For many retail categories, branded product has proven to be a double-edged sword. There are many benefits that arise from branding products but there is also the threat that the rise of branded product has caused too much competition, forcing some product lines out of business.
Take fast-moving consumer goods (FMCGs), for example. Reg Bryon, CEO of strategic marketing firm Brand Council, says supermarket shelves have become stocked with dozens of brands that are all doing the same thing. He explains that a very buoyant advertising and marketing period during the 1980s and 1990s caused many markets to become totally saturated. Put simply, there isn’t enough room in each category for so many players.
“That’s happening in every category – from tomato sauce to toilet paper and soap powders,” he claims. “A couple of decades ago, there would have probably been about 20 or 30 soap powder brands on the shelf.”
Bryon’s point is that price becomes the only differentiator in markets where all the products are essentially the same. It’s a factor that’s affecting various retail categories, especially those dealing in FMCGs. Luckily, for the jewellery industry, not only is design and style important – emotional and aspirational attitudes play a significant role in the consumer’s buying decision too.
Overseas brands helped or hindered?
The greater the number of reasons for consumers to buy, the more niche markets can exist. Yet as retailers and consumers have both moved towards embracing jewellery brands, has the influx of international brands helped or hindered local businesses?
Pastiche founder and director Barbara Hastings holds a ‘glass half full’ view.
“Although there are some obvious difficulties in standing out against big international brands with large marketing budgets, the positive side to this competition is that it pushes you to deliver your best,” Hastings says. “It may force you out of your comfort zone to consider new materials or styles and, in effect, raise your brand profile to the level to compete as an international brand yourself.”
Laura Sawade, marketing manager at Peter W Beck, also believes greater competition forces markets to become more efficient.
“The introduction of more international brands to our shores has definitely been challenging for Australian manufacturers and, in a lot of cases, they are quick to market,” she says, adding, “Many local manufacturers have been forced to sharpen their pencils and look at what they do best and, luckily for many of us, our product ranges and offering are just as good if not better than those brands coming in from overseas,” Sawade says.
There is no doubt the “big boys” have helped the local market, says Steve Der Bedrossian, CEO of Sams Group. “It [international brand competition] has helped boost branded product sales industry-wide, even for local brands,” he insists.
“There have been flow-on effects for Australian business because retailers are more accepting of branded goods these days.”
Daniel Bentley, co-founder of Daniel Bentley Fine Jewellery, argues that one cannot dismiss the impact of social media upon the modern market, and the way in which it is forcing local retailers to stay abreast of international trends or miss out on swings in consumer preference.
“This [social media] means Australian’s tastes have changed and have become broader, and they [consumers] seem faster to follow a look or trend,” he says. “This makes it difficult for local brands as they have to work extremely hard to compete at the same level as the larger international brands.”
Positive changes
One category that has been impacted in a positive way by an influx of international brands is opal, according to Opals Australia national accounts manager Clayton Peer. “With the increase in international brands entering the Australia market, we had to go down the path of branding our own product range,” he explains. “It has been very successful for us as Opals Australia now has many resellers in Australia and throughout the world.”
When discussing the effect of internationals on the domestic market, the common thread running through supplier comments is the greater pressure it places on locals to compete, and Bolton Gems’ director Brett Bolton does not deviate.
“There is no denying that international brands dominate the retail market in Australia so local brands have had to step up or be swamped by the mass appeal of the internationals,” he says, adding that Bolton Gems has embraced the challenge to find new product.
“I believe we have been successful with Australian Chocolate Diamonds because we’ve focused on our client relationships, offering the consumer a unique product with a strong story that differentiates the discerning stockist.”
Bolton’s view is simple: if the product, marketing and price is right then a local brand will be a strong competitor against international brands, however Gerri Maunder, head of Gerrim, makes an important point: retailers who stock international brands should ensure the brands aren’t overpowering their own store identities.
“The introduction of branded jewellery in recent years has revived the herd mentality or tribal instinct amongst retailers. Certainly some retailers would say branded jewellery has been good by giving stores an immediate cash boost, but what next? Do they want the brand to drive their business?” she asks, stressing that retailers still have to find and protect their own points of difference, lest they find themselves providing identical products and experiences to their competitors.
“What happens when your fellow competitors are selling the same product in their market? What’s your point of difference? Shouldn’t it be service, trusted partnership and pride in purchase? All these are – or should be – motivators for the customer.”
Increasing globalisation
Nerida Harris, founder of Pearl Perfection, is another supplier who believes the increasing globalisation of the local market has positives and negatives.
“It has certainly paved the way for local brands so it’s a definite help in that regard; however, it has possibly hindered local jewellery brands too in that the so-called ‘big names’ can seem pretty daunting to a new-ish entrant,” Harris explains. “Local brands simply can’t compete with the money spent by the internationals on marketing and advertising, display and merchandising materials.”
According to Sparkle Impex managing director Raj Barmecha, smaller companies must reinvent and rethink their marketing strategies in order to appeal to the contemporary market. “I believe international brands do challenge local jewellery brands but they do so in a way that encourages us to provide more creative offerings and focus on a more sophisticated target audience,” he says.
“Local jewellery brands should focus on consumers looking for more niche accessories by which they can differentiate themselves from the international brands. Not every consumer is looking to jump on the mainstream bandwagon, so there will always be demand for unique local products.”
Whether loved or loathed, the presence of international brands in Australian jewellery is having an undeniable effect. One might even call it a shake-up, which isn’t necessarily a bad thing.
Perhaps this is most noticeable in the way that branding practices are catching on with local establishments that have resisted the practice for decades. Roberto Ulas from TWM Co certainly believes this is the case.
“They [international brands] have helped Australian jewellery brands. For example, in only the last few years, we are now starting to see 30+ year-old companies adjusting their logos and starting to market their products. I guess being late is better than never for some,” Ulas explained.
Ultimately, if the arrival of international brands brings added efficiencies to the market by helping local retailers and suppliers to shake off complacency and introduce best-practice marketing principles, and it does all this while giving consumers a greater array of products that stimulates overall sales, how can it be anything but a benefit?
3 PART Aussie brands report