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Margin Call

I’ve been in the retail industry my entire working life, both as a retailer and most recently as a supplier, and I’ve never seen the market as difficult as it is right now. It’s like being on a boat and you know the storm is coming but you really don’t have any idea how bad it is going to be.

There’s no way that retailers are getting as much foot traffic as they were three or four years ago; customers are now fewer and farther between.

If jewellers are to have any hope of surviving this challenging period then they need help from suppliers. Specifically, suppliers must take responsibility and provide them with increased margins.

Not naming names, I think it’s imperative that the big brands look at adjusting margins in order to maximise the value of each customer that walks through the retailer’s door. Being able to maximise this customer value does not come by giving people a new product or a gift with purchase promotion. These strategies don’t work anymore because the branded product marketing that’s currently out there is heavily geared towards the online environment.

Why is this the case?

Well, the big brands set most of the margins online, meaning there’s little need to conduct marketing for bricks-and-mortar retail.

My business gives a significant mark-up for the retailer and there’s a reason we do it – it’s because I know what is required to survive in a retail environment. I’ve been there, we’ve done the retail side of it and I know it’s ridiculously hard to survive without money.

If I were still in retail and wanted to ride this difficult wave then I’d need a massive margin on the products in my store, I’d need foot traffic and I’d need to get these two components to glue together.

Money is the one thing that will keep retailers alive – nobody pays bills with extra product, free gifts or rebates. Only money will pay wages and rent. It’s as simple as that.

Some suppliers boast about offering rebates. For example, if a retailer spends more than $5,000 then the supplier will give a percentage rebate or a favourable payment option. Well, that’s great but that also requires a retailer to spend more money.

Can we please all be human for five minutes? Can we all recognise that we have a better chance of surviving this retail war if we all join hands?

This is like saying to someone that’s drowning in the ocean, “Listen, I know you’re drowning but can you just hold this for me for a minute? I am going to rescue you later, down the track, but I need you to hold this for me now.”

That’s too late – there’s no surviving that situation; the retailer has drowned.

There’s also much complaining going on from suppliers about retailers not running their businesses properly, damaging the brands in store, blah, blah, blah. Are you kidding me? They’re trying to save their businesses! Retailers are the ones who are struggling to pay rents, struggling to negotiate with Westfield and other landlords who all want to get paid.

Suppliers have one job on top of providing product: they must offer outstanding customer service in order to solve every problem their retail customers have.

I think some suppliers believe that it’s not their job to do that or that retailers should feel lucky to stock their brands but this is just ridiculous.

The big brands need to take it on the chin for a bit and must cut their margins if retailers are to survive. Suppliers are already making massive margins online so it’s not as though cutting margins for the retailer’s benefit would jeopardise their businesses. Anyone who claims this is talking rubbish.

Many suppliers have been manufacturing for a long time so what’s stopping them from going back to their manufacturers and asking for better prices? They need to do whatever they can before it’s too late.

Can we please all be human for five minutes? Can we all recognise that we have a better chance of surviving this retail war if we all join hands?

Retailers don’t need to be told how to sell jewellery; they know how to sell jewellery. They need to be given larger margins – even just for the short term – to enjoy a bit of a breather.

Importantly, it needs to be done now otherwise there will be no retailers left to sell to for suppliers!


Name: Hayley Birtles-Eades
Business: Love Lockets
Position: marketing and brand manager
Location: Brisbane
Years in the industry: five



















Saturday, 16 December, 2017 01:13am
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