An interesting trend is developing among jewelers:

The necklace, and similar ones worn at this season's couture shows, represents a trend that jewelers are hoping will bail them out in the current listless market: "fashion jewelry" made from semiprecious stones like amethyst and moonstone and seldom-used minerals like chalcedony, chrysoprase and amazonite...The stones themselves may be inexpensive — a necklace-long string of turquoise beads sells for $15 at a jewelry trade show — but the designs are not cheap. At merchants like Bergdorf Goodman and Barneys, elaborate bangles and beads sell for $1,500 and up.

For the designers and retailers, fashion jewelry has other obvious advantages. "The profit margins are much bigger," said Clive Kandel, whose jewelry is on display at his boutique in Bergdorf Goodman.

The difference between the $15 necklace and the $1,500 necklace--as it is with so many luxuy items--is scarcity. The fact that a particular designer crafted the latter necklace means there are fewer of those around, so they can sell for up to 100x the price of jewelry whose components are essentially worth the same amount.

The old adage mother's told their daughters, "It's just as easy to fall in love with a rich man as a poor man," applies to retailiers too. Why sell the $15 necklace everyone else is selling if you can sell one that no one else carries? This doesn't mean that every retailer out there needs to find their own haute couture designer, but take the time to find something that is unique to your market, whether it's swimsuits imported from Venezuela or amber necklaces designed by a local artists. The higher profit margins will reward your effort.

Speaking of strategic focus, it looks like Gap is starting to get back on track:

The gains reflected a back-to-basics approach Gap adopted mid last year to lure back consumers alienated by a clothing selection that emphasized more eclectic fashions.

Gap was always about selling "the basics," i.e. clothing anyone could buy and be sure they didn't stand out too much. The flashier clothes are best left to the other store chains. Why confuse the customer?

Gap is also struggling with another common problem: conditioning your customers to only buy when there is a sale:

To prod sales this month, Gap has had to lower prices more than it expected, causing the company's profit margins to sag badly, managers cautioned.

''We are seeing some reluctance to buy at full price and that is what we are trying to understand,'' Pollitt said during a conference call with analysts.

The lower profit margins unsettled several analysts participating in the call. The trend is likely to raise worries that Gap is regressing after several successive months of rising profit margins.

I, for one, never buy anything on Gap until it's on sale.

More evidence on the importance of strategic focus behind your store brand:

Walt Disney Co. will split its Disney Store chain into two separate retail concepts, one aimed at children and the other focused towards parents, at cost of about $200 million, according to a published report Friday.

As we saw in the Samsonite case, sometimes the best approach is to divide and conquer.

Tip of the day. Dress for success. People shop for validation, to feel better about themselves. Nothing sends an undecided buyer reaching for the wallet like the simple words "It looks great on you." However, for those words to have an effect on the customer, the customer must believe in the credibility of the salesperson. If the salesperson looks like a slob or is clearly not fashionable, he can say "It looks great" until he is blue in the face and the customer will merely see insincerity. However, when your salespeople are sharp dressers with a keen sense of fashion in their own wardrobe, then the customer is not only likely to believe the salesperson but is even subconsciouly waiting for her guidance. More than once I have seen the owner of an appparel or footwear store show up for work in jogging pants and sneakers. Customers look to salespeople for guidance -- dress accordingly.

The shopping as entertainment trend seems to keep growing:

The project, named Meadowlands Xanadu, is a blend of theme park, shopping mall, hotel and office space. Mills projects increasingly include entertainment attractions mixed with retail, and Xanadu will include a "snow dome" with indoor skiing, indoor water surfing, a spa, a minor league ballpark and a farmers' market.

"It's almost going to be laid out like Disneyland," said Laurence C. Siegel, Mills chairman and chief executive. Siegel said entertainment attractions would anchor the complex, rather than the usual department stores. For instance, sports retailers such as Bass Pro Shop will be clustered around the sports-related entertainment sites.

More on Home Depot's customer service problems.

Michael's, the arts and crafts retailer, has learned the value of investing in superior information technology according to this brief profile:

The turnaround story which began in April 1996 with the hiring of new CEO Michael Rouleau continues to gain steam. His oversight into how to run a large-sized retailer in regards to systems development and efficiencies of merchandise distribution are just taking hold and should continue to benefit improved store productivity and operating profit margins.

