The 411 on Retirement Sales: Q&A With Wilkerson & Associates’ Josh Hayes

Succession in jewelry retail can be clear-cut—say, an owner has a son or daughter who’s keen to take over the store when he or she retires. But if there’s not one clear inheritor, succession can also be messier than a house full of puppies.

But whether your plans are to pass on your business or simply retire and cash out, it pays to know what your contemporaries are doing, and to stay abreast of best practices in retirement planning. Which is why we asked Josh Hayes, vice president of jewelry consultancy firm Wilkerson & Associates, which hosts retirement and liquidation sales, among other services, to chat about what jewelers planning for a graceful exit should be thinking about right now. —Kristin Young

The Zing Report: How have succession plans changed in the last decade?

Josh Hayes: In the last ten years, we’ve been seeing a lot less generational succession. Years ago, we would broker a lot of stores. We just don’t see that as much anymore. Three main reasons why: One, is the kids just don’t want it. They watched their parents work 80 hours a week and they just don’t want that life. They want a 9-to-5; they want a balanced life. Two, banks used to loan on gold and diamonds at a higher rate. They don’t do that anymore—60-to-70-percent at best.

Jewelry is capital-intensive, and the model to sell to an outside person is that much harder. Thirdly, the business model is significantly smaller. Years ago, everyone wanted to have three stores then grow to 15 stores throughout New England, say. You don’t see that anymore. Now, the goal is to build one-two-three stores that do $3-$5-million apiece.

What are the trends in how jewelry retailers are exiting their businesses in retirement right now?

Now the model is closing a store. Of course, most people want to keep the store alive and perhaps sell to a non-family member, say a manager. But the financing structure makes that—well, we call it a unicorn, a mythical creature—and it just doesn’t happen very often. What we have been incredibly successful with in the last few years is running retirement sales. Stores get as many net dollars as if they had sold it outright. Going-out-of-business sales are incredibly high, if not a tad bit higher.

Does Wilkerson you also bail out jewelry stores that aren’t doing well financially?

Oh, sure. But that’s not the majority. We’re not seeing jewelers in financial distress these days. It’s mostly people who have hit their retirement age and their nest egg is their store. That’s their path; it’s not financial distress. I couldn’t tell you the last time I ran a financial distress sale.

How many jewelers are on the verge of retirement? What does the landscape look like these days?

We have an aging population of store owners. About three years ago, we conducted a poll on how many jewelry store owners were approaching retirement age. Between 57-58% were 60 years old or older, while 27 percent were 50-59-year-olds. That’s 85% of store owners who are 50 or older. That’s what we’re working with, and it’s created a busy time for us. We have about 20 competitors but they’re all small. We work with retailers from California to Maine and all 48 states in between. We do more sales than all of them put-together.

How did the COVID-19 pandemic affect people’s retirement plans?

The industry stopped for two months. People were worried and lost sleep. Then $7 trillion flooded the market and retailers started doing amazingly well. So well, in fact, that they held off retirement. Business was up, on average, 40% and they did lots of sales with fewer employees and fewer hours. They were making more money than they ever had and put off retirement. They rode the wave. Now, there is a backlog of people who want to retire. There’s a backlog plus the regular pace of retirees and we’re just inundated right now.

Is there a magic recipe to hosting going-out-of-business sales?

Absolutely! We celebrate retirement or farewell parties, not a going-out-of-business funeral-like sales. We also do transition sales. Or moving sales or anniversary sales. It has to be upbeat.

What would be your one piece of advice to store owners on the verge of retirement?

Proper planning is key. You never want to wait until you have a health issue and then decide to retire. Store owners are notorious for not doing that. It takes years of planning to manage inventory and maximize sales. By planning, we can get stores in better shape, host the sales event, and put dollars in owners’ pocket at the end of the day.

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