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Why buying groups are still important

The challenges for bricks–and–mortar retailers are showing no signs of abating. ALEX EUGENE reports on why it’s still a smart move for retailers to belong to a buying group.

Challenging is the word Mike Dyer, sales manager Retail Edge uses to describe the current retail environment. When asked to expand, he laughs and calls it “bloody challenging”.

“Having said that, January was reasonably good, enough for people to be noticeable,” Dyer says, adding that he intends to keep an eye on developments.

Two years ago, when Jeweller’s last biennial buying-groups report was published, industry consensus was similar – a mixture of factors had combined to create “flat” retail trading conditions. These factors included rising rents in shopping centres, conservative spending habits of consumers and, inevitably, the growing impact of online shopping. All of these are still issues today, leading some industry analysts to dub flatter retail conditions as “the new normal”.

“The new normal is the most significant challenge that most retailers will ever have faced,” says Colin Pocklington, managing director of Nationwide Jewellers.

“The changes in retail, particularly in discretionary spending, have been and will continue to be quite dramatic. In Australia, these changes have been exacerbated by a prolonged period of stagnant income growth and unemployment,” he adds.

After interviewing the heads of all three major buying groups in Australia, one strong message comes through: in hard times, sticking together is essential.

“We all need to work together as an industry to ensure the simplest path from manufacture to sale,” says Leading Edge general manager Joshua Zarb.

Carson Webb, general manager of Showcase Jewellers, also believes the power of community is invaluable.

“Many of the long-term retailers who belong with buying groups will tell you that they are not just members for discounts – those days are long gone,” he says.

Zarb and Webb aren’t the only industry stakeholders who remain confident in the face of adversity. Dominique Lamb, CEO and director of the National Retail Association, has great faith in the strength of jewellers.

“This is nothing new to Aussie retailers who have proven time and again how adaptable and innovative they can be,” she says.

The digital bogeyman

Much has been written about the negative effect of internet shopping on traditional retailers. But according to Dyer, e-commerce is not as heavily to blame for dwindling jewellery sales as some might think.

Michael Dyer, Retail Edge sales manager
Michael Dyer, Retail Edge sales manager

“The industry certainly isn’t dying in the face of online sales – there’s no doubt in my mind about that,” he says. “From what I’ve observed with our clients, typical online sales are at best around eight per cent of [total] sales.”

Dyer says this is because online stores still can’t replicate the sales opportunities that come from face-to-face interaction.

“Because of the emotional attachment and the dollar value of the product, and therefore the risk involved, there’s still a significant amount of face-to-face contact and the ability to sell based on the intrinsic value of the product, rather than just price alone,” he explains.

Lamb dismisses the idea that traditional jewellers should cry ‘unfair’ about the emergence of online retailing.

“The idea of clicks versus bricks is no longer relevant as technology has become a fundamental component of retailers’ overall strategies,” she explains.

“This has enabled retailers to provide a far more comprehensive shopping experience. Participation is the key component for the modern consumer so retailers are now moving toward offering multiple streams to increase digital engagement, as well as in-store offerings,” Lamb continues.

“Each of these enhances the other to create a true, omni-channel approach.”

This doesn’t mean jewellers who feel left behind in the digital revolution should panic. In fact, this is exactly where buying groups come in. All three groups have understood from the beginning of the digital era how crucial it is to be on board, and have plenty of solutions to help their members.

Josh Zarb, Leading Edge Group Jewellers general manager
Josh Zarb, Leading Edge Group Jewellers general manager

“We are digitally savvy and have the skills for members to ask anything related to social media, video and photography,” Webb says.

“We also have many free assets for them including product and non-product image downloads – our members should not want for anything in this department.”

Zarb is also quick to point out the digital tools available for Leading Edge members.

“A seamless online and in-store experience features heavily on our radar at Leading Edge.

“For us as a buying group, we will continue to invest in this area to ensure our members have access to the technology to help them compete in this new digital world,” he says.

Nationwide’s approach is no different.

“We continue to update and modify the many benefits and services that we offer in order to stay ahead of the game and provide the best possible support for the retailers in our group,” Pocklington confirms.

Necessity is the mother of invention

Internet technology has gone into overdrive but so have creative solutions, with new services and ideas popping up everywhere in retail, according to Lamb.

