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The Luxury Market is Changing: The Importance Of Good Succession Planning | December 30, 2015 (0 comments)
While every year brings change, this year seems to have brought more than most. At The Centurion, we know the retail landscape continues to evolve. To help you start out 2016 on the best note, we asked a variety of industry experts for their take on dealing with these changes. Each replied from their own viewpoint, offering strategies and insights into the changes the year ahead will bring. Our ninth installment is from Dan and Lori Askew, The Vantage Group, and speaks to retailers on the importance of transitioning your store, when the time is right. --Caroline Stanley
La Costa, CA—The biggest change in recent times for our industry is undoubtedly the shrinking of the number of independent stores. This trend was predicted several years ago, and Dan Askew of Vantage Group addressed it in a talk at Centurion 2011. The economic numbers are quite simple to understand; there is a large number of baby boomers either at, or quickly approaching, the age of retirement. This, coupled with an increasingly competitive marketplace, puts our industry in a quandary.
31% of jewelry storeowners are currently 61 years old or older, and 70% are 51 or older, approaching their dream of retirement. These percentages have actually declined over the last several years because of the number of jewelers who have exited the industry. The U.S. Government Social Security full retirement age is 66 or 67, based on when a person was born, but applicants can accept a reduced distribution as early as age 62. A recent survey by InStore magazine showed that 24% of jewelry storeowners plan to continue working through age 65 to 69; most disturbing is that 52% of independents plan to work beyond age 70.
We are just approaching what will be a severe decline of independent jewelers, and consequently, we are on the cusp of an escalating number of store closings. This happens for several reasons but primarily due to lack of planning.
When a jeweler seeks to retire, he or she has three options: Sell to an outside firm or individual, sell to a staff or family member, or close the store and run a going-out-of-business sale, or “GOB.” The first two options take more effort but typically yield the greatest return for the owner. The option of a GOB is necessary when there is no buyer for the business, and the process will typically produce 1.2 times annual sales during a nine-week event. This option requires careful planning to maximize the owner’s return.
Strategic planning is critical. Dedicated planning allows the independent not only to financially maximize his return, but also to do so in a way that allows more control of his destiny. In the meantime, strategic planning helps the independent maneuver around the competition as they close their doors, to benefit from their closings and to be in a position to capitalize on what most likely is another owner’s demise.
In the days of our parents, retirement was a cherished goal: the second half of life, a time to relax and travel. Sadly, those dreams only exist for a small percentage of people today, stripped by the economy and unpredicted outside factors. If the hope of retirement is no longer on your horizon, we encourage you to change your destiny and retake your dreams. Strategic planning can maximize the independent’s decades of hard work, allowing you to finish well.
For more information about Succession Planning visit: VantageGroupInfo.com.
Missed any previous installments? Click below to read:
- The Luxury Market is Changing: The Importance of Omni-Channel Retailing by Sherri Smith
- The Luxury Market Is Changing: It's Not The Millennials, It's the Opportunities by Andrea Hill
- The Luxury Market is Changing: How To Deal With New Financial Realities by Jeff Gordon
- The Luxury Market is Changing: How To Turn Millennials On To Fine Jewelry Beyond Bridal by Edahn Gohan
- How Synthetic Diamonds Will Impact The Future by Abe Sherman
- For Local Jewelers, The Future Is Brighter Than You Think by Doug Gollan
- The Luxury Market is Changing: Social Media, Hiring & Firing by Suzan Flamm, JVC
- The Luxury Market is Changing: Marketing by Ellen Fruchtman, Fruchtman