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Jeweller - August 2020

• Tech’s appeal: Understanding your customers’ e-commerce expectations • Balance of power: Review of retail leases and negotiation in the post-covid environment • Market update: new and bestselling products from leading suppliers

• Tech’s appeal: Understanding your customers’ e-commerce expectations
• Balance of power: Review of retail leases and negotiation in the post-covid environment
• Market update: new and bestselling products from leading suppliers

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VOICE OF THE AUSTRALIAN JEWELLERY INDUSTRY AUGUST <strong>2020</strong><br />

Tech’s appeal<br />

UNDERSTANDING YOUR CUSTOMERS’<br />

E-COMMERCE EXPECTATIONS<br />

Balance of power<br />

REVIEW OF RETAIL LEASES AND NEGOTIATION<br />

IN THE POST-COVID ENVIRONMENT<br />

Market update<br />

NEW AND BESTSELLING PRODUCTS<br />

FROM LEADING SUPPLIERS


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I N T E R N A T I O N A L<br />

J E W E L L E R Y & W A T C H F A I R<br />

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YOUR SAFETY IS OUR PRIORITY<br />

Safety plans in place to protect visitors, exhibitors and staff<br />

at the event.<br />

Social Distancing will be encouraged and monitored<br />

throughout the event for your safety and the safety of others.<br />

To minimise queuing and contact all visitors are required to<br />

pre-register for entry tickets.<br />

The teams have been trained to deliver new cleaning procedures.<br />

As a condition of entry, everyone will be assessed and those<br />

with COVID-19 related symptoms will be refused entry.<br />

For details and updates on the International <strong>Jeweller</strong>y & Watch Fair<br />

please visit jewelleryfair.com.au<br />

Organised by<br />

Est. 1990


Only $6,495 USD<br />

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ONlY 2 were found to detect All of the Synthetic Diamonds tested.<br />

Thus, giving you 100% PrOTEcTION!<br />

For your convenience, please check out the table below for the synthetic detection rate of<br />

all 12 detectors that can test multiple stones and jewellery at once.<br />

Manufacturer<br />

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Price in<br />

$USD<br />

Yehuda<br />

The Sherlock<br />

Holmes 2.0<br />

100% $6,495<br />

De Beers Group SYNTHdetect 100% $18,500<br />

NGTC GV5000 99.00% $43,200<br />

DRC Techno J-Smart 89.40% $22,499<br />

Arotek/GII QChKAdC 88.90% $7,700<br />

DRC Techno D-Secure+ 85.90% $11,999<br />

DRC Techno J Detect 9000 85.40% $9,999<br />

Gemometrics GemPen 84.90% $2,300<br />

DRC Techno J.Mini 84.40% $6,499<br />

Massive Tech Lab G-certain 82.40% $9,999<br />

Massive Tech Lab J-Certain 80.40% $13,999<br />

Taidiam Technology<br />

DiamondDect 5<br />

(HPHT only)<br />

77.40% $5,730<br />

Scan the QR Code below to read the full report of the Assure Program<br />

performed by UL Laboratories, and see for yourself.<br />

yehuda.com


Looking for new product ideas? Maybe you have an unusual request for a diamond or gemstone or perhaps<br />

you need a new supplier for your bread and butter items? Or you are looking for a new watch brand?<br />

The <strong>2020</strong> Suppliers Directory – the “Bible” of the Australian and<br />

New Zealand jewellery industries – has all the answers.<br />

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Suppliers - Are you and your products listed? Retailers – Have you got your copy?<br />

Email info@jewellermagazine.com<br />

Not only is the Supplier Directory the largest and most comprehensive<br />

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www.jewellermagazine.com


AUGUST <strong>2020</strong><br />

Contents<br />

This Month<br />

Industry Facets<br />

10 Upfront<br />

24<br />

10 YEARS AGO<br />

Time Machine: <strong>August</strong> 2010<br />

12<br />

FACTS & FIGURES<br />

COVID-19 Update<br />

26<br />

MY STORE<br />

The Collective<br />

14 Monthly Showcase<br />

17 News<br />

29<br />

52<br />

54<br />

LEARN ABOUT GEMS: BACK IN TIME<br />

Colour change gemstones<br />

MY BENCH<br />

Laurie Moffatt<br />

SOAPBOX<br />

Darren Roberts<br />

Features<br />

30<br />

COVID-19 IMPACT – PART II<br />

Seeing eye to eye: Retail rent review<br />

30 RENT REVIEW FEATURE<br />

New lease on life<br />

<strong>Jeweller</strong> explores how the COVID-19 pandemic<br />

has tipped the balance of power between retail<br />

landlords and tenants.<br />

Better Your Business<br />

41<br />

CUSTOMER STRATEGY<br />

STEVEN VAN BELLEGHEM reveals how technology is shaping customer relationships.<br />

44<br />

46<br />

48<br />

50<br />

SELLING<br />

To increase sales and satisfaction, listen up, advises RICHARD SHAPIRO.<br />

MANAGEMENT<br />

Make employee performance reviews count, writes BARBARA CROWHURST.<br />

MARKETING & PR<br />

BARRY URQUHART discusses the best ways to cut through the marketing ‘noise’.<br />

