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Australian jewellery industry – a complete picture

Facts and figures about the jewellery sector are often thrown around all too flippantly. COLEBY NICHOLSON discusses how being skeptical actually led him to uncover a wealth of industry revelations.

I am a stickler for accurate and precise information. I guess it comes with the job. Journalists have an obligation to report accurately, which is why there is often a need for doubt – we should always question what is presented to us as fact.

Apart from being a member of Australian Skeptics, one of my credos is ‘Everything is wrong until proven correct.’ All too often I am told something that just doesn’t sound right, and on further investigation it usually isn’t right.

Then, sometimes I’m told something that does sound right but nevertheless also proves to be wrong, which leads to my second credo: ‘50 per cent of what you are told is wrong and the other 50 per cent is not right.’

I have written in the past that the Australian jewellery industry suffers from a lack of accurate information. We have very few facts about total industry sales at wholesale or retail, let alone individual category sales.

In fact, for a long time, the industry flew blind on data about the basics; the number of jewellery stores in the country. There were guesses ranging from 2,000 to 4,000 but no one knew exactly and, in fact, there wasn’t even an agreement on what constituted a jewellery store.

For example, can a ‘store’ be an ‘upstairs’ jeweller or a business that repairs jewellery? Are they even retailers?

Indeed, when I first started looking into the issue many years ago, there was debate as to whether fashion jewellery retailers should be included in industry analysis because that category was frowned upon, even though there was, or is, no consensus on the definition of fashion jewellery!

Ask three people to define ‘fashion’ jewellery and you will get five different answers!

So, if there is no agreement on how to define things, nothing can ever be measured, and if no one is measuring, how can the industry have accurate information? For example, what’s the turnover of the Australian jewellery industry?

Jewellery chain stores dominate

Around 2003 there was a contentious debate about the increasing domination of jewellery chain stores such as Prouds, Michael Hill, Goldmark, Angus & Coote, Zamels and so on. Doomsayers cried that independent jewellers were being put out of business as major chains expanded all over the country, especially into regional and rural areas.

After hearing these ‘facts’, my #1 credo kicked in – everything is wrong until proven correct – so we set out to research the number of chain stores and independent jewellers located in shopping centres.

Interestingly, that data painted a picture very different to the notion that chain stores dominated the industry (credo #3: ‘Conventional wisdom is usually wrong’). We continued our research and in 2007 we published data that showed independent jewellery stores accounted for 62 per cent of all retail locations.

We had to create definitions for an evolving market along the way. For example, in 2003 there were no flagship stores and relatively few brand-only stores such as Pandora ‘concept’ stores. It was also important to define issues such as, how many stores constitute a ‘chain’ and what a jewellery kiosk was. Therefore, we developed the definitions (see below) in order to create consistency across research.

Backgound reading: What is fine jewellery? 

With further definitional refinement and research we published our 2010 State of the Industry report, which measured independent jewellers, chains stores (divided into fine and fashion jewellery), brand-only retailers, kiosks and flagship stores.

The report contained a wealth of information and concluded that fine jewellery chains represented only 23 per cent of the market while independent jewellery stores accounted for 64 per cent. So much for the chain stores dominating the market and putting local jewellers out of business! 

 The 2010 State of the Industry report showed that independent jewellers accounted for 64 per cent of all retail outlets, while only 23 per cent were fine jewellery chain stores and a further 9 per cent were fashion jewellery chains.
The 2010 State of the Industry report showed that independent jewellers accounted for 64 per cent of all retail outlets, while only 23 per cent were fine jewellery chain stores and a further 9 per cent were fashion jewellery chains.

We are now finalising another data collection project intended to test other commonly-accepted industry ‘facts’. This latest research indicates that many small, independent jewellery stores have closed over the past few years, a fact that would not surprise anyone; however, what will be most interesting to the trade is the extent of our research.

Jeweller already manages the most comprehensive and complete database of industry information, bar none, and we can now identify which stores sell watches and which do not, which stores have manufacturing jewellers in-store or use the services of a local ‘benchie’.

