Swarovski Australia set for major retail expansion

The Austrian-based jewellery giant is set to embark on a major store expansion using its international “mono-brand partner” model.

Swarovski currently operates 58 retail outlets in Australia and New Zealand, all of which are company owned stores or department store concessions. Internationally; however, the company also has non-company owned stores under a partner or licensing model similar to Pandora’s concept store franchise operation.

 

Robert Buchbauer, CEO Swarovski consumer goods business, explained that there are around 2,400 Swarovski mono-brand retail stores worldwide of which 1,100 are under the partner model.

“We have operated very, very successfully with partners all around the world and we believe it’s time to introduce this model to Australia,” Buchbauer told Jeweller. 

He believed the partner model was important because it allowed the brand to get much closer to consumers that might not best be serviced by a large, international company. 

“Swarovski is very good at an international environment such as major high streets with lots of traffic and tourists and we know how to run that retail business. 

“But sometimes partners are really able to service the consumer better because there are lots of interesting [retail] locations where you need a lot of local knowledge in order to build the relationship with the consumer. That’s why we want to partner with local experts,” Buchbauer explained.

According to Buchbauer, discussions are well underway with a potential local partner and, “We hope we can finalise an agreement and open the first partner store before the end of the year.”

Buchbauer is the great-great-grandson of Swarovski founder, Daniel Swarovski, and has been a member of the company’s executive board since 2002. He joined Swarovski’s marketing division in 1998 and in 2001 took the position of vice president marketing services and e-business where he set the company on a “first mover” internet strategy.

The local market has achieved impressive results for Swarovski, providing confidence for the retail expansion. “Australia is performing very well for us at the moment, especially in our watch category. Worldwide we had a 35 per cent growth rate last year in watches but Australia was 60 per cent growth. That’s fantastic!” Buchbauer said.

Apart from capital city expansion, the introduction of the retail partner model will also focus on regional centres and large country towns, which, according to Patrik Hauert, Swarovski managing director consumer goods business Australia and New Zealand, shows Australia has a lot of growth potential.

“We already have a well established distribution [in Australia] and we’re in all the major shopping centres and on the major high streets. There is room for a lot of growth in Australia and NZ, especially with the partner model,” Hauert said.

He added there was no specific target for store openings. “It will be more of a selective expansion, it will depend on the partners, but we won’t be rolling-out 50 stores in one year. 

“Once we begin, we’ll look at where we need to gain more accessibility to consumers and identify the right partner. The important point is we need the right partner who really understands how we want to operate as a brand in Australia.”

Interestingly, there are no restrictions on potential partners, and if someone has an existing jewellery business, including a Pandora concept store, they would not be excluded. 

“If someone who runs another jewellery store like Pandora wants to partner with Swarovski, and provided there is no conflict with the other party, then we would be open to finding partners with existing jewellery businesses. They [partner stores] need to be profitable otherwise, if they can’t make a living out of the partnership, then what is the point?” Buchbauer explained. 

It’s not widely known that Swarovski’s first store outside of Austria was in Sydney’s Centre Point, which opened in 1979. Buchbauer described it as more of an “experiment,” and the brand’s international retail expansion really only got underway in 1997 when the first Swarovski stores opened in Hong Kong.

Indeed, at the time the Sydney store opened, Swarovski’s business was essentially still in crystal figurines, which accounted for 70 per cent of the company’s sales. These days Swarovski’s international turnover exceeds €3.2 billion (AU$ 4.85 b) and figurines represents only 30 per cent of annual sales, a complete reversal.

Swarovski has been quietly undergoing retail expansion Down Under; increasing store counts from 26 in 2007 to 37 by December 2013. Add to that 10 department store concessions, four “factory outlets” and two kiosks, along with four New Zealand stores and one concession, and you can see why a partner model can achieve greater market penetration. 

The company gained local media coverage in 2011 when it outbid Bevilles Jewellers for the prime location in Bourke Street Mall. Bevilles had been in the mall for a decade and it was reported that Swarovski was paying more than $1 million rent for the 105 square metre store. 

At the time, Bevilles managing director Michelle Stanton explained that the company was reluctantly closing the store because of the rent increase and that competing with overseas retailers would be a new challenge for Australian retailers.

“International players have come to town and they have the ability to pay fabulous rent. The right rent moving forward [for smaller companies] is difficult, due to these international companies,” Stanton said. 

Two years on, the move has been a great success for Swarovski. “It’s a very successful store. It’s the number two store in Australia and is now is in the top 30 Swarovski stores worldwide. We pay a certain rent but we would not pay a rent that we could not afford,” Hauert explained.

Buchbauer added that Swarovski had experienced the same thing overseas. “It happens to us here and there too. Sometimes the landlord is asking too much for a [rent] increase and we say, ‘Sorry but we will not pay that’, so it happens everywhere in the world.”