LOGGED ON<br />

DAVID BROWN explains how to audit your business’ online presence.<br />

29 LEARN ABOUT GEMS<br />

Colour change gems<br />

4Discover the captivating<br />

qualities of chameleonic<br />

gemstones across the<br />

colour spectrum.<br />

FRONT COVER The Thomas<br />

Sabo Magic Garden collection<br />

continues to inspire and<br />

delight, with delicate pieces<br />

evoking the beauty of nature.<br />

<strong>August</strong> <strong>2020</strong> | 7


S A MS GR O UP<br />

A U STRA L I A<br />

WE’LL RISE ABOVE THE STORM<br />

These are unsettling times, with COVID-19 impacting our<br />

professional lives and those close to us. We understand it<br />

is challenging to operate under current restrictions, however<br />

we’re getting through this together one day at a time and<br />

there is a light at the end of this tunnel.<br />

Despite the circumstances, take care and make time to<br />

do the things you love with the people you love; it’s<br />

never been more important to support one another, remain<br />

positive and keep smiling.<br />

Wishing you a safe passage through this difficult period.<br />

We’ll rise above the storm.<br />

Steve Der Bedrossian<br />

CHIEF EXECUTIVE OFFICER<br />

ARGYLE PINK<br />

DIAMONDS<br />

Semi Precious <strong>Jeweller</strong>y<br />

T: 02 9290 2199 F: 02 9262 1630 E: Pink@samsgroup.com.au W: Samsgroup.com.au


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Upfront<br />

#Instagram hashtags to follow<br />

Alpha Order<br />

#chainbracelet<br />

#jewelleryblog<br />

Stranger Things<br />

44,251+ POSTS<br />

#chunkyjewelry<br />

145,628+ POSTS<br />

#menswatches<br />

Weird, wacky and wonderful<br />

jewellery news from around the world<br />

42,899+ POSTS<br />

486,930+ POSTS<br />

Crashed up<br />

#diamond<br />

15.8 MILLION POSTS<br />

#estatejewelry<br />

215,639+ POSTS<br />

#goldnecklace<br />

492,008+ POSTS<br />

HISTORIC GEMSTONE<br />

The Black<br />

Orlov<br />

The Black Orlov, set<br />

in a diamond brooch<br />

and necklace<br />

The 67.5-carat Black Orlov diamond is<br />

famous for its alleged ‘curse’. It was<br />

once part of a much larger stone called<br />

the Eye of Brahma, which – legend has<br />

it – was stolen from an Indian temple<br />

before surfacing in Russia in the early 20th Century.<br />

#rosegoldjewelry<br />

98,500+ POSTS<br />

#sustainablejewelry<br />

125,835+ POSTS<br />

#vermeil<br />

65,625+ POSTS<br />

Two of its owners – Princess Nadia Vygin-Orlov and US jeweller<br />

JW Parris – committed suicide before the diamond was cut into<br />

three pieces in an attempt to break the curse. Renamed the<br />

Black Orlov in the princess’ memory, the stone was set in a<br />

brooch of 108 diamonds, suspended from a diamond necklace.<br />

It was purchased by jeweller J Dennis Petimezas in 2004 and has<br />

been displayed in several museums since.<br />

Celebrity Style<br />

4 US actress Joey King has modelled<br />

a beautiful range of jewellery during the<br />

digital press tour for her latest Netflix<br />

film. Her stylist Jared Eng selected a<br />

particularly eye-catching set of hoop<br />

earrings by Alexander McQueen for the<br />

LA online premiere.<br />

Image credit: Instagram/jaredeng<br />

4Talk about turning ‘crash’ into<br />

treasure! US brand Crash Jewelry<br />

creates jewellery from parts of<br />

wrecked luxury vehicles. <strong>Jeweller</strong><br />

Christi Schimpke crafts necklaces,<br />

earrings, cufflinks, and bracelets<br />

using metal sourced from her<br />

husband’s LA car repair workshop,<br />

combined with precious gemstones.<br />

Pieces made from Porsche,<br />

Ferrari, and BMW cars are<br />

her bestsellers.<br />

Million-dollar mask<br />

4An Israeli jewellerhas been<br />

commissioned to create a<br />

COVID-19 protective face mask<br />

valued at $US1.5 million. Isaac<br />

Levy, jewellery designer of the<br />

brand Yvel, says the 18-carat white<br />

gold mask will be fitted with an<br />

N99 filter, and be covered in 3,600<br />

white and black diamonds.<br />

“I am happy that this mask gave us<br />

enough work for our employees to<br />

be able to [keep] their jobs in very<br />

challenging times,” Levy said.<br />

Digital Brainwave<br />

An Instagram<br />

spokesperson said<br />

the company is<br />

exploring options<br />

to monetise Reels<br />

for businesses,<br />

though details are<br />

yet to be finalised.<br />

4Instagram has introduced a new feature,<br />

Reels, which enables business and personal<br />

accounts to create short-form videos. The<br />

15-second clips mimic the format of the<br />

popular social media app TikTok. The clips<br />

can be annotated with captions and and<br />

edited with fun visual effects.<br />

While advertising is yet to be integrated into<br />

the Reels feature, it is still useful for brands<br />

to create engaging and entertaining content<br />

for followers. However, business accounts<br />

are currently unable to use music or branded<br />

content tags, and cannot pay to have their<br />

Reels promoted.<br />

Jewel Watch<br />

4Louis Vuitton presents a new<br />

unisex jewellery collection, LV Volt<br />

(as modelled by French artist Sharon<br />

Alexie, above), which reshapes the<br />

fashion house’s signature letter logo as<br />

