Jeweller - June, Edition II 2020

FORECAST FEATURE | Post-Pandemic Retail
INDUSTRY
PREDICTIONS
Set to Rise
Local
support
which means that shopping will be
further digitally driven than it is now.
Resource scarcity is another megatrend,
where energy prices will continue to
increase.
There will be a shift in economic power
as India will be the next country to see its
economy grow rapidly, with the thirdlargest
GDP. Asia and Africa will also
expand quickly.
A demographic change is at play as well.
People will live longer and have fewer
children.
A few years ago, there were four workers
in Australia for each retiree but by 2050
it is predicted that the ratio will be 1.5
workers per retiree.
“Since 2012, there has been
negative wage growth in real
terms. So, at the same time the
cost of ‘essentials’ increased,
real income for the average
person descreased by about
1-2 per cent. Therefore, the
amount of money spent – or
available to spend – on nonessentials
decreased by about
15 per cent.”
Then we come to the retail disruptors.
Large e-commerce businesses that
have entered Australia, like Amazon and
Alibaba, are agile, innovative competitors.
They have found clever ways to gain
market share and the jewellery industry
has to do the same – it has to be
smarter.
The market changes and disruptors have
affected the average fine jewellery store
over the past four years, contributing to
the closure of approximately 300 stores
– or 10 per cent of all jewellers.
Difficult trading over the past ten years
has resulted in some early retirements
– with jewellers deciding to close the
store rather than risk renewing a long
term lease – or in some cases because
of insolvency.
Looking into the crystal ball
By examining the previous trends, the
future of retail can be predicted to some
degree. For example, in 2017 around
35 per cent of all online purchases by
Australian consumers were for goods
from overseas websites.
Globally, it is likely there will be even
more cross-border business-toconsumer
commerce – although
COVID-19 will dampen international
transactions for a period of time, due to
worsening economic conditions and less
international transport available.
In addition, there are already signs that
many Australians are endeavoring to
support local businesses and Australianmade
products, where possible. This
may present marketing opportunities
for many retailers to promote local
manufacturing and sourcing of raw
materials.
Several years ago, the standard
model involved manufacturers in Asia
employing an agent to work with a local
importer, wholesaler and retailer in
order to deliver the final product to
a consumer.
That model is now changing, with more
producers finding ways to sell directly to
consumers and ‘cut out the middlemen’.
The other important trend for retailers to
consider in the future is social proofing
– that is, social media reviews and
third-party ratings that influence buying
decisions. This is more powerful than
traditional mainstream media, which
reaches less than half of the people it did
10 or 15 years ago.
Finally, the growth in consumer
demand for custom designed jewellery
will continue and provide substantial
turnover for bricks-and-mortar stores
as consumers search for something
‘different’.
There is still a huge opportunity
for further growth in custom sales,
particularly as bricks-and-mortar store
sales are more profitable than online
sales.
International
e-commerce has
been dampened;
consumers want to
buy Australian
Direct sales
Manufacturers
are moving into
direct-to-consumer
sales, cutting out
wholesale and retail
Social proof
& reviews
Consumer
purchasing is
increasingly guided
by third-party
ratings and social
media reviews
Custom
design
Demand for
custom-designed
jewellery remains
a substantial
opportunity for
retailers
That is because, on average, most products
sold online are at a lower price point than
those sold in-store as the vast majority of
consumers buying online are searching for the
lowest price available.
It’s not good business sense to transfer a
profitable sale from a bricks-and-mortar store
to an unprofitable, or less profitable, sale in an
online environment.
So now we come to 2020 and beyond and the
impact of COVID-19.
As the various government health restrictions
ease, we need to find ways to restore trading
to pre COVID-19 levels, despite increased
unemployment, underemployment and
considerable consumer concern.
Real time, real-talk solutions
A webinar series created for Nationwide
members focused on key retail strategies that
address all of the changes over the past 10
years, as well as disruptors, and COVID-19.
The webinars focused on three topics:
preparation, maximising stock performance,
and marketing.
“The market changes and
disruptors have affected the
average fine jewellery store over
the past four years, contributing
to the closure of approximately
300 stores – or 10 per cent of all
jewellers”
In the preparation topic, we outline the
financial support schemes that are available
from the federal and state governments.
It is important that all businesses take
advantage of everything available, including
rent relief under the Mandatory National
Commercial Leasing Code (“Code”); however,
the legislation varies by state, which makes
negotiating the best outcome difficult in some
circumstances.
The next step is to ensure that businesses
have a sound financial structure going forward,
based on a realistic sales forecast.
The three key elements are: gross profit
percentage, rent and labour costs – the
latter two being the major expenses in retail
30 | June 2020