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A tale of two (jewellery) locations

A violent armed robbery recently highlighted the risks for jewellery stores and, ironically, COLEBY NICHOLSON says it draws attention to the pros and cons of shopping centres.

The recent armed robbery of a Melbourne jewellery store emphasises the added risks that high-street retailers face over jewellers located in shopping centres.

All retail businesses face the risk of theft and robbery though few face the heinous crime of armed and violent robbery as much as jewellers.

Of course, the issue is predicated almost solely by the high value of the goods in store and the fact that quality jewellery pieces can be melted – even if stolen jewellery can easily be identified, armed gangs know that the value of the individual components of certain pieces can equal the value of those pieces as a whole.

This is especially so for gold jewellery, which is exactly what the Melbourne jewellery store carried in abundance. The store catered for gold-loving consumers, and CCTV footage of the terrifying robbery shows armed thieves scooping-up valuable gold items.

Subsequent media reports stated that the three bandits escaped with as much as 70 kg of gold jewellery, including the entire front window display. Over in a brief moment, the haul has been valued at between $250,000 and $300,000.

The crime raises various points for discussion. Firstly, the attack should remind the trade that even the best security and CCTV systems will not stop an attack such as this – CCTV assists the police in apprehending the assailants after the robbery but will not deter thieves who have intent.

Secondly, high-street jewellery stores are far more vulnerable to vicious attacks than jewellery stores in shopping centres for reasons that are self-evident, which is one reason why many storeowners gravitate to the more secure and safer surrounds of large shopping malls.

There have been instances of violent armed attacks on jewellery stores in shopping centres but they are few and far between when compared to the more susceptible high-street stores. Higher rents in centres provide for greater security and safety.

There are often rent advantages to be had by opting for a traditional suburban store on shopping strips because there will be many landlords on the same street as opposed to just one monopoly landlord controlling a whole centre.

Furthermore, should the landlord want to increase the rent beyond a reasonable rate, high-street jewellers are better placed to move to nearby empty stores where different landlords are likely to offer better terms to attract new tenants. Jewellers that have built a solid and enviable reputation as well as a strong local clientele are well placed to move their store across the road, for example, with little or no effect on sales.

On the otherhand, a jeweller in a shopping centre must either accept the landlord’s demands or close the store and leave.

More flexibility
However, while high streets offer more flexibility when dealing with landlords, any savings might be offset against higher insurance premiums and increased security measures because of potential attacks such as this recent one. For every debit there’s a credit, right?

But in this rapidly changing world, I still think it might be easier for jewellers to build their own “brand” on the high street as opposed to being one of a dozen or more jewellery stores in the one shopping centre.

If I was focused on building a long-term business and I believed I could build the store and my work into a local brand for destination shoppers, I know where I would prefer to be located.

Jeweller’s own research has previously highlighted that jewellery stores make up 5 per cent of all specialist stores in shopping centres right across the country and this is no coincidence – it’s well known that shopping centre landlords love jewellers because they see them as easy targets for higher rental costs.

It has become a common complaint that jewellery stores pay over the odds or above market tenancy costs in shopping centres. The landlords play-off one store against the other and when there’s 10-20 jewellery stores in the one centre, it becomes an unpredictable game.

(Apparently jewellers achieve much higher margins than other retail categories!)

And worse, trying to stand out and offer a USP is much more difficult in a crowded market which is another attraction for high street locations.

Again, for every positive there is a negative!

National database of retail leases
It’s pleasing to note that the Jewellers Association of Australia (JAA) is attempting to redress the imbalance for jewellers when negotiating leases with the major shopping centre landlords by creating a national database of retail leases, including tenancy rates, general location, lease area size, and terms and conditions.

The project would allow jewellers to compare their tenancy rates against other businesses in shopping centres to ascertain if their lease costs are overpriced and/or above what other businesses are paying for similar space.

It’s even more pleasing that the Australian Competition and Consumer Council (ACCC) has announced its approval for the project. The JAA had to work with the ACCC to establish the database in order to overcome the “technical nature” of cartel laws in the Competition and Consumer Act 2010.

The issues relate to subsection 88 (6A) – Anti-competitive disclosure of pricing and other information of the Act, which covers the collusion of price or other behaviour.

If the JAA’s lease project gains traction, there’s a good chance that jewellers will be able to use the valuable information contained in the database to negotiate reductions in leasing costs or, at the very least, ensure they are not paying above market rates.

The game has been stacked against small independent retailers for too long but things might be about to change.

Sadly, though, the greater security risks – including the potential violent, armed attacks for jewellers located on the high street – will always remain.
 

More reading

Retail tenancy database
New jewellery lease database receives go-ahead
Jewellers take on landlords
Senate inquiry good news for jewellers

Robberies
Terrifying, armed attack on jewellery store
Jewellers watch robbery live on iPad
$100,000 diamond rings swiped in jewellery store theft
Australian thief swallows diamond rings
Stolen Argyle diamond still missing
Rare Argyle diamond possibly swallowed in theft
KFC jewellery store finally unlucky
Thief swallows diamond ring
Jewellery suppliers targeted in robbery spate











ABOUT THE AUTHOR
Coleby Nicholson

Former Publisher • Jeweller Magazine


Coleby Nicholson launched Jeweller in 1996 and was also publisher and managing editor from 2006 to 2019. He has covered the jewellery industry for more than 20 years and specialises in business-to-business aspects of the industry.

Ikecho Australia
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