a recurring motif.<br />

Bite the dust<br />

4New York City publication<br />

Brooklyn Paper reports that a<br />

mugger stole a man’s gold teeth<br />

after ambushing him in his car<br />

earlier this month. The victim told<br />

police that his assailant held him<br />

at gunpoint and stole a ring and<br />

cash as well as the false teeth.<br />

While unusual, the crime is not<br />

unprecedented; in 2016, a man<br />

was assaulted on the street in<br />

San Francisco’s Financial District<br />

before two robbers stole his gold<br />

teeth and mobile phone.<br />

VOICE OF THE AUSTRALIAN JEWELLERY INDUSTRY<br />

Published by Befindan Media Pty Ltd<br />

Locked Bag 26, South Melbourne, VIC 3205 AUSTRALIA | ABN 66 638 077 648 | Phone: +61 3 9696 7200 | info@jewellermagazine.com<br />

Publisher & Managing Editor Angela Han angela.han@jewellermagazine.com • Assistant Editor Arabella Roden arabella.roden@jewellermagazine.com<br />

Advertising Toli Podolak toli.podolak@jewellermagazine.com • Accounts Paul Blewitt finance@befindanmedia.com • Subscriptions info@jewellermagazine.com<br />

Copyright All material appearing in <strong>Jeweller</strong> is subject to copyright. Reproduction in whole or in part is strictly forbidden without prior written consent of the publisher. Befindan Media Pty Ltd<br />

strives to report accurately and fairly and it is our policy to correct significant errors of fact and misleading statements in the next available issue. All statements made, although based on information<br />

believed to be reliable and accurate at the time, cannot be guaranteed and no fault or liability can be accepted for error or omission. Any comment relating to subjective opinions should be addressed<br />

to the editor. Advertising The publisher reserves the right to omit or alter any advertisement to comply with Australian law and the advertiser agrees to indemnify the publisher for all damages or<br />

liabilities arising from the published material.


With the recent announcements of<br />

government restrictions starting to be<br />

rolled back, jewellers now have the<br />

opportunity to get customers back<br />

into the store.<br />

Effectively communicate the<br />

changes that have taken<br />

place without spending<br />

all their time on the phone.<br />

Do you do custom rings?<br />

Yes we do! Pretty much<br />

everything is customisable,<br />

from setting to stone to cut.<br />

What are you looking for?<br />

Get the free<br />

Texting Guide<br />

CLAIM YOUR COPY<br />

We’re wanting to create a<br />

unique engagement ring.<br />

Wonderful, congratulations!<br />

Come on in and we can go<br />

through all the options.<br />

61.478.189.947


COVID-19 Update<br />

9.5%<br />

decline in the Westpac-<br />

Melbourne Institute Index<br />

of Consumer Sentiment<br />

between July and <strong>August</strong><br />

* Westpac Consumer Sentiment Survey highlights, 12 <strong>August</strong><br />

6 October<br />

Commonwealth Budget to be<br />

announced, including decisions on<br />

further stimulus payments, business<br />

support, and tax reform<br />

$5,000<br />

additional grant available to Victorian<br />

small businesses – both metropolitan<br />

and regional – from the State<br />

Government’s Business Support Fund<br />

due to the impact of stage-four lockdown<br />

To qualify for the extended<br />

JobKeeper scheme, employers<br />

now need to show a 30 per<br />

cent decline in revenue for<br />

the September and December<br />

quarters; employees hired<br />

from 1 July are now eligible<br />

DR PHILIP LOWE<br />

GOVERNOR, RESERVE BANK<br />

OF AUSTRALIA<br />

“The economy is not going to<br />

recover until we get on top of<br />

this virus. From the outset there<br />

was a very strong sense that<br />

we needed to build a bridge to<br />

the other side when the virus is<br />

contained. That bridge has had<br />

to be longer than we might have<br />

hoped to be necessary, even so,<br />

it’s been the right strategy.”<br />

DANIEL ANDREWS<br />

PREMIER OF VICTORIA<br />

“We want businesses<br />

to survive this pandemic. We want<br />

people healthy and back at work.<br />

We want to begin the process of<br />

rebuilding our economy and our<br />

community and setting us up for<br />

the future. We can’t get to that<br />

point unless we all play a part<br />

in making this strategy work,<br />

but we will continue to support<br />

businesses to the other side.”<br />

DR ELOISE ZOPPOS<br />

RESEARCH FELLOW,<br />

AUSTRALIAN CONSUMER<br />

RETAIL STUDIES UNIT –<br />

MONASH UNIVERSITY<br />

“Victorians are well placed to<br />

adjust to the ‘new normal’... While<br />

we can’t know exactly what the next<br />

few weeks will bring in Victoria,<br />

we do know that consumer and<br />

shopping behaviours were already<br />

changing, and we can only expect<br />

these changes to continue.”<br />

48,000<br />

Australians applied to<br />

access up to $10,000 of<br />

their superannuation in<br />

the week to 2 <strong>August</strong> *<br />

* Australian Prudential Regulation Authority<br />

60%<br />

of surveyed<br />

Australians who received<br />

government stimulus<br />

payments said they spent it,<br />

rather than saving<br />

* ‘Australian Financial Review’, 10 <strong>August</strong> <strong>2020</strong><br />

