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We are not living in an age of disruption
We are not living in an age of disruption

Jewellers don't have to become blacksmiths

These days, traditional shopping strips are full of ‘For lease’ and ‘Vacancy’ signs. COLEBY NICHOLSON explains why this could be a good thing.

There’s a quiet revolution occurring in retail, especially around traditional shopping strips. Drive down any suburban high street and you can’t help but notice the endless ‘For lease’ and 'Vacant' signs which, of course, have followed the ‘Closing down sale’ signs.

A number of Australia’s premier traditional retail strips have long been empty of shoppers and, therefore, retail tenants – some for many years! There are reports of vacancy rates being as high as 20 per cent, although you wouldn’t be alone in thinking that the percentage was even greater, given the visual impact of ‘Vacant’ signs.

Unlike the US, the UK and most of Europe, which have had recessions, there are other reasons at play for the demise of our local high streets. Of course, most reasons are associated with that big bogeyman known as the internet.

Yes, the rise of online shopping has played a major part in the decline; however, in reality it’s less to do with the existence of the internet and more to do with changing consumer behaviour.

In other words, the downfall of traditional retail strips is not because of the street itself but rather the ‘offer’ made by the retailers operating on the strips. In essence, consumers are no longer looking for many of the products or services that have always been offered on traditional high streets – or in the way they are offered – because their behaviour has changed.

Consumers still need – or want – the same things, just not in the same way. A good example is how banks are closing branches as their customers move online. Do you enjoy visiting a bank and standing in a long queue? Of course not! So you don’t do it because there’s no need.

Stores closed

When presented with options, the consumer will always choose the most convenient. The same goes for many other products and services. Retail strips were once full of newsagencies, video, music and book stores but the media industry is undergoing structural transformation, which in turn affects these retail channels.

Some of these stores have closed forever while others have had to adapt to consumer change. Add to that other retail categories – such as computers and whitegoods – and the issue begins to become even clearer: if your product or service offering is more convenient online, then you are not long for this world.

A few months ago, a friend said he was saddened to see all the empty stores in the high streets and my reply caught him by surprise: “I’m not!”

He asked why I wasn’t concerned about the increasing number of ‘For lease’ signs and I said, “Because it means the streets will start to be rejuvenated with new businesses that people want, rather than businesses that have always been there.”

I explained that while they remained vacant, the asking rents would continue to reduce to a point where people would say, “I can afford that rent, so I’m going to give this new ‘X’ business a go.”

Background reading: 13 reasons why retailers are failing

That’s starting to happen now, except the new stores are offering things that can’t be acquired online or, more importantly, are experiential retail businesses.

For example, an old-style menswear store near our office closed a few years ago and the large retail space remained vacant until some two years later when it was transformed into a wine bar. Sure, you can get wine bargains on the internet but you can’t experience wine or the bar’s atmosphere online (well, not yet!).

New retail stores need to rely on face-to-face customer interaction and experience – the things you can’t get online. You can’t get an online haircut or manicure! Nor can you get freshly baked goods and great coffee.

High streets are being revitalised with experiential retail brought on by consumer demand. If your business simply offers a product transaction – something that can be replicated in many locations or on the internet – with little or no added benefit to the consumer, then you’re operating in a very competitive market usually driven by price and, therefore, you have little control over your margins.

Retailers who simply sell other people’s product are, effectively, nothing more that a delivery mechanism from the supplier to the end-consumer – a middleman, if you like. Such businesses were perfectly okay before we encountered the globalised world and the era of ecommerce.

Unlike other retail categories such as music and video, where the only thing you could offer was the product, the beauty of jewellery is that retailers can offer consumers a great deal more.

While the latest CD/DVD or video is nothing more than the latest CD/DVD or video, the same cannot be said when it comes to jewellery, as it offers consumers something unique and personal. There is an emotional attachment that can be sold and ‘serviced’ by jewellers, thereby offering an experiential retail transaction instead of only a product transaction.

Technological change favours jewellers

Unlike other retail categories, technological advancements have worked in favour of the jewellery industry rather than against it. Advances in CAD/CAM and 3D printing have allowed jewellers to offer bespoke design and custom-made services to their customers, which means they are not just sellers of other people’s product.

There was no better example of this than the story we recently covered about a jeweller who reinvented his business, although he actually had no choice as he was about to go broke!

On the other hand, how could newsagencies, video and music stores reinvent their businesses?

I constantly hear that we are living in an age of disruption, and all too often that’s an excuse for poor business skills. I believe we are living in the same age as we always have – one where consumers change their behaviour and businesses need to react.

Can you imagine the local blacksmith when he saw the first automobile drive past his workshop? Do you think he stood there scratching his head saying, “Wow, I’m living in the age of disruption”?

No, his product and service offering was on its way to becoming obsolete. His business closed and a mechanics shop opened in its place. See, nothing has really changed.

It’s perfectly okay to have a traditional-style ‘middleman retail business’ selling other people’s brands, however you will always be in the hands of third parties – one at each end!

Alternatively, your business can build its own reputation and longevity by offering customers much more, especially things they can’t easily get on the internet, such as expert knowledge and, above all, a great shopping experience.

The late Steve Jobs said it best: “You can't connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future.”

By learning from the mistakes of the local blacksmith who didn’t change with the times all those years ago, local jewellers can use the ‘dots’ of the past to guide them away from a similar demise and towards a bright future. Indeed, a prosperous future!

More reading
Incredible business turnaround for jewellery retailer
The future for jewellers is the good old days
13 reasons why retailers are failing
Are you a middle market retailer?
Are jewellery retailers being squeezed?

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.

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