If you have experience and a passion for working in the jewelry industry, then you might be tempted to open a jewelry store of your own. As a store owner, you’ll have complete control over the inventory you stock, the customer base that you market to, and the services that you offer. This can be a freeing experience if you’ve worked for other stores for years, and you can make changes that contribute to the store’s success. Whether you have experience in designing and making jewelry or have an eye for design and a desire to provide great customer service, read on to understand some of the other elements that come along with starting a jewelry store of your own.
Jewelry stores sell various types of jewelry and accessories directly to consumers. Stores typically specialize in either fashion or fine jewelry, and they may specialize further, like by offering jewelry within certain price points. In many cases, these stores don’t just sell jewelry, but also offer fittings, repairs, customization, and appraisals. Some may purchase used jewelry, and some jewelry store owners not only stock pieces by others, but also make their own pieces to sell, too.
Jewelry stores face competition from online retailers, but these stores are also at an advantage in many ways. Access to a brick-and-mortar store means customers can see and touch the pieces for themselves before committing to a purchase. Many customers seek out jewelers because of their expertise in the industry; a talented jeweler can help a customer to custom-order a special piece, making recommendations about material types, colors, and more. This degree of customer service can set stores apart from their competition, and it also serves to establish a relationship with returning customers, ensuring future business.
According to IBIS World, the jewelry store industry recently experienced a decline in revenue, but is expected to rebound. From 2014 to 2019, the industry’s revenue declined by 2.4 percent, with the industry bringing in $30 billion in revenue in 2019. During that same five-year period, the number of businesses declined to 61,235, and industry employment also fell to 157,750.
The decline in revenue is reflective of the weak economy and falling employment rates that occurred during that period. With reduced household incomes and wealth, customers also reduced their spending on luxuries like expensive jewelry. It’s important to remember that the economy is recovering, and per capita disposable income is increasing. As the economy becomes stronger, jewelry stores are likely to see a resurgence in sales and revenue.
Many trends are affecting the changing jewelry industry. According to Sarine, jewelry store owners are under increased pressure to be transparent about their business practices. Millennials in particular want to know information about the products they’re purchasing, including where the materials were sourced from, whether workers are being paid fair wages, and whether the products are environmentally friendly. Jewelry stores need to approach their businesses with this in mind, especially when it comes to selling diamonds, since diamond mines can be seen as harming the environment. This is the ideal opportunity to highlight a business’ dedication to social and environmental responsibility.
There’s currently an increased market for personalized and unique pieces and styles. Nearly half of engagement rings have elements that are custom-designed. Stores that carry unique or limited lines with plenty of customization opportunities can use these benefits to attract customers.
Jewelry stores have faced tough competition from online retailers, who have been able to offer jewelry at lower prices because of reduced overhead. However, in 2019, the industry began shifting. Online-only retailers started to realize the benefits of brick-and-mortar stores when selling fine jewelry, and some of these retailers have begun to open their own storefronts.
Who is the target market for a jewelry store?
A jewelry store’s target market will depend on that store’s area of specialty. Stores offering high-end fine jewelry will market to affluent adults, while stores with lower-cost pieces can market to a broad middle-class adult audience. In all cases, stores will market to consumers who have enough disposable income to purchase jewelry. Customers may be couples who are soon to become engaged, couples who are getting married, individuals who want to purchase pieces for their own use, and individuals who are looking for jewelry to give as a gift.
Skills, experience, and education useful in running a jewelry store
Starting a jewelry store doesn’t require a business degree, but certain skills and experiences can make the process easier and increase the chances of the store being a success.
Jewelry industry knowledge. Previous experience in or knowledge of the jewelry industry is important. Customers want to buy from informed jewelers, so a store owner who is highly familiar with the industry will be at an advantage.
Attention to detail. Detail is everything in this industry. From assessing the quality of pieces to designing attractive displays, a store owner needs to be detail-oriented.
Awareness of jewelry trends. A store owner who is knowledgeable about changing jewelry trends can make wise purchasing decisions and develop an inventory that’s full of pieces that customers want to buy.
Customer service skills. A store’s reputation is quickly built on its customer service, so a store owner should have great interpersonal and customer service skills.
Management experience. When it’s time to hire employees, experience in hiring, training, and managing staff is helpful.