$101.3bn<br />

estimated total cost<br />

of the JobKeeper<br />

scheme until<br />

March 2021<br />

Australian<br />

Financial Review<br />

Gemfind Digital<br />

Solutions<br />

World Diamond<br />

Congress<br />

Pip Marlow, CEO<br />

Salesforce ANZ,<br />

Charles Coorey,<br />

partner Gilbert +<br />

Tobin, and Dr Billy<br />

Sung of Curtin<br />

University will take<br />

part in the event.<br />

4The Australian Financial<br />

Review will host the third<br />

instalment of its Future<br />

Briefing virtual event series<br />

on 29 September. The webcast<br />

will explore the new reality<br />

of consumer behaviour and<br />

demand of online shopping.<br />

Topics covered will include<br />

e-commerce opportunities<br />

and trends, and how to create<br />

strong brand engagement and<br />

personalised experiences.<br />

Gemfind’s Alex<br />

Fetanat and<br />

Anthony Arechiga<br />

will explore<br />

digital marketing<br />

strategy and<br />

website best<br />

practices.<br />

4US jewellery-focused<br />

digital marketing firm<br />

Gemfind Digital Solutions<br />

continues its ongoing<br />

webinar series for retailers<br />

on 19 <strong>August</strong>.<br />

The session, held in<br />

partnership with the<br />

Independent Jewelers<br />

Organization, is entitled,<br />

‘The Road Map to Successful<br />

Online Selling for Jewelers’.<br />

The biennial<br />

Congress was<br />

scheduled to be<br />

held in Hong Kong<br />

in November, but<br />

has been moved<br />

online due to<br />

COVID-19.<br />

4The next World Diamond<br />

Congress will be held digitally<br />

from 14–15 September <strong>2020</strong>,<br />

the World Federation of<br />

Diamond Bourses (WFDB)<br />

has announced. Yoram Dvash,<br />

acting president WFDB, said,<br />

“This is the first time that<br />

we will be holding the entire<br />

Congress in this format,”<br />

adding that the event was<br />

coming at a “critical time” for<br />

the diamond industry.<br />

12 | <strong>August</strong> <strong>2020</strong>


Let’s Talk<br />

It’s always important to talk, but right now – in the middle<br />

of a worldwide economic crisis – it’s more important than<br />

ever to talk and work together.<br />

As we emerge from COVID-19 we want to ensure Duraflex Group<br />

is listening and adapting to your needs as a true business partner.<br />

Duraflex Group is here to support you during this recovery<br />

period, and to help you succeed in <strong>2020</strong> and beyond. We are<br />

open to discussing anything you need to assist your business<br />

during this challenging time.<br />

Phil Edwards<br />

MANAGING DIRECTOR, DGA<br />

We are here to listen and provide support for your business.<br />

Duraflex Group is here to help you succeed.<br />

For more details please call (02) 9417 0177 and talk to your Sales Executive to discuss.


Bestsellers<br />

1<br />

2<br />

3<br />

4<br />

AUGUST<br />

Monthly<br />

Showcase<br />

<strong>Jeweller</strong>’s compiled snapshot<br />

of bestselling pieces from<br />

leading suppliers.<br />

5<br />

6 7<br />

8<br />

1 QUDO | Timesupply The Tondo and Tondo Deluxe tops from Qudo are a perennial favourite, while the new Eternity Spacer rings are proving equally popular with customers who love the exciting and<br />

personalised Qudo range. 2 STOW LOCKETS | Link Wholesale Stow Lockets are handcrafted from the finest materials. Each locket can be carefully stylised by adding meaningful charms, creating a<br />

sentimental heirloom jewellery piece. 3 PIERRE LANNIER | Heart & Grace The Pierre Lannier Capital Chronograph is a stylish and sophisticated addition to any watch collection. 4 IKECHO AUSTRALIA<br />

The Keshi Freshwater Pearl Hook Earrings combine simplicity with elegance. Crafted in sterling silver with 14–16mm Keshi pearls. 5 GEORGINI | West End Collection The Sonutosa range – part of<br />

the Luxe Collection – is a refined take on geometric shapes. The bold squares and rectangles are accentuated with Georgini’s signature sparkle to make a style statement. 6 THOMAS SABO | Duraflex<br />

Group Australia The Colourful Lucky Symbols necklace, made from 925 sterling silver plated in 18-carat yellow gold, features glass-ceramic decoration as well as synthetic ruby, and pink and white<br />

zirconia. 7 Baume & Mercier | Duraflex Group Australia The Hampton Collection features a unique style emblematic of the Art Deco era and is immediately distinctive for its rectangular design. 8 PINK<br />

KIMBERLEY | SAMS Group Australia The Kimberley Rae Ring features a trinity of emerald-cut white diamonds set in 18-carat rose and white gold and adorned with beautiful Argyle pink diamonds.


