instead of a $40 bottle. The fact is, people do not like buying the cheapest or the most expensive item on a list.

Your specific action step

Look at each of your showcases and find areas where you are offering “middle priced options” that are not as high priced as you think the market should bear. Experiment with a few similar pieces of merchandise at 20 per cent higher prices to make your previous highest priced pieces the new middle choice. Make the new middle pieces at full margin because you are going to sell more of them. Place the higher price pointed items in the rear of the showcase for the salesperson to reach it more easily.

Place the least expensive goods near the customer’s side of the showcase and mid-priced merchandise between the two. Now, when a client is moving up or down in price, your salesperson simply moves back to front in the case without having to move all over the store. This arrangement makes selling much easier.

Test your new selection offering for 60 days and track your results. Be sure your sales team offers the high-priced option to every prospect. That will “anchor” the higher price in your customer’s mind and make the lower price point seem more appealing. At the end of the test period, evaluate the sales results and expand or rethink the strategy as the results show. If the idea does not work for you, evaluate the “perceived value” of the merchandise involved and be sure you have good choices. CJ

Larry Johnson is the author of “The complete guide to effective jewelry display.” He is CEO of Larry Johnson Consulting based in Colleyville, Texas. He works with independent jewellery retailers around the world to increase their profits through better display techniques.

 80 total views