Christmas trading in 2012 may have been slow for many Australian jewellery stores but retailers are staying optimistic, saying it could have been a lot worse.
Australia’s second largest jewellery chain with 150 stores, Michael Hill, reported flat sales in the final quarter of 2012, which resulted in the company not meeting its forecasts. (
See separate story)
Chief financial officer Phil Taylor told Jeweller: “Both New Zealand and Australia [markets] were difficult for us over the December quarter and Christmas itself was tougher than expected”.
The results for were similar for mid-sized chain Wallace Bishop.
The company’s chief financial officer Ian Winterburn said Wallace Bishop’s overall results throughout the festive season were similar to 2011, although this was still approximately 10 per cent less than two years ago.
“If you think about it, at Christmas it [trading] would have to be a lot worse to become disastrous because you’re always going to get a huge buy,” Winterburn told Jeweller.
Wallace Bishop operates 57 stores throughout Queensland and NSW, and Winterburn added, “I suppose the disappointment would be that you always look forward to December to producing a cash flow to offset some of the poorer months and maybe that wasn’t as great as we would have hoped, but at least it was a positive result.”
Similarly, Transworld Enterprises, operators of Shiels Jewellers (40 stores) and Grahams Jewellers (seven stores) across South Australia, Western Australia and Queensland could have traded better at Christmas.
Transworld Enterprises director Toby Bensimon said, “It was patchy, it was actually a struggle particularly in South Australia. Post Christmas was a little bit better and WA and Queensland were pretty good.
The description of a “patchy Christmas” was mentioned by all three chains, saying that while it was a tough Christmas overall, they did have some standout stores that performed significantly better.
Discounting
Bensimon said the majority of sales were made on promotionally-driven items. “There wasn’t much product that we sold outside of catalogue,” Bensimon said.
He attributed the market trend to an increase in department stores holding sales and promotions on a more regular basis. “The dynamic has changed with everyone looking for those bargains. It’s always been like that but it was more pronounced this year I think,” he added.
Winterburn echoed those sentiments, saying Wallace Bishop had also felt the pressure to provide markdowns.
“There’s so much discounting that it really makes it [selling] quite difficult. You really have to respond to keep in the market. So I think the consumers did quite well from that perspective.”
Not all doom and gloom
While the chain stores may have struggled many independent stores reported good or very good results.
Bucking the Christmas trading slump was family-owned and operated Smales Jewellers. With four stores across Western Australia, it reported the 2012 Christmas period as being the company’s best in three years.
A spokesperson for Smales said the recent festive season sales were an improvement on the previous year, which in turn, were better than the poorer figures of 2010.
While an overall increase in general sales was responsible for the pleasing results, watches were noticeably popular among customers.
The buying groups are often a good reflection of the wider industry given that between them Nationwide, Showcase and Leading Edge represent nearly 900 jewellery stores.
Nationwide Jewellers’ managing director Colin Pocklington said although overall Christmas trading sales for its members were lower than the previous year, they were better than expected given trading over the past 12-month period.
In addition, he said business improved from Saturday, December 15 and was strong through to Christmas Eve for most members.
Cameron’s Fine Jewellers in Swan Hill, Victoria, and Underwoods Fine Jewellers in Maroochydore, Queensland, reported excellent trading throughout the festive period.
Margaret Fay from Fay’s Jewellers in Devonport, Tasmania, said sales were down on last year’s Christmas figures, but this time last year was a bumper period for the retailer, much similar to the previous year.
Fay said the difference in performance between the years was the noticeable lack of sales of larger, more expensive items.
“We sold many smaller items this Christmas,” she said. “We certainly worked a lot harder for our sales this time around.”
Fay said her business was now focusing more on the service and repair sides of jewellery retailing, adding that the workshop had been kept busy over the holiday period resizing rings and adjusting watches, many having been purchased over the internet.
A Victorian retailer, who asked not to be identified, said he was below budget at one store but was surprisingly 15 per cent above budget at another demonstrating that it was a patchy Christmas.
Popular products
Pocklington said silver jewellery including Kagi, Thomas Sabo and Pastiche proved to be popular among consumers.
Furthermore, Pocklington noted Pandora sales continued to decline in independent stores, but still represented a significant proportion of total sales while Winterburn said although a reasonably high volume of products was sold during the Christmas period, it tended to be primarily small items.
“People tended to stay away from heavier gold pieces, the average price was down so people are obviously not spending as much as they had in the past,” he added.