“Retailers here and globally are already partnering with tech companies and investing more in areas like conversational commerce, the use of artificial intelligence and chat bots to interact with customers. This generates incredible feedback and data capture on what customers actually want so retailers can refine their offerings even further,” Lamb explains.

Russell Zimmerman, Australian Retailers Association executive director
Russell Zimmerman, Australian Retailers Association executive director

Russell Zimmerman, executive director of the Australian Retailers Association, says it is important for buying groups to lead the way in this area.

“The growth in retail will be in the online sector, therefore buying groups should be offering their retailers assistance with this – from assisting with websites to delivery support via secure, fast, efficient and cost-effective delivery systems,” he says.

Zarb says this is exactly what Leading Edge is doing: “In 2018 we will see refinements to all our platforms and the launch of a bespoke Jewellery Concierge app, bringing the in-store and online experience together to increase sales.”

It’s top of mind at Showcase too.

“There’s probably never been a better time to be with the group,” Webb states.

“We have resources that are second to none that members simply couldn’t tap into as a stand-alone business. These include an e-commerce, mobile ready web platform that has Google, YouTube and Pinterest built in.”

For Pocklington, the most important thing jewellers can do is focus on building a unique brand to set themselves apart.

“Custom design continues to increase and we are launching a major marketing initiative early in 2018 to assist members to substantially grow this part of their business,” he says.

“Merchandise of a fashion nature is now a much larger proportion of the average retailer’s stock holding than ever before. It is essential that retailers review their brand performance every six months using the tools we have provided.”

This detail isn’t lost on Webb who says, “We believe whilst there is a reduction in the number of retail jewellers out there, it’s also pushing up the quality of standards demanded by consumers. It’s simply not good enough to house various brands in an old site, pop in a casual extra and hope it all goes well – those days are gone.”

GROUP TOTALS - AUSTRALIA
TYPENATIONWIDESHOWCASELEADING EDGETOTAL
MEMBERS335152135622
STORES393212195800

GROUP TOTALS - NEW ZEALAND
TYPENATIONWIDESHOWCASELEADING EDGETOTAL
MEMBERS7026399
STORES752323121
Leading edge has entered the New Zealand market for the first time

GROUP TOTALS - international
 
TYPE

NATIONWIDE
FIJI

SHOWCASE
VANUATU

TOTAL
MEMBERS112
STORES415
Members and stores outside of Australia and New Zealand

NATIONWIDE - AUSTRALIA
COMPARISONNSWVICQLDWASATASACTNTTOTAL
 2018 - Members108776730331082335
2016 - Members1218885353811112391
 Variance-13-11-18-5-5-1-30-56
2018 - Stores1279482323410122393
2016 - Stores1379295363811162427
Variance-102-13-4-4-1-40-34
* Excludes 70 members and 75 stores in New zealand and 1 member and 4 stores in Fiji

 

Reasons to be a groupie

While getting that ‘group discount’ is still a big drawcard for joining a buying group, it’s only a tiny part of why joining one can prove to be beneficial – or even necessary these days.

Dyer believes a sense of community is one of the greatest benefits retailers get from being part of a group. When jewellers get together, they can share their problems and devise solutions together.

Colin Pocklington, Nationwide Jewellers managing director
Colin Pocklington, Nationwide Jewellers managing director

“I think one of the most significant things in a challenging time like this is communication with your peers – not mix of product, extended credits or anything else,” Dyer says.

One of the biggest problems he has observed for retail jewellers is “finding the motivation to do something new”.

In the face of the constantly changing market, Dyer believes retailers “don’t see an answer; they just see more problems.”

That’s where unity and discussion become so valuable, he explains.

“At [buying-group] meetings there’s a chance to communicate; where retailers can tell each other, ‘You’re not the only one with these problems. Here are some ways you might choose to tackle these things,’” Dyer says.

Zarb agrees: “Our members are looking for help on how to compete in this challenging environment, specifically on getting shoppers through the door and spending more money once they are there. They have certainly moved away from the ‘group-purchasing’ mindset; it has shifted from a ‘discount’ mentality to a ‘value’ mentality.”

To Zarb and Webb, the real value of membership lies in the support that buying groups offer to retailers.

“It can be very daunting trying to run a successful jewellery retail business without the data analysis and market trend advice that buying groups offer,” Zarb continues.

“We provide the ‘road maps’ for members to use at their discretion to maximise efficiencies in stock purchasing and reducing unplanned or wasted purchases.”