The article mentions automatic replenishment of inventory as one of the secrets of Michael's success. Notice that the investments in information technology began 5 years earlier. The market will reward the patient retailer who makes long-term investment decisions just as surely as it will punish those that do not.

David to their Goliath. This story on how independent nursuries are struggling to survive against Home Depot offers a good lesson for all small retailers competing against the big box retailers:

"The people who go to Home Depot don't know that much about gardens," she said. "In some cases, they've never gardened before. Some just bought a house and they don't want to spend a lot of time or money. But they're not hard-core gardeners."

Studies have shown, in fact, that big box stores have boosted sales for independent shops in towns that are large enough to support both outlets.

"What happens is the customers go into these stores where they get started gardening and then they hit a limit in terms of what they can find," she said. "If they really get hooked, then they eventually turn to independent garden stores."

Those who don't "were never going to be our customers anyway," Eagle said.

The smart retailer understands that competition may actually increase the total market size. Think of all of those marketing dollars a behemoth like Home Depot, Barnes & Noble or REI brings to a community. Let the big box retailers work to bring new customers into the market -- and be ready for them when they grow more serious about their hobby or interest, by offering a deeper selection of merchandise, more informed salespeople and more attentive customer service.

There's good coverage of the pros and cons of RFIDs in today's New York Times. The pros, as I've mentioned, are superior inventory control:

Early tests are encouraging. For three months in 2001, Gap tested radio frequency tags on denim clothes at a store in Atlanta. Sales jumped because the tags prevented the store from running out of popular items, and the tags made it quicker to find any items in stock.

Typically, 15 percent of shoppers leave clothing stores without getting what they want; during the test, fewer than 1 percent of Gap shoppers left empty-handed.

However, there are still many cons to be ironed out including a high unit cost (currently around $0.30 per chip), a lack of industry standards and consumer fears of loss of privacy. And of course there's the classic problem of getting retailers to make the leap and invest in new technology.

Still, the prize is so huge, it is inevitable that RFIDs will replace the bar code. The question is whether that will be in two years or five.

The technological limitations of bar codes makes the growing interest in R.F.I.D. easy to understand. Kevin Ashton, a P.& G. executive who directs the Auto-ID Center, estimates that on average 10 percent of stores are out of items the managers think are in stock — and as many as 40 percent do not realize they are out of a color or size.

The monetary impact of losing track of goods is huge. According to a survey by the University of Florida, shrinkage — the common retailing term for goods that disappear either through theft, misplacement, fraud or just bad record keeping — cost retailers a record $31.3 billion last year. Only a third was a result of shoplifting. Nearly half was employee theft, about 5 percent was vendor theft and 15 percent was paperwork errors.

The advantages of being a multi-channel retailer. This story and this story cover the problems retailers face when harsh weather keeps shoppers away from stores. Although President's Day sales were dissapointing at J.C. Penney, the department store did enjoy stronger Internet and catalog sales.

The challenge for a chain like J.C. Penney, Hicks said, is getting money that isn't spent during a snowstorm back into the stores rather than seeing it frittered away at Starbucks.

Different shoppers have different moods and habits and it's important to have a way to sell merchandise to both the misanthropic insomniac who shops at his computer in his underwear at 2 a.m. and the socialite who hits the mall first thing in the morning, and everything in between. By having an online store and a catalog sales department you can offer your customers the full range of shopping experiences -- and give the obsessive shoppers a chance to spend their money even in the middle of a blizzard.

Here's a good reminder that you can never rest on your laurels: Lowe's is gaining ground against the once unbeatable Home Depot:

Analysts said the results showed that Lowe's was making inroads against industry leader Home Depot Inc. as it sets up newer stores alongside older Home Depot warehouses.

Home Depot has been hurt by weakening sales and perceptions that its customer service is lagging. The difference in the two retailers' performance is evident in sales at stores open at least a year, an important retail measure. Lowe's reported a 4 percent rise in same-store sales for the fourth quarter. Home Depot, on the other hand, has said its quarterly same-store sales could decline as much as 10 percent.

Sometimes the formula of success is as simple (and impossible) as maintaining excellent customer service.