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Hard lessons from a tough year

With the worst of the global financial crisis seemingly over, Jeweller surveyed retailers and suppliers alike, asking whether the year was as bad as they imagined and what lessons they learned.
After all the doom and gloom of 2009, there is no doubt that the Australian jewellery industry surprised everyone. Plagued by gloomy media reports and low consumer sentiment, many industry members succumbed to their worries, while others stayed positive – aiming to survive and thrive. What we found was an interesting mix of success, caution and interesting insights in the way many people managed their way through the tougher times.

You could learn from their experiences. 

Mike Parsell, Michael Hill (Retailer)
Michael Hill ended the year with strong same store sales in all countries and that exceeded expectations. This achievement was a result of careful planning and a strong, coordinated effort between our merchandising, marketing and retail teams. From a merchandise perspective, a thorough review and late tactical changes resulted in strong Christmas sales in all markets.

The main lesson learned was the importance of getting the basics right every time - especially recruitment and keeping a lid on costs and inventory. This ensures cash flow and debt are at the levels required to enable you to batten down the hatches and ride out the storm. Recruitment and having the right team around you is always important, however in a recession, this is critical. 

We feel positive about 2010. There is still, no doubt, some turbulent water to pass under the world’s economic bridges, but we are seeing more and more positive indicators. 

Graham Jackson, Lolomas  (Retailer)
We had excellent results – sales for the year were certainly well-up. My expectations were exceeded in the diamond department – we have a range called Hearts on Fire that just exploded last year.

I learned that one should never, ever take their foot off the pedal, that success comes with hard work. Everyone just had to work harder last year and we have a fantastic team that all got involved and made sure that we didn’t go backwards.

To ensure success, we doubled our staff traineeships, and customer service training programs. Success did just not come from TV ads and radio commercials.

This year will be an excellent year. In our region, employment is not a problem, and we don’t expect it to become so. We have relatively low unemployment rates, compared to the rest of Australia. Our team of 60-odd are all looking forward to another record trading year.

Gina Kougias, Georgini (Supplier) 
We were very happy with our 2009 result. We were up 120 per cent on 2008. That was partly because customers were choosing more affordable items, over luxury goods.

This year will be a great year because I intend to make it a great year, regardless of what is going on around us. There were two important lessons from last year. Firstly, be proactive and don’t just wait for things to happen. You need to figure-out ways to make them happen. Secondly, do not put all your eggs into one basket.

Don Gillett, Gilletts Jewellers (Retailer)
Last year exceeded our expectations – growth was substantial every month throughout the year, dipping a little in November.

From this, we learned that too many businesses are influenced by media hype.

We expect 2010 to be a little challenging for jewellery stores. Most commentators expected it last year and we don’t think it happened, but there will be a lag this year as we feel the effects of increasing expenses and interest rate hikes.

Jeff Burnes, Pandora (Supplier) 
Pandora finished the year with a 76 per cent increase on last year. That’s an incredible result considering the GFC and it really does highlight the importance of a strong brand with high-quality attributes.

There were a lot of lessons from 2009, including maintaining your market profile through the good times and the tough times. Many companies had a knee-jerk reaction to the GFC and reduced their advertising and promotional activity, which in the majority of cases led to their own crisis or demise.

I think 2010 is going to be a fantastic year for the trade - consumer confidence is strong and unemployment is down. We at Pandora have a number of new, exciting initiatives and launches.

Ross Paterson, Paterson Fine Jewellery (Supplier) 
We had a very good year – all except for the super fund, that is! Our business was up 20 per cent on first half turnover and profit. I think everyone learned from the global financial crisis. For example, it is important to lower overheads and it made most companies really tighten their running costs.

The upside was that, when the GFC didn't really hit Australia, most of us found we were running our businesses far better in preparation for the fall-out. Tough times can make you review your business practices. I believe 2010 will be a good year for all the above reasons. Plus, most people think we were unaffected by the crisis and life goes on, so sentiment will be up. There seems to be plenty of money around and little unemployment.

Robert Salera, Saleras Jewellers (Retailer)
We didn’t know what to expect for the year. We were within an unprecedented environment, so you couldn’t really predict what would happen. Sales continued to be strong up until August, and then it went downwards for the year. Results were very mixed for the rest of the year, culminating in a really flat Christmas.

It was such an unusual environment to be trading in, so you can’t really take any lessons from it.

The government incentive earlier in the year certainly had an influence on people’s spending. It was strange that the government was giving people incentives to spend early in the year, and then we had consecutive interest rate hikes at the end of the year. That caused some issues in the market place. From what I have heard around the place, it was not a good Christmas for anybody.

I think we will have a very flat first three quarters of 2010, with probably some recovery in the third quarter. Next Christmas will potentially be better than last year.

Chris Holdsworth, Holdsworth Brothers (Retailer)
Last year was our best on record. We had an anniversary sale that helped us dramatically (like having two Christmases really). Christmas was also up on 2008. The introduction of Pandora has improved sales while only slightly reducing our other core sales. I think it has probably attracted “fashion dollars” (money that would otherwise be spent on shoes, handbags, fancy phones, designer labels, etc.) to jewellery without really affecting other jewellery sales.
We learnt to stick with what you know, don’t panic, don’t remove staff that you will be desperate to re-employ in a year’s time. If you have to cut costs then cut back on other excess spending and run down inventories. If you have to reduce wages, try to come to agreements with staff over reduced hours. Generate sales by moving old stock. Try harder than ever to be better than everyone else.