News<br />

Sydney <strong>Jeweller</strong>y Fair postponed to October<br />

The International <strong>Jeweller</strong>y & Watch Fair is now scheduld to take place in October.<br />

The organiser of the International <strong>Jeweller</strong>y &<br />

Watch Fair (IJWF), Expertise Events, has postponed<br />

the show by four weeks, from 12–14 September to<br />

10–12 October <strong>2020</strong>.<br />

Gary Fitz-Roy, managing director Expertise Events,<br />

told <strong>Jeweller</strong> that the decision to move the show<br />

date was made earlier this week, prior to the<br />

announcement of new border restrictions between<br />

NSW and Queensland, and increasing COVID-19<br />

case numbers in Victoria.<br />

“We’re making our decisions based on what’s best<br />

for the industry, rather than a particular state. We<br />

haven’t reacted to Victoria, we haven’t reacted to<br />

Queensland. No-one knew the announcement<br />

[from the Queensland Premier] was coming – we<br />

certainly didn’t.<br />

“We made a commitment to the industry that we<br />

would give an update on the show at the end of<br />

July, and we’ve been transparent in our<br />

communication and shared the good, the bad,<br />

and the ugly,” Fitz-Roy said.<br />

In an email to exhibitors, Fitz-Roy confirmed that<br />

the mid-October dates had only recently been<br />

made available by International Convention Centre<br />

Sydney, adding that the extra four weeks would<br />

give “more time for state border restrictions to<br />

be reviewed, especially given most states have<br />

resumed to near-normal business operations”.<br />

He added, “If we’d made this decision two weeks<br />

ago, we would have been jumping the gun. We<br />

are making the next decisive move that is in the<br />

best interest of the industry. Will everyone like it?<br />

Possibly not. But if we’re going to have any industry<br />

to come back to, and if retailers are going to survive,<br />

it’s got to start with something.<br />

“It’s our desire and hope that the October new<br />

dates will give us an opportunity to reconnect, do<br />

everything we’ve talked about, and move forward.”<br />

The Spring Gift & Lifestyle show, which was<br />

scheduled to run concurrently with the IJWF at the<br />

ICC Sydney exhibition centre, will also take place on<br />

the new October dates.<br />

The exhibitor email states that the later schedule<br />

“provides more time for State border restrictions<br />

to be reviewed, especially given most states have<br />

resumed to near normal business operations. It will<br />

also allow buyers a little more time to gauge their<br />

stock levels in time for Christmas, and although we<br />

do know this could mean some suppliers will need<br />

to review their own supply levels and timing we<br />

believe it’s the ‘greater good theory’.”<br />

Fitz-Roy told <strong>Jeweller</strong> he also believes the new<br />

dates are more suitable because “there are no<br />

international shows, so the sourcing and supply of<br />

stock for the busiest period, being Christmas, is<br />

still important. Sooner or later, retailers are going<br />

to need stock. And significantly, not many retailers<br />

have had visits from suppliers [this year],” he<br />

explained.<br />

Expertise Events previously announced several<br />

initiatives aimed at reducing costs for exhibitors,<br />

including new modular stands and the Expertise<br />

Mate discount program.<br />

Addressing safety concerns, Fitz-Roy said delaying<br />

the show was “realistic” and would provide enough<br />

time for case numbers to stabilise in Victoria.<br />

“We have to accept that we will have COVID-19<br />

among us for some time. So I think what [moving<br />

the dates] means is that it gives all states a bit<br />

more time to get things under control and they are<br />

obviously ramping that up,” he explained.<br />

Expertise Events will provide a further update on<br />

the Sydney shows on 4 September. The Gold Coast<br />

Gift & Lifestyle fair will proceed as planned on<br />

26–28 September.


News<br />

In Brief<br />

David Allen returns to lead Pandora<br />

Australia; Phil McNutt steps down<br />

Gold price reaches<br />

record high<br />

4 Amid an investor surge, the gold price<br />

has broken its previous record high.<br />

Gold reached $US2,075 per ounce on<br />

7 <strong>August</strong> – exceeding the previous record of<br />

$US1,917, which was set in <strong>August</strong><br />

2011. However, the price has since dropped<br />

back below $US2,000. The gold price<br />

has seen an upward trend throughout<br />

<strong>2020</strong> as a result of uncertainty in other<br />

areas of the world economy.<br />

Record-breaking colour<br />

diamond found in Russia<br />

4Russian mining giant Alrosa has<br />

confirmed that it has unearthed the<br />

largest natural colour diamond ever<br />

found in Russia. The 236-carat rough<br />

– which displays a yellowish orange<br />

colour – was mined at the Ebelyakh site in<br />

Yakutia. Pavel Vinikhin, head of polishing<br />

Alrosa, said the stone was being evaluated<br />

to determine if it would be cut in-house at<br />

Alrosa or sold as rough.<br />

Apprentice competition<br />

revamped for <strong>2020</strong><br />

4Nationwide <strong>Jeweller</strong>s has launched its<br />

<strong>2020</strong> Apprentice of the Year Competition,<br />

with key changes. This year, apprentices<br />

have been given a customer brief<br />

including thoughts, ideas, and budget to<br />

reflect the market demand for custommade<br />

jewellery. Entry forms have been<br />

snt to Nationwide members in Australia<br />

and New Zealand. The winner will be<br />

announced in November.<br />

GIA embraces artificial<br />

intelligence<br />

4The Gemological Institute of America<br />

(GIA) is developing an artificial<br />

intelligence (AI) system for diamond<br />

clarity grading, alongside IBM. Pritesh<br />

Patel, chief operating officer GIA, said<br />

AI clarity grading works by feeding<br />

data gathered from GIA’s thousands of<br />

reference stones into a program, which<br />

then is used to ‘train’ algorithms on<br />

how to grade for clarity. The system is<br />

currently being trialled at two GIA US labs.<br />

David Allen – who previously led Pandora Australia from 2012–2015 – has returned to take over management of<br />

the new Pacific regional division, which includes Australia, New Zealand, and Fiji.<br />