Webb agrees: “The retailers require more than a discount or a bit of credit, which we all know is built in somewhere.”

According to Pocklington, Nationwide has seen strong results arise from helping their members with business strategies.

Carson Webb, Showcase Jewellers general manager
Carson Webb, Showcase Jewellers general manager

“Our exclusive Industry Best Practice Programme is already resulting in a substantial improvement to sales and profits for many members,” Pocklington explains.

“More and more retailers are realising the importance of the business support services that we provide.”

Coming back to that group discount, Pocklington adds that it’s not just the savings but also the origin of a product that is important for members.

Nationwide therefore selects suppliers based on what is best for their members.

“We review suppliers twice a year and are always on the lookout for new product opportunities that will enhance our members’ businesses,” Pocklington says.

Webb also stresses the importance of member needs in relation to suppliers.: “We are owned by the members and work for members so we’re in the business of growing the retailers’ businesses,” he says.

“To do that successfully these days, it’s so much more than just a purchasing discount. We introduce new suppliers with open arms and work diligently on their success but, ultimately, the retailers decide what’s right for them and their clients,” Webb continues.

“In fact, many of our core jewellery suppliers are trading up this year so that’s a positive sign for suppliers, members and us.”

showcase - AUSTRALIA
COMPARISONNSWVICQLDWASATASACTNTTOTAL
 2018 - Members61304075801152
2016 - Members60304075801151
 Variance100000001
2018 - Stores7647631051001212
2016 - Stores814068126901217
Variance-57-5-2-11 0-5
* Excludes 26 members and 23 stores in New Zealand and 1 member and 1 store in Vanuatu

The way forward

The sentiment across the three buying groups is that the future still holds a place for traditional retailers.

For all the options and bargains the internet can offer, it will never be able to compete with the experience of talking to an expert in person.

Lamb confirms that the even Gen Z and Millennial consumers want exactly that.

Dominique Lamb, National Retail Association, CEO and director
Dominique Lamb, National Retail Association, CEO and director

“Research suggests that even the youngest shoppers – those who were almost born with a smart phone in their hands – still love and appreciate the in-store experience,” she says.

“This is merely a continuation of the rising ideals of participation, social conscience, connection, individualised service and consumer experience.”

Pocklington says Nationwide intends to keep abreast of the demands of the fashion world.

“We have been running workshops at the International Jewellery Fair for the last two years on how to evaluate brand performance. More retailers are realising the importance of the business support services that we provide,” he adds.

Webb reiterates that jewellers should take pride in what they know and aim to be number one in their chosen areas.

“Many of our Showcase members are fine jewellers, designers, watchmakers and experienced diamond retailers – we’re very proud of them. The path most of them have taken is to really embrace this area of the business,” he says.

“We all understand the challenges and difficulties, many of us are living them daily; however, it’s making sure we address and focus on the ones we can influence, not the ones we cannot,” Webb concludes.

“It’s a positive to see that fine jewellery sales are now well up, with steady growth coming across each month.”

Zarb urges retailers to focus on custom collections. “Many of the chain stores are reducing their custom-make offerings and this leaves the door open for our retailers to capture this market,” he says. “We will continue to offer marketing support to our members to promote design and manufacture.”

The battle between online and traditional retailing is set to continue but there is no shortage of resources to help bricks-and-mortar retailers in their fight. Buying groups offer a way for jewellers to come together and share their knowledge and expertise while also maximising their purchasing power.

As they say, there’s always strength in numbers.

leading edge - AUSTRALIA
COMPARISONNSWVICQLDWASATASACTNTTOTAL
 2018 - Members542326917312135
2016 - Members512527817413136
 Variance3-2-110-10-1-1
2018 - Stores70522910193210195
2016 - Stores6448298194212186
Variance64020-10-29
* Excludes 3 members and 23 stores in New Zealand

Each buying group operates a completely different business model. What are the benefits and differences of the three groups and the cost of membership? To find out, click the logos below.

 
Which group is right for you? Click the logos to meet them now
 
LEADING EDGE GROUP JEWELLERS, JOSHUA ZARB

 

NATIONWIDE JEWELLERS, COLIN POCKLINGTON

 

SHOWCASE JEWELLERS, CARSON WEBB

 



















Tuesday, 23 October, 2018 10:41pm
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