Jeweller - March 2020

INDUSTRY FEATURE
Buying Groups Report
JOINING FORCES FOR THE FUTURE
STRENGTH in NUMBERS
Alone we can do so little; together we can do so much – so goes the old adage, and in the current business climate
that could not be more true. COLEBY NICHOLSON explores the benefits of joining a buying group.
It feels as if it’s every second day that we read about
another retailer closing its doors. Economic and
financial causes aren’t the only issues at play;
Australia has also had to contend with drought, floods,
fires and now the coronavirus, all of which have taken
their toll on the already fragile retail industry.
Colin Pocklington, managing director Nationwide Jewellers –
Australia and New Zealand’s largest buying group – says, “The
conservative spending of consumers continues to adversely affect
the industry. Until we see real growth in incomes and an easing
in cost of living, we are unlikely to see growth of sales.”
He sees tenancy costs as a significant and ongoing issue for the
industry, with many of his members “seeking rent reductions to
bring their occupancy costs back in-line with industry benchmarks.”
Carson Webb, general manager Showcase Jewellers, provides
a good insight into the mismatch between store revenue and retail
tenancy costs: “When a jeweller signed a $75,000 lease, say, five
years ago, that lease has now risen to around $91,000.
“Have the jeweller’s sales increased proportionally over that period?
The statistics will tell you that they haven’t. And what about the
legislated wage increases that they have no control over?”
According to Charlie Davey, general manager of members and
category management at Leading Edge Group Jewellers, there is
another problem facing retailers in large shopping centres. While
some landlords may not be increasing rents (though they are not
dropping them either), already high tenancy costs have forced
many anchor tenants to leave centres.
QUICK
NUMBERS
36%
Of all buying
group member
stores are
located in
NSW
108
Number of
member
stores in New
Zealand
4%
Of all buying
group
members are
located in
Tasmania
“Rising rents and increases in basic business costs continue to
challenge some retailers who must deal with a decrease in foot
traffic, due to some of the bigger players such as Big W pulling
out of regional centres,” Davey explains.
It’s a valid point because the number of shoppers who visit the
centre in part determines the value of a lease.
If ‘foot traffic’ is declining, while at the same time tenancy costs
are rising, it’s a recipe for disaster.
That is one of the reasons large retail chains are closing stores –
or worse, being placed into liquidation – sometimes as part of a
restructure plan in order to renegotiate existing long-term leases
with landlords.
Pocklington points to the number of store closures to illustrate
the seriousness of the situation. “More than 300 Australian jewellery
stores – representing 10 per cent of all retailers – have closed in
the last four years, with the main factor being falling sales.
“Without doubt, the biggest challenge has been the significant drop
in jewellery industry sales over the last three to four years.”
He monitors the industry closely, regularly visiting cities and towns
and noting stores that have closed or opened, so his finger is firmly
on the pulse.
However it’s important to acknowledge that not all the challenges
faced by jewellers are economic or financial.
Changes in consumer behaviour
The world has changed largely because of the internet and, along
with it, consumer habits.“Over the past two years, I think the
changing face of our consumers and their purchasing habits is
34 | March 2020