Retailers are suffering as a result of poor decision-making, not the state of the global economy, says retail expert Peter Ryan, director of Red Communications.
Ryan is one of Australia’s leading retail strategy consultants and in a frank interview with Jeweller, he said that jewellery stores are more like catalogues and showrooms.
“Jewellers have essentially become showrooms rather than aspirational zones,” Ryan said. “Jewellers are basically a catalogue window that all look the same; jewellery should be a special purchase.”
The appearance of a jewellery store is essential, says Ryan, and many jewellers have lost that seductive element. Rather than place the majority of stock in store windows, Ryan believes jewellers need to entice customers.
According to Ryan, stores like Tiffany make an excellent example of a successful formula for selling jewellery. Besides the visual merchandising and appearance of Tiffany stores, Ryan said that staff educate the consumer with product knowledge and seduce them with a good first impression.
“As a consumer at Tiffany you focus on what the staff member does rather than make up your own mind, he educates you on what you look at,” Ryan said. On the otherhand, “Most [independent] jewellers leave everything in the showcase letting you make your first impression and this is hard to undo.”
Jewellers need to re-discover this edge of seduction and aspiration, Ryan suggests. Selling jewellery is about charming and engaging your market, and according to Ryan, jewellers have the ideal opportunity to provide a beacon of light amongst the doom and gloom.
“In this world you need to engage at a human level and charm consumers,” Ryan said. “Jewellery is a premium item where it’s a want and money is secondary, so jewellers need to provide a place where they want to find new things.”
Ryan believes that the global economic crisis wasn’t to blame for negative trends in consumer spending.
“Since Australia recovered from the 1996 recession, retail hasn’t taken a backward step,” Ryan said. “Today consumers spend more money than they have ever spent in the history of retail.”
Ryan claims that retail isn’t experiencing difficult conditions; rather, the sector is growing at the 50-year average of four per cent per annum. So why do we continuously read about doom and gloom in Australian retail?
“Retail is growing at four per cent which is the 50 year average,” Ryan said. “The problem was that the industry was growing at eight per cent prior to the GFC and retailers got drunk
on this.”
The popularity of online shopping has seemingly negated the sales in bricks and mortar retailers. Ryan, however, insists that the internet has brought transparency to the market, allowing consumers to see how uneven pricing really is.
“Transparency has laid brands bare as hypocrites,” Ryan added. “If Consumers can get products cheaper in America and have it shipped here in 48 hours – then why not? We [Australians] effectively buy American products here cheaper than the Americans who are subject to state taxes.”
Ryan argues that retailers are overestimating the impact of online retailing, saying it has grown because of pricing schemes put in place by brands. As a result retailers feel the only way to combat these schemes is through discounting, Ryan says.
“Global brands have their heads buried in the sand in regards to distribution,” Ryan said. “Relative pricing from a consumer perspective should be fair and equitable – the truth is that it’s not.”
Jewellers meanwhile can be left open to price comparison, based on the brands they stock. Retailers need to re-think what they stock and devise consistent pricing strategies, he says.
“The internet has made information easily accessible for consumers,” Ryan said. “If you sell the same products as other local jewellers, this causes benchmarking by consumers; so if it’s the same product, they will look for the cheapest price.”