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Editor's Desk

When there is no ker-ching; changing times call for changing attitudes

There’s no doubt that the jewellery industry will see some major shifts in 2018 - after all, they have already started. Change is happening all around us now but I have often said that these substantiative shifts take time to flow through to jewellery.

For a start, the most recent retail business to hit the breaks is well-known fashion jewellery chain Butterfly Silver. In March, it was announced that the speciality sterling silver business had been placed into administration.

This came on the heels of Michael Hill announcing it would close 24 of its 30 Emma & Roe stores in Australia and New Zealand. This was after the company declared it was quitting the US by closing its nine stores. The chain retailer’s overseas experiment began 10 years ago when it bought 17 Whitehall Jewelers stores in Illinois and Missouri after the US business filed for Chapter 11 bankruptcy.

Michael Hill closed eight Whitehall Jewelers stores in June 2010 and maintained the nine locations based within the greater Chicago area. It also had 30 stores in Canada, which the company has increased to more than 80 stores today.

Chairman Michael Hill said at the time that the nine remaining stores were the “stores with the most promise”. Later that year, the company announced plans for 500 stores across America.

Grandiose dream?

Perhaps but before we jump to the conclusion that Michael Hill management is at fault, it must be said that more than 700 retail stores closed throughout the US in 2017, according to the Jewelers Board of Trade.

There was talk that Michael Hill would close more locations; however it was stated that all of its existing stores in Australia, New Zealand and Canada – more than 300 – are trading well.

However, it seems that did not relate to the Emma & Roe brand.

The news follows Thomas Jewellers’ shock news last year that it had decided to cease trading all together!

Still, the consolidation of the industry in the US, Australia, the UK and other territories continues. One common attribute of these markets that is driving closures is the ageing independent storeowner – businesses that traditionally would have been handed down to the next generation are now struggling to install succession plans – however, there’s much more happening in the background than just a generational shift.

Industry buzz-terms

In announcing the closure of its US operation, Michael Hill chief executive Phil Taylor was reported as saying that the business “will be repositioned into targeting the more affordable ‘demi-fine jewellery’ for consumers”.

It’s the latest buzz-term yet, like all other marketing jargon, the concept is not new so what is it? Well, it’s simply up-market fashion jewellery.

Where fashion jewellery comprises affordable accessories made from less-expensive materials and fine jewellery comprises luxury-priced items made from precious metals and gemstones, demi-fine jewellery supposedly sits between the two, borrowing ideas from both.

This is no new revelation; plenty of brands have achieved success straddling the area between fashion and fine jewellery – Pandora for example – yet online retailer Net-A-Porter is promoting demi-fine jewellery as a new category.

In truth, it’s nothing but a new marketing term to describe a category that already exists. Why isn’t it named semi-fine? Well, demi sounds more intriguing, right?

Net-A-Porter has become such a force in luxury goods retailing that Swiss luxury conglomerate Richemont moved to take control of the online retailer last month, offering to acquire the shares it does not already own in Yoox-Net-a-Porter group for €2.7 billion ($AUD4.14b).

Richemont’s brand stable includes Cartier, Baume & Mercier, Piaget, Officine Panerai, IWC Schaffhausen, A. Lange & Söhne, Vacheron Constantin and others.

It’s been reported that the days of double-digit growth in the luxury industry are gone – it grew by 5 per cent to €1.2 trillion in 2017 – and Swiss watches have had a tough time since Chinese demand collapsed following the government’s crackdown on corruption.

Essentially, the Chinese Swiss watch buyers were imaginary! For many years the sales growth was basically built on corruption.

It seems like only yesterday that luxury companies, led by the Swish watch brands, were telling anyone willing to listen that their products would never be sold online. “There’s no way that our luxury brands would demean themselves by being sold on the internet,” they would say.

I remember thinking at the time, “Yeah, good luck with that!”

My, how times have changed!

Mind you, back then no one had ever heard of things like 'multi-channel' or 'omni-channel' shopping, 'click and collect' and all the other things that have changed the way we shop.

Even the almighty Australian shopping centre landlords are reconsidering how to attract shoppers. Large retailers are challenging and, in some cases, preparing to fight the centres, with many saying unless rents reduce they’re walking.

It’s funny how seismic shifts in industries are so often caused by the lack of ker-ching at the cash register!

Watch this space.

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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