Two store-owners share how memo has helped their businesses, and some of the challenges it’s presented.
Finding the right balance between owning stock and taking it on memo is an important part of a retailer’s job, according to Suzy Morrison*, owner of Morrison’s Jewelry in New York. At present, she estimates, between 35% and 50% of her loose diamonds are short-term consignment items, and 20% to 25% of her finished stock is on long-term memo. “This is the most finished jewelry we’ve ever had on memo,” she says. “We used to have all our finished jewelry in wallet [an industry term meaning the store owns the inventory]. Now we use a lot of memo, and we invest more money in diamonds and semi mounts.”
Short getting shorter
For loose diamonds, she works almost exclusively in short-term, which presents some challenges. The amount of time she can hold on to the inventory is “shortening up even more as vendors tighten things up,” she explains, since competition for stones is increasing.
“More vendors have their inventory online. You have so many people looking at the same stones. I used to have vendors send me stones and wait for me to report. Now they call me after a few days.” And while consignment is helpful, the work it entails can be cumbersome. “The amount of manpower for memo is a lot,” says Morrison. “You have to process the stones, grade them, ship them. It’s a full-time job. That’s why I prefer long-term memo. I can have the items for longer and not have to deal with all that every week.”
Still, the ability to supplement inventory with consignment pieces means Morrison’s Jewelry can use a more targeted buying strategy, so it purchases only what the management is certain will move. “I want to spend my company’s dollar on things I know are going to sell, and you just can’t stock it all,” says Morrison. “Having what customers want is crucial to our business model, and memo helps us keep our stock fresh.”
Part of the plan
For Kelly Christensen*, owner of Christensen’s Jewelers in San Jose, California, memorandum is integral to the company business model and has been since she opened. “Not every jeweler can have everything in their store all the time,” she notes. “If what I own doesn’t match what my customers want, we get it in.”
While memo accounts for only 5% of her finished products, it makes up 90% to 95% of the store’s loose diamonds. She also has a substantial number of colored stones on consignment. Memo works well for Christensen, in part because she has a meticulous system for keeping track of all the moving parts.
“Every Sunday night, my employees send out a sold/hold/ returned report,” she says. “We also send out a request for what we need, and we’re very specific. We not only ask for a specific color and clarity, we also list the appointment time, the depth, table, fluorescence, everything. We say, ‘If you have this exactly, then send us the stone.’ This system means we don’t have to spend time talking to every dealer.”
Sending back unsold goods is part of the process, but Christensen prefers to work on long-term memo rather than short-term when she can wrangle it.
“It gives me more time to sell the diamond,” she explains, saying it’s crucial to have flexible time with a stone because sometimes customers don’t show up to buy what they’ve ordered. Yet long-term is the exception rather than the rule. “Some pearl and colored-gemstone dealers do longer-term memo — like three to six months — but only on a handful of pieces.”
Despite the challenges, she believes memo keeps jewelry retailers competitive, since it highlights face-to-face connections. “Retail is about showing the stone in person,” she says. “If they’re just buying it off paper and off the certificate, then why not buy online?
The reason customers come in is so that I can show them the diamond in person and give them service. If you do away with memo, you’ll kill small business.”
* Retailer names and locations have been changed due to the commercially sensitive nature of the information being shared.