As part of Pandora Jewelry’s global<br />

restructuring, David Allen – who led Pandora<br />

Australia between 2012–2015 – will return to<br />

head up the new Pacific regional division, with<br />

current managing director Phil McNutt leaving<br />

the company.<br />

Allen had been based at Pandora’s global<br />

headquarters in Copenhagen, Denmark for the<br />

past five years, where he oversaw its Europe,<br />

Middle East and Africa operations.<br />

Speaking to exclusively to <strong>Jeweller</strong> about his<br />

return, Allen said, “It is wonderful to be back,<br />

Australia is home, and we all missed her very<br />

much. My family and I have had an incredible<br />

life and professional experience abroad and I<br />

will always be truly grateful for the opportunity<br />

that was given to us.”<br />

He added, “One of the first things we did when<br />

we got back was to have a barbecue – not that<br />

we didn’t have barbecues in Denmark, but<br />

there is nothing quite like an Aussie barbecue<br />

on a Saturday afternoon with a cold beer!”<br />

When the restructuring was initially announced<br />

in March <strong>2020</strong>, Allen was confirmed to be<br />

staying with the company in an unspecified role.<br />

Internationally, 180 redundancies were<br />

expected, with Kenneth Madsen, president<br />

Pandora Asia-Pacific, among those leaving<br />

the company.<br />

At the time, a spokesperson for Pandora<br />

Australia told <strong>Jeweller</strong> that McNutt – who was<br />

appointed managing director in January 2019<br />

– would take over as general manager of the<br />

new Pacific regional division, which includes<br />

Australia, New Zealand and Fiji.<br />

<strong>Jeweller</strong> also previously contacted McNutt<br />

regarding potential job losses and staffing<br />

changes at Pandora Australia’s head office in<br />

Sydney, but those questions went unanswered.<br />

Pandora Australia’s revenue has declined each<br />

year since 2017. Throughout 2019, revenue<br />

fell by double digits each quarter; the most<br />

significant drop was in the three months to<br />

November 2019, when it fell by 23 per cent.<br />

“It is wonderful to be back, Australia<br />

is home, and we all missed her very<br />

much. My family and I have had an<br />

incredible life and professional<br />

experience abroad”<br />

– David Allen, Pandora Jewelry<br />

It has also undergone something of a<br />

management merry-go-round, having been led<br />

by three different executives: Brien Winther,<br />

who was transferred to Pandora British Isles<br />

after 13 months, Mikael Kruse Jensen, who left<br />

to manage Pandora Northern Europe following<br />

less than two years in the role, and Phil McNutt,<br />

who joined the company from Sunglass Hut in<br />

January 2019.<br />

When asked about the differences between the<br />

Australian and EMEA markets and the changes<br />

in Australia over the past five years, Allen<br />

said, “It is of course very important for me to<br />

understand if and how the market has changed<br />

– as I am sure that it has – and I will invest time<br />

in understanding this. This will in turn help the<br />

team and I understand the role that Pandora<br />

will play moving forward.”<br />

Some industry commentators have noted<br />

that Pandora’s local problems may have<br />

CONTINUED ON PAGE 20<br />

18 | <strong>August</strong> <strong>2020</strong>


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News<br />

Indian jewellery body to host international digital trading event<br />

India as well as buyers from across the world an<br />

opportunity to interact and make decisions in a<br />

similar way as they used to do at a<br />

physical show”.<br />

Dilip Shah, convener international GJEPC, added,<br />

“The VBSMs will help our buyers to check out<br />

new product developments without travelling,<br />

explore new sourcing opportunities, compare<br />

and analyse products and services of exhibitors<br />

without any distraction.”<br />

The Gem & <strong>Jeweller</strong>y Export Promotion Council has announced the first in a series of Virtual Buyer and Seller Meets.<br />