We now know the number of ‘upstairs’ jewellers as well as how many jewellers are in shopping centres as opposed to on the traditional high street. The database even stretches to identifying jewellery and watch repairers, design studios and we’ve even researched those businesses that buy loose diamonds, gemstones, opals and tools and equipment.

All this information paints a very interesting picture of the whole of the industry and now puts us in good stead to address the most substantive issue of all, and one that’s still missing – an accurate guide to industry turnover. It’s the last piece of the puzzle, so to speak.

While there are many figures bandied around about the annual revenue of the jewellery industry, they are unreliable at best, and misleading at worst. The latest Australian Bureau Statistics’ data has total retail spending for the year to May 2015, excluding petrol, at $284.5 billion.

Wouldn’t it be great if we could accurately measure the value of jewellery and watch sales that contributed to that $284.5 billion figure?

Better still, wouldn't you like to know whether consumer spending on jewellery and watches is increasing or decreasing year-on-year?  Alas, you will have to stay tuned for that one.

 

 

JEWELLERY INDUSTRY DEFINITIONS

Jewellery Retailer

A store, or person, whose predominant business is selling fine or fashion jewellery
and/or watches to consumers from a physical store.
 

Independent jeweller

A store, or person, whose business is more often than not a single store and/or ‘family’ style business and therefore not part of a chain store or franchise. Independent jewellers often join buying groups -see below.
 

Upstairs jeweller

A store, or person, whose predominant business selling jewellery to consumers from premises that is not a traditional ‘street level’ store. The upstairs jeweller usually operates “by appointment” and has a showroom with limited product range, stock and specialises in custom-made designs for consumers. The business might also undertake contract work for other jewellery (retail) businesses.
 

Chain stores

A group of five or more jewellery stores (fine or fashion) trading under the one (brand) name, with one ownership entity - person or company - who co-ordinates buying and marketing activities across the group. It could include a franchise operation. A chain store usually has central management and standardised business practices and methods. It will source product from local suppliers and/or import its own product.
 

Brand-only store

One or more fine or fashion jewellery stores that sells and markets its own brand of jewellery and/or watches. It is usually a vertical-market operation, does not utilise local suppliers, and does not distribute to third-party stockists on a large scale. Brand-only stores are often owned and operated by the proprietor of the brand or can be businesses operated as a franchise or under licence.
 

Flagship store

One or more fine or fashion jewellery stores owned and operated by the brand itself rather than a third party. The flagship store is not part of a vertically integrated business but embodies the ‘typical’ business model of wide-scale distribution to third-party stockists. It will usually stock the largest range of its own merchandise and is regarded as a ‘landmark store’ or ‘face’ of the brand.
 

Kiosk

A retail outlet that is usually free-standing and semi-permanent in structure or might be a cart-style business. These businesses operate exclusively within large retail establishments or shopping malls.
 

Supplier

A business that sells jewellery and/or watches on a wholesale basis to retailers who then sell the product to consumers. A supplier can also provide trade services such as watch or jewellery repairs, insurance, training and other services specific to the jewellery industry.
 

Manufacturing / Bench jeweller

An individual who designs, makes and/or repairs jewellery. They person can be employed by a third party or operate their own business, and usually hold qualifications from a recognised training or educational institution or via jewellery apprenticeship.

 

Buying group

A member-based organisation created to leverage the collective purchasing power of a group of independent jewellery retailers to obtain discounts from suppliers, and to provide support services such as marketing, management and accounting advice.

 

More reading
What is and isn't fine jewellery?
What is fine jewellery?





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ABOUT THE AUTHOR
Coleby Nicholson • Managing Editor

Managing Editor • Jeweller Magazine


Coleby Nicholson is publisher and managing editor of Jeweller magazine. He has covered the jewellery industry for more than a decade and specialises in business-to-business aspects of the industry.






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Tuesday, 22 August, 2017 03:37am
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