Retailers, wholesalers and manufacturers need to accept some responsibility for the problems in the industry. We need some affirmative action if we are to combat the reduction in consumer spending on luxury goods, and eliminate the stranglehold that sectors of this industry have on our market place. Some critical changes to the way the industry operates are as follows:
Manufacturers approach retailers directly to retain a higher profit margin in-house. This trend of circumventing the wholesaler seems perfectly suitable for retailers, who think they're getting cheaper prices by dealing directly with the manufacturers. The big winners are the latter, who increase profits.
To ascertain whether this is a smart move, we need to look at the Italian jewellery industry.
Although some Italian manufacturers have sold expensive machinery to Chinese producers and lost productivity due to labour cost competition, most are still selling their products to the wholesalers who service retailers.
That's how the retailers like it. They get a choice of stock from manufacturers, negotiated by the wholesalers. A direct relationship between manufacturers and retailers has had an adverse effect.
Retailers are turning their backs on Australian manufacturers and seeking products overseas. Over the past few years, the number of Australian manufacturers exhibiting at our two major showcases has declined considerably. The high costs of hiring booths at the Sydney and Brisbane jewellery fairs is a prohibitive factor, as is the downturn in domestic sales orders.
The quality and variety of products on display also suffers in comparison to many other international jewellery exhibitions.
The fair spots vacated by local manufacturers are being filled with Asian exhibitors and costume jewellery importers who seem to be doing pretty well in our market.
Why is it that a direct relationship between retailers and manufacturers is not reaping enough benefits? Rather than spending resources attracting retailers, should manufacturers be investing in expanding their product ranges, making them more exciting and cost-effective?
Our market has been invaded by Asian imports. Debate on this has been waged for sometime.
Some jewellery experts support the influence of Asian manufacturing upon Australia, claiming it has brought product prices down and increased variety. Others argue that Asian producers flood the market with low-quality products, devaluing the industry as a whole.
There is a high demand for lightweight, average-quality diamond products from Asia. The market is driving demand and these producers have a solid presence in Australia. Not only do they exhibit at our fairs, but they send armies of sales agents with bags of goodies and they are enormously successful.
There is a decline in the demand for high-quality product. What triggers this trend? Do we want to change more often and buy more of the cheaper products? Do we sacrifice quality for quantity?
Asian products are not all poor quality. Most jewellers will tell you that they wouldn't be able to manufacture such products and, if they did, the cost would be so high that no one would buy them.
Of course, some diamonds in foreign-manufactured jewellery are poor quality, but you can order any quality you want, so that really is not the issue. These products are being manufactured overseas at really competitive prices and retailers are making a good profit from them while satisfying customers.
There is a dog-eat-dog attitude. It is well known that Australia has a relatively-small market place, and maybe there are too many players in the game. How do we choose to deal with it? By bagging everybody and making them look bad so customers will choose us.
To survive in a market when it becomes crowded, companies look at mergers and alliances because they know that they can ensure access by joining forces. Why fight for it when we can share?
Ultimately, the biggest losers are the customers. There is a general perception that jewellers cannot be trusted. There is also a level of mistrust caused by a lack of consumer education. Customers don't know much about jewellery so we are facing an amount of scepticism because of a lack of knowledge.
Can we overcome this? Can we make it better by taking initiative and educating buyers? We can fix many issues through solidarity and voting for change. Whether you are a manufacturer, wholesaler or retailer, you have a stake in the future of this industry.
Maybe it's time we ante up.
Name: Mireille Pizzo
Business: Talia Jewellery Importers, Manufacturers, Wholesalers
Position: Director
Qualifications: Masters of Business Administration, Diplomas in Management and Financial Strategy
Years in industry: 15 years