The Gem & <strong>Jeweller</strong>y Export Promotion<br />

Council (GJEPC) has announced it will hold<br />

a Virtual Buyer and Seller Meet (VBSM) on<br />

27–28 <strong>August</strong> to allow Indian manufacturers to<br />

showcase diamond jewellery and loose stones to<br />

international buyers.<br />

Products will be displayed on a dedicated secure<br />

GJEPC website with a user-friendly search<br />

function. Registered buyers and sellers will then<br />

be matched through the site and have video<br />

meetings scheduled and managed by the GJEPC,<br />

alongside a team of international coordinators.<br />

The GJEPC postponed the India International<br />

<strong>Jeweller</strong>y Show (IIJS) Premiere – the country’s<br />

largest jewellery trade fair – earlier this year<br />

due to the COVID-19 pandemic; it had been<br />

scheduled to take place from 6–10 <strong>August</strong>.<br />

Another major Indian diamond trade event,<br />

Bharat Diamond Week, was held digitally last<br />

week.<br />

Colin Shah, chairman GJEPC, said, “The demand<br />

for gems and jewellery is slowly recovering in<br />

markets like the US, China and other parts of<br />

the world. We need to make sure that we reach<br />

out to these buyers and meet their requirements.<br />

“This is the time to explore the digital world,<br />

and make the best use of it to showcase our<br />

products through virtual medium and help<br />

buyers make informed decisions.”<br />

Vipul Shah, vice-chairman GJEPC, explained<br />

that the VBSM would “give our exhibitors in<br />

“The demand for gems and jewellery<br />

is slowly recovering in markets like<br />

the US, China and other parts of the<br />

world. We need to make sure that we<br />

reach out to these buyers and meet<br />

their requirements. This is the time to<br />

explore the digital world”<br />

– Colin Shah, GJEPC<br />

He added, “I am glad that we have been able to<br />

create an advanced user-friendly set-up which<br />

would give our buyers an experience better than<br />

the real one.<br />

“A series of VBSMs are organised over the next<br />

few months, which would help our buyers across<br />

the world to source gems and jewellery from the<br />

comfort of their homes or offices.”<br />

The diamond VBSM is intended to be the first of<br />

many, with future digital trading events focused<br />

on other categories within the jewellery market,<br />

such as gold, colour gemstones, and platinum.<br />

Jail likely for gold<br />

buyers linked to 2017<br />

store robberies<br />

Judge Scott Johns has indicated Alejandro Mendieta<br />

Blanco (left) will face a custodial sentence for<br />

handling stolen jewellery and watches.<br />

A Melbourne judge has indicated a custodial<br />

sentence is likely for three gold dealers who have<br />

pleaded guilty to receiving stolen goods, which<br />

were taken from jewellery stores during a spate<br />

of armed robberies three years ago.<br />

Alejandro Mendieta Blanco, 34, his brother Julio<br />

Mendieta Blanco, 37, and their associate Chey<br />

Tenenboim, 39, were initially charged with more than<br />

400 offences each following a raid on their business,<br />

Gold Buyers Melbourne, in October 2017.<br />

Police reportedly collected more than 1,900 hours<br />

of surveillance footage, while undercover officers<br />

were able to sell gold jewellery and watches<br />

to Gold Buyers Melbourne for “off the books”<br />

payments without showing identification, as is<br />

required by law.<br />

Earlier this year, all three pleaded guilty to single<br />

charges of receiving stolen goods as part of a<br />

deal with prosecutors and paid back $165,000.<br />

The Mendieta Blanco brothers are currently free on<br />

bail, while Tenenboim’s bail was revoked in mid-July.<br />

At a hearing at the County Court on 31 July, Judge<br />

Scott Johns described the actions of the three men<br />

as “very dishonest, it’s brazen, it’s audacious. There<br />

is no moral compass being applied.”<br />

He added that they were “acting as a customer<br />

for the thief” by running a “particularly lucrative<br />

business”; The Age and The Sydney Morning<br />

Herald report that Gold Buyers Melbourne turned<br />

over $66 million in the 2015-16 financial year.<br />

Judge Johns dismissed a suggestion for a<br />

community correction order for Alejandro<br />

Mendieta Blanco and told his legal representative,<br />

Justin Hannebery QC, that his client should<br />

prepare to serve a prison term.<br />

Prosecutors are seeking a harsher sentence<br />

for Tenenboim as the scale of offending was<br />

larger. Last month David Grace QC, acting for<br />

Tenenboim, requested a community correction<br />

order or a prison term short enough to allow<br />

him to return home for his son’s bar mitzvah<br />

in November. However, Judge Johns said that<br />

Tenenboim was unlikely to be freed before then.<br />

All three men will be sentenced this month.<br />

<strong>August</strong> <strong>2020</strong> | 21


LUXURY pearl AND opal JEWELLERY<br />

LUXURY pearl AND opal JEWELLERY<br />

LUXURY pearl AND opal JEWELLERY<br />

David Allen returns to lead Pandora Australia<br />

CONTINUED FROM PAGE 18<br />

been compounded by its shift toward company-owned ‘Concept’ stores<br />

while simultaneously alienating retail stockists.<br />

A recent analysis by <strong>Jeweller</strong> revealed that the number of Pandora<br />

points of sale in Australia has declined by more than 60 per cent<br />

since 2010.<br />

Addressing Pandora’s strategy in Australia, Allen said, “I cannot<br />

comment on the more recent decisions that have been made in the<br />

Australian market regarding network distribution. I do know that<br />

the organisation values the contributions that all of our distribution<br />

channels make to our brand.<br />

“I also know that the shape and structure of this distribution varies<br />

across our Pandora markets globally, and this differentiation can be<br />

based on particular local market conditions and on how established the<br />

brand is,” he added.<br />

“I’m grateful to have David take on a new responsibility<br />

and that we can continue to pull on his strength and<br />

business know-how”<br />

– Alexander Lacik, Pandora Jewelry<br />

e are in a situation we never thought we<br />

ould be in. COVID-19 has turned our lives<br />

ide down but there’s always a silver lining<br />

We We are are in in a a situation we never thought we we<br />

would would be be in. in. COVID-19 has turned our our lives lives<br />

upside We upside are down in down a situation but<br />

but there’s we always never a thought silver<br />

a silver<br />

lining we lining<br />

to would to this<br />

this be crisis.<br />

crisis. in. COVID-19 The industry<br />

The industry has and<br />

and turned our community<br />

our our community lives<br />

another. coming together We are to connected encourage and in support isolation. one<br />

coming pside down together but there’s to encourage always a and silver support lining<br />

another. We are connected in isolation. one<br />

o this<br />

another.<br />

crisis. The<br />

We<br />

industry<br />

are connected<br />

and our<br />

in<br />

community<br />

isolation.<br />

oming We will together see each to other encourage after this and all support has passed. one<br />