Brett Bolton, Bolton Gems (Supplier) 
We looked at every aspect of our business in 2009 - from staffing and customer service through to product, credit control and financing - and we ended the year strong. 
It was a hard year and sales were down a little, however compared to our expectations we had a very good year. The GFC forced many companies to assess all aspects of their business and we learned; not get stuck in our ways, to look at new opportunities and new markets and employ and keep the right people. 
Most importantly, we helped customers trade through the bad times and now we are better for it because it gave us a greater insight into the pressures faced by them and the opportunities in their market. Things are looking up for 2010. Yes, there are still problems ongoing with diamond prices and supply, and the fluctuation of the $AUD (for very little reason) but I believe the market is trying to put the past behind it.

Lonn Miller, Miller Diamonds (Supplier) 
Given the first half of the year was dismal due to the GFC, we ended 2009 very, very well because we were extremely proactive providing our customers with extra added value.

We increased our product range and put a lot of extra effort into servicing our customers. Last year taught us not to be complacent because you never know when challenging times will arise. Also, be weary of the banking system.

We are optimistic about this year and expect growth and better demand as the Australian economy is much stronger than other countries. Diamond inventory levels have been low and ran-down throughout 2009 due to the crisis – people are starting to develop inventory shortages which will need to be filled. The stronger Aussie dollar will help.

Carol Bryson, Desert Gems (Retailer)
Last year’s sales were pretty crummy. Our Christmas was worse than 2008 – 12 per cent down. I attribute this to fear  – a fear to spend money because of the economy. Consumers are just being very careful.

I think there will be an improvement in the coming year, but I don’t think it is going to be dramatic. I just want to go back to what we had in 2008. If I can get back that 12 per cent by this Christmas I think I’ll be doing okay. I don’t have any great expectations, I am just hoping it improves slightly from 2009.

Greg Ward, Connect to Jewellery  (Retailer)
Sales in 2010 will be determined by the strength of the dollar, remembering that diamond prices are based on the US dollar. The way consumers react to rising gold prices, whether gold itself is going to hold-up or there will be a trend towards stainless steel or silver, is another factor.

Colin Kahn, Time Essentials (Supplier) 
We were very happy with our result. We were ahead of forecast with a strong fourth quarter but 2010 has the chance of being a challenging year. We have seen how quickly positives can change to negatives and vice versa. Having a strategy and keeping the course must be coupled with flexibility and quick decision-making.

It seems that the Australian jewellery trade generally had a good 2009, both at the wholesale and retail levels. All things being equal, it should continue in this year. Perhaps our most valuable lesson from last year was; Keep your finger on the pulse. Continuously monitor both large and small details, and customer service is king.

Colin Pocklington, Nationwide Jewellers (Retailer)
The average Nationwide Jewellers member increased sales in 2009 in excess of 20 per cent over 2008. It was an interesting year and one thing we learned was that local conditions, and in particular consumer sentiment, can outweigh global factors. We expect this year to be one of steady growth, with improving sales of bigger-ticket items.

Jordy Cobelens, TW Steel (Supplier) 
I’m happy to say 2009 ended on a strong note for TW Steel. We increased our brand presence in Australia and around the world and our product sales remained solid in what is a very competitive market.

I believe the economic situation provided opportunities for young, emerging brands to be aggressive at a time when many established brands were downsizing marketing budgets and advertising-spend. I believe 2010 will continue to see an increase in both our brand presence and worldwide sales.  

Ron Cummins, Cummins Jewellers (Retailer)
I have no doubt we’ll have a brilliant year this year. People are starting to feel comfortable again, after a little bit of a fright with the world financial situation. People are now starting to settle down again, and I think the year will be excellent.

Stephen Brown, RJ Scanlan (Supplier) 
We increased sales last year over 2008. We budgeted for an increase and worked hard to achieve it with new products, promotions, advertising and customer support. When you put in the work it’s always fulfilling to get the result. I think anyone who experienced the ’87 crisis and the tech-bubble has already learned the lessons – it’s just a matter of not forgetting them through the good times. You tend to discover the good operators in times like these. You have to go into the new year planning for it to be a good one. It becomes a self-fulfilling prophecy.

Peter Beever, Your Jeweller (Retailer)
We had a record year and were very happy with our 2009 year-end result. We expect 2010 to be another good year as we have no reason to think otherwise. You should not worry what is said in the media. Things are never as bad as they say and, as they saying goes: “smile and the world smiles with you”.

Michael Daniele, Daniele Designer Jeweller (Retailer)
Being in the jewellery trade these days, you have got to work hard all year. In 2010, we are lucky to enjoy the dollar being so high, and obviously it makes our diamond product a bit more affordable. So, hopefully we can push the diamonds this year. Unfortunately today, people live day by day they don’t plan ahead for big purchases.



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