The performance of the jewelery sector is mixed. On average there is a decline in volume results. This corresponds well to the difficulties encountered in the marketing of gold jewelry. Due to the tight economic environment, these products are experiencing a sharp slowdown in sales. On the other hand, fancy or silver products are a great success. Their result boosts sales throughout the industry. The high-end market’s margins decline because of the increase in raw material prices that can not be passed on to the products. Taking advantage of the popularity of cheaper products, specialty chains have positioned themselves in the mid-range and low-end jewelery segment. Corresponding to the expectations of the customers they develop more and more. Thanks to attractive average prices, they are enjoying spectacular success.
In this context, the most fragile establishments are small jewelery shops with a turnover of less than $ 350,000. They are unable to face the strike force of specialized networks both in terms of price and variety of supply. They try to maintain themselves with related benefits, such as maintenance and repair. Medium-sized jewelers, with sales between $ 350,000 and $ 800,000, seem to be recovering. They benefit from the gradual disappearance of the small independents and especially they are organized within various groups. They achieve economies of scale through central purchasing. They renew their stocks faster and offer up-to-date products. They practice a frequent discount policy that reduces their margin. As for large jewelery companies whose turnover exceeds $ 800,000 they seek to capture and retain high-end customers. This objective is strongly opposed. Efforts on employee training and quality of reception could help to achieve this.
The jewelery market in France
The sector’s strongest trend is concentration. Specialized networks will extend their grip on the medium and low end. They should gradually offer offers on the high end. The sector has three segments with very different results:
- Costume jewelery sells low-end items. They do not provide repairs.
- Mixed jewelers whose offer ranges from low-end to luxury goods. These establishments are usually found in shopping centers.
- Luxury jewelers are positioned on the high end. These stores are only in the city center.
The constraints of creating or taking over a jewelery business
No specific rule concerns the opening of a jewelery shop. It is subject to the common law of the retail trade and must meet the safety standards of places receiving public. On the other hand, there are some professional specificities. It concerns high-end articles.
The institution must have a register called a police book. It must record the purchases and sales of precious metal products: silver, gold, platinum. The law imposes a surveillance system for jewelery stores with a stock above $ 106,000 excluding tax. The texts specify that these devices can range from video surveillance, to the presence of a surveillance agent during the opening hours of the store.
The status of jewelery companies
There is no diploma requirement for practicing jewelery. CAPs however exist in precious metals or jewelery timepieces. As with most activities, it will be possible to practice as an individual entrepreneur or by creating a company. As an individual entrepreneur, taxation follows the regime of industrial and commercial profits. The professional is subject to corporation tax if he has created a company, or includes income from his business on his income tax return if he is a self-employed entrepreneur.
In the jewelery sector, 63% of companies took the form of companies. The VAT rate is 19.6%.
The characteristics of the jewelery trade
Almost no new establishments are created in the city. Acquisitions range from 45% to 80% of annual sales. As in any retail business, location is important. In addition, the performance of the safety device and the aesthetics of the arrangements are added for the jewelery industry. Pure creations are generally realized in shopping centers. It is necessary to plan substantial investments for the layout. It is imperative that the establishment presents a modern design. Safety devices can not be neglected. It is evaluated alone at 30% of the total cost of the facilities. The premises must be renovated at least every 10 years.
The management of a jewelery
Jewelery is a very seasonal activity. 30% of the turnover is realized during the end of the year holidays. Valentine’s Day and May are the other two good times. Fancy jewelery and low and mid-range are the main sales.
The manager will be able to follow the decomposition of his figure between jewels, watches as well as any benefits: cleaning, repairs.
With regard to retail sales, purchases are the heaviest item in terms of expenses. They make up about 50% of the turnover. Inventory tracking is essential to minimize them.
Personnel costs are not decisive. Even in specialized chains the staff is very small and versatile.
To succeed, the professional must ensure a turnover consistent with his orders. For this he must calculate his margin so that it allows a rapid turnover of goods while ensuring a substantial profit. Aggressive policies lead some independents to cut their margins too much.
Cash is a real problem in this sector because of seasonal activity. Financing difficulties are therefore a reality. At startup, you need to have solid resources. For independent jewelers, own funds must represent at least 60% of stable resources. For network affiliated jewelers, they should not be less than 40%.
The value of a jewelery business
The valuation of a butchery business depends on the products sold. Thus a fancy jewelery can be estimated between 40 and 120% of the annual turnover while a jewelery watchmaker will be valued rather between 30 and 70% of annual turnover.
Of course, the location or profitability generated by the jeweler will increase or decrease the valuation of the business.
Financing a jewelry store
In the end, only professionals with sufficient stable funds will be able to survive.
Obtaining financing will depend on the significant personal contribution of the partners and the manager’s experience, which is essential to convincing the bankers.
Being part of a jewelry franchise network can also be an undeniable asset, especially if it is well rated by banks.