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Editor's Desk

But hang on...

COLEBY NICHOLSON talks about the battle between the online and traditional sectors and shares some good points as to why traditional jewellers should be pushing harder to strengthen their positions in the market.

Traditional retail is in a confusing state. Indeed, in some cases, it’s just plain contradictory, and not just in the local market.

Take, for example, recent news that retail behemoth Toys ‘R’ Us will close another 200 stores, which comes on the back of an announcement in September 2017 to close 180 stores after the company went into bankruptcy.

At the time, the US toy chain operated 1,600 stores, half of which were in the US. Most stores and territories outside the US are run on licensing arrangements and not affected by the US bankruptcy; there are 39 in Australia.

Many reasons have been given about the demise of this once-powerful retail brand but the main factors appear to be management’s decision to take the company private in 2005 and the subsequent growth of online shopping.

People prefer the convenience of shopping online, so the experts say, but hang on… this doesn’t explain the rise in new bricks-and-mortar stores around the world – and we are not just talking about single-store operations.

For example, as Toys ‘R’ Us closed stores, Chinese fashion retailer Inman effectively abandoned its online-only model to open 450 traditional retail outlets!

Why the change in business model? When Inman started in Alibaba’s Tmall in 2008, the retailer quickly became one of its flagship brands yet while Inman’s online sales increased by 39 per cent last year, sales in its bricks-and-mortar stores rose by 300 per cent.

"I believe that the percentage of jewellery bought online is insignificant when compared to other consumer categories"

But hang on… don’t people prefer the convenience of shopping online and home delivery?

When Inman’s founder Fang Jianhua first announced the change in business strategy, he was widely criticised – many analysts predicted the plan was doomed – but even Amazon, the world leader in online shopping, has opened physical stores: clicks-to-bricks.

There are plenty of other examples of online-only retailers opening traditional stores including eyeglass seller Warby Parker, cosmetics company Birchbox and men’s clothing store Bonobos.

The decision for ‘e-tailers’ to go traditional is generally dependent on which product category they occupy and, yes, the jewellery industry has its own examples.

In February 2015, we reported on the increasing importance of multi-channel retailing when online diamond and jewellery business Blue Nile announced plans to open a bricks-and-mortar store. The company was founded in 1999 as an online-only diamond retailer and was acquired by a private investor group last year.

Blue Nile now operates five webrooms – as it calls its US physical outlets – each averaging 500 to 700 square feet and each with large TV screens mounted on the walls that display social media posts from customers. In store, shoppers can view and try about 400 pieces of jewellery.

According to various retail experts, online shopping in Australia only accounts for around 7 per cent of the total retail market. No one knows how much of that spend equates to jewellery and watches and I doubt it’s significant.

Indeed, at the same time Toys ‘R’ Us and Inman were announcing plans to close and open more stores respectively, a report emerged on Amazon’s new Australian operation. It detailed the popular product categories since Amazon started trading just before Christmas last year.

Interestingly, jewellery was not among them. Electronics, men’s and women’s clothing, health and beauty, home and kitchen and other products all featured prominently but not jewellery.

I believe that the percentage of jewellery bought online is insignificant when compared to other consumer categories and I would hazard a guess people who buy jewellery online are probably not your customers anyway.

But hang on… this is not a reason for jewellers to become complacent. The battle between the online and traditional sectors appears far from won, which is why traditional jewellers should be pushing harder than ever to strengthen their positions in the market. One way to do this could be as part of a larger collective. After all, there’s always been strength in numbers.

Click over to our biennial Buying Group Report for more about that.

Coleby Nicholson • Managing Editor

Managing Editor • Jeweller Magazine

Coleby Nicholson is publisher and managing editor of Jeweller magazine. He has covered the jewellery industry for more than a decade and specialises in business-to-business aspects of the industry.

Bharat Diamond Bourse

Friday, 23 August, 2019 01:06pm
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