Business Insider Australia recently declared, “Australia’s retail spending strike may be over.” Ambitious words, especially since research conducted by various industry organisations over the past few years have suggested that retail trading – and specifically that for jewellery stores – has been flat at best.
A phrase that is regularly used in the jewellery industry is ‘the new normal’; however, anecdotal evidence from suppliers, retailers and buying groups suggests that sales over the 2017 Christmas period had nominally improved or were on par with those from the same period in 2016.
The industry’s buying groups offer a valuable representation of the retail landscape, since they represent approximately 850 stores across Australia and New Zealand.
Showcase Jewellers general manager Carson Webb said his group was pleasantly surprised by the December results.
“Interestingly for us was that our diamond business was very healthy and was 16 per cent up, with a strong average sale increase.” However, he added those results didn’t form the complete picture in terms of dissecting the results.
“There’s so many aspects to the December trade nowadays and it’s not a clear cut result. If I back out two of the key brands within our retail stores, we were actually up 2 per cent for December, but if I place those brands back into the mix – as you do – then retail was down 2.5 per cent in stores,” Webb explains.
Nationwide Jewellers is the largest buying group and managing director Colin Pocklington said that although watches and diamond sales had been strong over the December period, several of his member’s stores reported that trading continued to be “tough”.
“Half of our members were up on last year and half were down; however, the weighted average was a few percent down,” Pocklington noted, adding that foot traffic and unit sales also appeared to decline in most areas.
Leading Edge general manager Joshua Zarb agreed with these sentiments.
“Feedback from our group was that Christmas came very late this year; a number of transactions overall were down compared to last year and there was a definite decline in large ticket item sales,” Zarb noted. “[However,] the stores that ran an aggressive post-Christmas sale campaign appeared to be in line or even slightly above last year in terms of sales.”
Facts and figures
Although the Australian Bureau of Statistics (ABS) won’t release its December 2017 sales figures until later this month, Australia’s two major retail industry associations have expressed optimism regarding consumer’s spending habits during this particular period.
Dominique Lamb, the CEO of the National Retail Association (NRA), said the association had noticed positive signs of “changing consumer behaviour”.
“The ABS statistics show personal accessory retailing rose 0.2 per cent in trend terms over November, suggesting it’s likely we’ll see a strong result in this category when the December figures are released early next month,” Lamb began.
“Jewellers are in a great position to capitalise on changing consumer habits and this is particularly evident during the pre-Christmas shopping period, as they’re best equipped to offer a level of expert advice that’s hard to replicate in bigger or less-specialised stores.
“Those who’ve spent time investing in the right team – in staff who are able to educate their customers on what they’re buying and the subtle differences between pieces, who help guide them on what makes each piece distinctive, and of course who help them find the right purchase, have come out on top this Christmas,” she added.
Australian Retailers Association (ARA) executive director Russell Zimmerman echoed similar sentiments, also noting that some retailers had reported that their online sales had accounted for around 10 per cent of their trade over the Christmas period.
“The ARA and Roy Morgan predicted shoppers to spend $50 billion in the lead up to Christmas – forecasting a 2.8 per cent year-on-year increase in Christmas trade,” Zimmerman added, noting that the association also predicted Australians would spend approximately $4 billion on apparel and accessories, the category which encompasses jewellery.
“Although retailers would have liked to see a higher growth figure, we believe we are on track with our predictions,” Zimmerman confirmed.
These sentiments are also backed by the ABS’s November statistics, which reported that sales increased by 1.2 per cent, effectively topping economist forecasts of an increase of 0.4 per cent.
The bureau added it was the largest monthly percentage gain since January 2013 and that annual sales effectively ‘accelerated’ from 1.8 per cent to 2.9 per cent, the fastest increase in five months.
Trading reviews
Ben Tracy from Finelines Jewellers on the Gold Coast told Jeweller that Christmas had been “definitely better than the previous year,” despite instore traffic potentially being lower.
“We are not a traditional jewellery store and don’t stock a wide variety of items, but as a manufacturing workshop I found that people remodelling, restoring and repurposing their jewellery was a big hit this year,” Tracy noted.
“Although our figures were up on last year, I feel that the foot traffic may have been lower. This leads me to believe that people were spending or commissioning bigger items or more involved restoration jobs, rather than small ticket items.”
Another jeweller who experienced a rise in sales over the Christmas period was Garry Holloway of Holloway Diamonds in Melbourne.
“Both stores performed well – overall, 25 per cent better than last year and one of our best years since the financial crisis,” Holloway said, adding that diamonds and diamond jewellery made up two thirds of sales, while remodels and precious gems made up more than half of the rest.
Also reporting positive results was supplier Worth & Douglas’ head of marketing and sales Chris Worth.
“Gauging by the re-orders before Christmas and in January, most retailers seem to have had a steady Christmas. We felt sales were on par with last year and Karen Walker jewellery sold particularly well. Items we had in various group catalogues also sold well, with repeats coming through right up until we closed for Christmas,” Worth said.
“This is always a busy time of the year for wedding ring sales being the wedding season, and the factory has been busy since reopening on the third of January,” he added.
When asked whether there had been any significant changes during the Christmas period, Couture Kingdom managing director Michael Tran reported mixed results.
“The feedback we received from our stockists was that they were well down and we definitely felt it too. [However], our precious metal range was really successful which helped our Christmas trade,” Tran noted.
Duraflex Group Australia (DGA) managing director Phil Edwards, whose portfolio includes TW Steel, Jag and Thomas Sabo, raised a similar point.
“Overall, we had mixed results. In November and the first half of December we traded well; however, on a wholesale level the second half of December was slower than previous years. Feedback from our retail partners has also been that of mixed results,” Edwards said.
Commenting on products that had come out on top over December, Edwards noted that Jag watches had performed “exceptionally well”.
“This was due to a revamp of the brand, with current styling and market driving strong retail price points,” he added.
Also reporting positive results was Ken Abbott of Timesupply, who said he had experienced strong sales leading into Christmas with his fashion brands Coeur de Lion, Qudo and Dansk Smykkekunst.
“We have experienced good re-orders before Christmas and very strong re-orders so far in January; well in excess of last year’s reorders,” Abbott told Jeweller, adding, “The retailers we have spoken with are happy with the sales in fashion jewellery.
“I believe 2018 will be a great year and we look forward to being part of it.”
Forging ahead
While it is difficult to predict how the next 12 months will unfold, feedback from those within the industry suggests that jewellers will need to continue evaluating their business practices and ensuring they have procedures in place that capitalise on increasing sales.
Pocklington said that Nationwide had devised a ‘retail response plan’ as a direct response to member’s feedback.
“Nearly half of our members have responded to our trading survey, with the comment that business advice and support is the most valuable way the group can assist them,” Pocklington explained. “This is the reason that we have responded with our industry best practice program and our 2018 retail response plan.”
He added: “It is essential that jewellers re-engineer their businesses so that they can prosper in this changed retail environment.”
Webb agreed, noting “consolidation and back to basics” were principles jewellers would need to employ in order to prosper in the year ahead.
“The current challenges will remain and not ease any time soon; however, independents are actually in an advantageous position if they have their business model and product ranging sorted,” Webb stated.
“They need to have control over inventory and marketing well sorted for their demographic, including all things digital,” he added.
Retailers and suppliers alike will more than likely agree with Tran, who offered these final sentiments: “It was a tough year, but we are hopeful about 2018. We believe if we keep improving and giving the market what they ask for, the good times will come around again.