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Constant Reinvention Keeps Large Operations Going, Beasley Says By Joseph Dobrian, contributing editor
The chairman and CEO of Helzberg Diamonds, based here, Beasley has made his name in association with nationwide chain operations. Starting out in the 1960s with Gunst Corp., a wholesale distribution company, he moved to Best Products Co., the largest catalog showroom operator in the U.S., in 1972, and served as vice president of its jewelry division from 1983 to 1989 before joining Helzberg. At Helzberg, he held various executive titles before reaching his current position in 2004. Two initiatives that Beasley is currently considering for Helzberg are a move to more free-standing units, and a new and distinctive Web-based operation. “The trouble with malls,” he says, “is that so often, in the center court, you’ll see us in one corner, Zales in another, Kay Jewelers in another—and we all look alike. We’re doing whatever we can to make ourselves different, in terms of color, tagging the merchandise, and the biggest change we’ve made in the past couple of years is to become very strict about not negotiating on price. This is a direction that our main competitors are taking as well. All of us understand that to make money, you have to have an acceptable gross margin—and this is more of a challenge when you’re paying more and more for utilities, for advertising, for your employees’ health care.” Moreover, Beasley says, better goods are getting harder to procure, as the middle market consolidates—but this, he says, will benefit larger jewelers like Helzberg in the long run. “You’re going to see more manufacturers selling directly to larger jewelers,” he predicts, “and more wholesalers are going out of business. You saw the same development in the grocery business in the 1960s, when the supermarket could offer significantly lower prices than the corner grocer.” However, Beasley warns, larger retailers will have to stay alert to customer requirements, or their competitive advantage will evaporate. He cites the rapid decline and collapse of his old company, Best Products, as a classic example. “One of Best’s main competitors, Ward’s TV, was pretty well put out of business by Best,” he recalls. “But the company re-invented itself as Circuit City: a perfect example of a company that woke up and realized that the old format wasn’t working. Our main failure at Best was that we didn’t do the same thing, a few years later. We didn’t realize how mass merchandising and specialty retailing had changed the picture. We rested on our laurels too long, and failed to notice that the customer no longer had the patience for the catalog showroom format, by which you requested an item and waited for it to be brought up from the warehouse.” One thing Beasley did learn from Best, though, was how to grow an operation. There, he learned about market research and site selection, skill sets he used to take grow Helzberg’s operation from 50 stores to nearly 300. “There’s no substitute for choosing the right location in the right market,” he says. “Technologically, so many tools exist today to help you do that, so you might still make mistakes, but you won’t buy blind as you often did in the old days.” “The most important change I’ve seen in my years in retailing what information technology has done for the industry, in terms of the ability to collect data and turn it into an action plan. At Helzberg, forecasting and inventory control are such important parts of the necessary skill set, and without today’s technology it would be very difficult to control logistics, to keep stores stocked, to do the very specific assortment planning that’s now second nature.” The next frontier for Helzberg, Beasley adds, is Cyberspace. “We still believe the one-on-one in-store experience will always make the biggest difference, but I’m amazed at how much we sell through our Internet store,” he says. “Pricing is the issue that gets in your way there. Our Internet and in-store prices have to be identical, for the sake of our employees. Eventually, we may have to offer a whole different set of products over the Internet.” One possibility, Beasley reveals, is the establishment of a whole new cyber-operation—with a different brand name—that would focus on the high-volume $500-and-under market. “This would also be an opportunity to offer some unusual product, which is easier to do on-line because you don’t have to buy into it for all your stores, and you can sell it at a lower gross margin,” he explains. “The biggest
jewelry operations all face much the same problems,” he concludes.
“Helzberg’s biggest advantage is being owned by Warren Buffett’s
Omaha-based group, Berkshire Hathaway. It’s great to be backed
by that kind of financial strength and by Warren’s business savvy.”
Looking
Back, Looking Ahead: New York City Real Estate (first published
in The Wall Street Journal)
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