Costs to Start a Jewelry Store
The cost to start a jewelry store will depend on the store’s size, location, and the type of jewelry that it offers. Smaller-scale jewelry stores may cost as little as $20,000 to start, while larger stores or stores that specialize in high-end pieces can cost hundreds of thousands of dollars.
Common startup costs for a jewelry store include:
- Display cases
- Supplies like cleaning supplies and jewelry boxes
- Security system
Steps to Starting a Jewelry Store
Step 1. Write your Business Plan
After coming up with the idea, the next step in starting your business should be to write a business plan. Not only will a bank require you to have a business plan, but multiple studies have shown that a business plan helps increase the odds of starting a successful business.
Step 2. Form a Business Entity
A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from which include the sole proprietorship, partnership, corporation and LLC. Each type of entity has its own pros and cons such as liability exposure, costs and administrative requirements.
Related: Comparison of Business Entities
Step 3. Select your Location
Jewelry stores benefit from being in high-visibility locations in more affluent areas. While prime retail locations will carry higher rents, those are often justified by the walk-in traffic and general public awareness of the business that these locations bring.
Related: Choosing a business location
Step 4. Apply for Business Licenses and Permits
There are no specific licenses for jewelry stores, however there are general business registrations at the local, state and federal level that a jewelry store might need such as a sales tax permit, Employer Identification Number, and Occupancy Permit among others.
Step 5. Find Financing
Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a jewelry store is another. In order to get a loan, the borrower(s) will need to have good credit and be able invest 15-25% of their money towards the total start-up costs.
Step 6. Get your Marketing Plan in Place
A jewelry store’s budget needs to include money for marketing expenses. Stores often use print advertising, online advertising, email marketing, and social media to drive sales and brand awareness. Customer loyalty discounts and referral programs may also help to drive sales and build up a larger customer base. Marketing costs will depend on the type of activity performed.
Step 7. Get Insurance
A jewelry store will need several types of insurance for full coverage:
- General liability insurance protects the business if a customer is ever injured while on the property, like by a slip or a fall.
- Commercial property insurance protects the business against the financial loss if its store or inventory is damaged or lost because of an issue like a fire.
- Worker’s compensation insurance helps to cover expenses like medical bills or lost wages if an employee is ever injured on the job.
Insurance policy costs will vary depending on factors like the store’s location, the value of its inventory, and the number of employees on staff. To get the most accurate idea of what insurance will cost, request quotes from multiple companies. Then, compare the quotes while paying attention to important variables like coverage limits and exclusions, premiums, and deductibles.
Step 8. Hiring Employees
A business owner may be able to run a smaller store in its early years nearly entirely on their own, but at some point it will probably be necessary to hire staff. Glassdoor reports that jewelry sales associates earn an average of $21,138 per year. Some stores may also choose to offer their staff commission on the sales they make.
In addition to employee salaries, a store’s budget needs to include expenses like workman’s comp insurance, paid time off, and health insurance contributions.
Related: Hiring your first employee
How much can you potentially make owning a jewelry store?
Many factors will affect the profits of a jewelry store, including its location, the types of jewelry sold, and the amount of time that the store has been in business. According to Salary.com, jewelry store owners make an average of $39,696 per year. However, jewelry store owner salaries can range from $32,169 to $49,467.
Things to consider before starting a jewelry store
The jewelry industry can fluctuate dramatically, so it’s important to be prepared for unpredictability in profits from year to year. The health of the economy can have a significant impact on jewelry sales, and fluctuating gold prices can also contribute to the uncertainty of this industry. Jewelry store owners should have plans on how to weather the times when sales are down, as well as how to maximize their profits during better times.
Many stores are passed down through family, and entering the jewelry industry as a first-generation store owner can be a challenge. A new store owner won’t have the reputation and industry connections that someone who inherited a family store will, and this can cause a number of issues. New store owners may find it difficult to secure funding and to develop relationships with vendors.
In many cases, it’s best to gain industry experience before opening a store. Working in a store, holding an apprenticeship, and securing a relationship with a mentor can help a new store owner to “break in” to the jewelry industry. With the help of a mentor, a new store owner stands a better chance of being successful than they would when attempting to navigate the industry on their own.