Back to Ganoksin | FAQ | Contact

How much to discount merchandise This Christmas


With all of us officially now into the recession for about 15
months, the Fed’s say the recession is “over”. They haven’t tried
selling diamonds or gold at $1055 an ounce, have they?

We’re entering the Christmas selling season and for those of you who
"haven’t bought a thing" because business is bad, you’re going to
have a lackluster Christmas. This Christmas will be better than last
year, but of course last year was the worst in our lifetime. But
there will still be customers with money in their hand.

Here’s what happened last year. In 2008, other than Platinum going
to $2000, business was good until the end of the summer. Like all of
the years before, most of you kept on buying higher end merchandise
because “guys come in and spend big bucks at Christmas.”

You were caught with your hands down as that didn’t occur. In fact
what did happen was that people wanted to shop were either facing
job loss or reduced income, they cherry picked the lower price

This left you with the higher price points that didn’t sell to pay
in January.

Then in January you owed for higher goods that didn’t sell. A tight
squeeze. Being business was now officially in a downward spiral, you
continued to owe for goods that didn’t sell and you couldn’t “rob
Peter to pay Paul” because Tom, Dick and Harry didn’t come into

Many jewelers were trying to live off of old merchandise in the
cases. “Please, someone buy this Ballerina pin!”

But jewelers who have had good cash flow this year scrapped the old
inventory or had a big sale on it to raise cash.

Guess what they did with the cash?

  1. Paid some vendors to get them off of their backs.

  2. Actually bought some exciting new, lower priced lines and price

  3. They are actually selling merchandise rather than waiting for a
    "schnook" to come by and buy that ring that so far hasn’t sold for 3
    years. And probably won’t sell this year.

  4. Continued to advertise.

So what to do this season?

  1. Consider “old merchandise” to be anything over 1 year old.

  2. Make a showcase by itself and put a number of pieces of old in
    that case. Don’t over crowd as I know over half of your store is

  3. Discount the merchandise from the retail tag as such:

a. Over 4 years old 70% off

b. Over 3 years old 55% off

c. Over 2 years old 40% off

d. Over 18 months old $30% off

  1. Know that retail jewelry statistics say that once a piece hits 18
    months old it has a 75-80% chance of still being in your store for 5

So when customers come in and want a deal, direct them to the Deal
showcase. Some people even name the showcase:

“Say good-bye to our old friends”
“Extreme Value case”
“Retirement Case”

Merchandise 12 months and younger, try not to discount more than

Also use old merchandise as bait. If you’re selling a new piece and
they want a bigger discount, instead of discounting more, use these

  1. Give a discount gift certificate to be sued in the future.

  2. Split the above discount gift certificate into two parts. If they
    want 30% off new items, give them a cash 15% discount and a 15% gift

  3. Offer them an old item for free if they buy this new items.

So if they are looking at a $1000 new ring and want a discount, see
if they need more gifts.

“Mr. Jones, these are new rings and they are in high demand but as a
good customer I’d like to help you. In that vein, please allow me to
give to you your choice, absolutely free, any pendant/chain/ring
from THIS CASE over here that sells up to $350.00. Now you’ll have 2
gifts for the price of one and the $350 ring is like getting a 35%
discount on this new ring you love.”

If you keystoned the $350 ring, then what you’re giving away is your
cost at $175.

$175 is only a 17.5% discount on the $1000 item. So:

  1. You received $1000 rather than discounting the new ring to $650
    or $825.

  2. You used old merchandise to move new merchandise.

  3. The customer got two items for the price of one.

  4. You got rid of an old item at your cost.

  5. You have a happy customer.

  6. The bookkeeper is happy.

Use the old merchandise however possible to not let a customer walk.
If the merchandise is really old, you know it just might be butt
ugly! Consider melting it down, taking apart and keep the stones
while cashing in the gold.

For sure after the Christmas holiday is over dispose of old
inventory. Some inventory has such little value it may not matter.
Consider charitable donations, gifts to kids in school (mothers will
come into the store) anything to move it out.

You want to look at this year to be a good cash flow year and if you
have newer inventory you have a better chance of having what the
customers want.

Have a profitable Day!

David Geller
Director of Profit

With all of us officially now into the recession for about 15
months, the Fed's say the recession is "over". They haven't tried
selling diamonds or gold at $1055 an ounce, have they? 

Obviously they did not ! Personally I am winding down and getting
ready to retire. I do not see things improving any time soon. Price
of gold is the result of intentional destruction of value of dollar.
In USA the Congress is determined to spend country into oblivion, so
price of gold, in my opinion, is only going to climb. It simply is
not fun anymore.

Leonid Surpin