another. We are connected in isolation.<br />

e will see each other after this all has passed.<br />

his crisis. The industry and our community<br />

ing together to encourage and support one<br />

will see each other after this all has passed.<br />

Stay Stay strong and safe!<br />

e will see each other after this all has passed.<br />

Stay strong and safe!<br />

www.ikecho.com.au | enquiries@ikecho.com.au<br />

Tel: (02) 9266 0636 | Fax: (02) 9266 0969<br />

www.ikecho.com.au | enquiries@ikecho.com.au<br />

Stay strong and safe!<br />

Tel: www.ikecho.com.au (02) 9266 0636 | | enquiries@ikecho.com.au<br />

Fax: (02) 9266 0969<br />

Tel: (02) 9266 0636 | Fax: (02) 9266 0969<br />

www.ikecho.com.au | enquiries@ikecho.com.au<br />

When questioned over Pandora Australia’s treatment of retail<br />

stockists, including being forced to take unsuitable pack sizes, Allen<br />

was diplomatic: “Clearly the topic of inventory quality and quantity is<br />

critically important to us as well as our partners. That is understood<br />

and is of course something that the team and I are very focused on.<br />

“The distribution and the performance of our product is critical to<br />

strengthening the connection that our consumers have with our<br />

brand, and we will continue to work on investing in and enhancing<br />

our inventory lifecycle and management processes both locally and<br />

internationally,” he added.<br />

In his new role as general manager of the Pacific division, Allen<br />

will report to Pandora Jewelry’s new chief commercial officer,<br />

Martino Pessina.<br />

Alexander Lacik, CEO Pandora Jewelry, said, “I’m grateful to have<br />

David take on a new responsibility and that we can continue to pull<br />

on his strength and business know-how.“With David’s long standing<br />

experience with headquarter decisions and operations, the move<br />

is yet another step in us shortening the distance between headquarters<br />

and markets.”<br />

The restructuring program is estimated to cost DKK1.3 billion<br />

($AU288.3 million) and is designed to “reduce organisational<br />

complexity” and “ensure that feedback from consumers can more<br />

quickly fuel new concept creations”, according to Lacik.


10 Years Ago<br />

Time Machine: <strong>August</strong> 2010<br />

A snapshot of the industry events making headlines this time 10 years ago in <strong>Jeweller</strong>.<br />

Historic Headlines<br />

4 <strong>Jeweller</strong>s expand WA retail presence<br />

4 Fake gemmologist to pay for crimes<br />

4 Sydney set for biggest fair<br />

4 All eyes watching Pandora launch<br />

4 Online scammers target jewellers<br />

Aussie websites openly<br />

selling counterfeits<br />

<strong>Jeweller</strong> has found Australian websites openly<br />

selilng counterfeit watches and jewellery from<br />

well-known brands, including Tag Heuer, Omega,<br />

Breitling, and Rolex under the guide of ‘replicas’.<br />

When contacted by <strong>Jeweller</strong>, the director of one<br />

such website, SwissReplicaWatches.com.au,<br />

claimed his actions did not breach any Australian<br />

or international laws and described his business<br />

as necessary due to consumer demand.<br />

However, intellectual property expert Lisa<br />

Egan, a senior associate at law firm Middleton,<br />

confirmed that the term ‘replica’ was incorrect<br />

– copies carrying a brand’s logo are classified as<br />

‘counterfdeit’ goods. Egan said the only way the<br />

site could remain online was if none of the affected<br />

brands had taken action.<br />

Egan said brands could protect their intellectual<br />

property by sending a letter to the website operator<br />

and contacting Google to have the site excluded<br />

from search results.<br />

All eyes watching<br />

Pandora launch<br />

The much-anticipated Pandora watch collection<br />

is on track to launch in Australia in early<br />

September 2010. It will initially be introduced<br />

to consumers in 30 Pandora concept stores and<br />

more than 110 Pandora shop-in-shop retailers.<br />

The collection consists of men’s and women’s<br />

models and features 10 styles with four to five<br />

options available in each style. Prices start at<br />

$295, ranging up to $2,495. One of the selling<br />

points is that the range is Swiss-made and the<br />

watches feature Rhonda movements, sapphire<br />

glass, and a diamond on every winder.<br />

<strong>August</strong> 2010<br />

ON THE COVER Maxum<br />

Editors’ Desk<br />

4Pay Up: “Some years ago a salesman<br />

offered me the following advice: if you<br />

think education is expensive, you should<br />

try ignorance! [However] there are<br />

many forms of learning, and often the<br />

most valuable are the least costly.<br />

Business education and the ability to<br />

recognise opportunities are perhaps the<br />

most important; staying one step ahead<br />

of your competitors is imperative.”<br />

Soapbox<br />

4Turning Over A New Leaf: “We are<br />

living in a world where design is<br />

highly appreciated, and luxury goods<br />

are attainable for a great number<br />

of consumers.<br />

Why is it then that jewellery designers,<br />

a group who should be at the forefront<br />

of fashion, are content to churn out<br />

the same designs year after year?<br />

To enable the jewellery industry to<br />

flourish, we need more unique design<br />

that comes direct from the heart.”<br />

– Victoria Buckley, owner, Victoria<br />

Buckley <strong>Jeweller</strong>y<br />

STILL RELEVANT 10 YEARS ON<br />

Shining Silver:<br />

With a brilliant polish, flexible<br />

workability and low price, silver’s unique<br />

allure continues to work its magic<br />

in the jewellery world... Propping up<br />

silver’s profile is the wave of economic<br />

uncertainty that is washing over<br />

luxury consumers, dissuading them<br />

from paying huge premiums for gold<br />

Facebook ‘nipplegate’<br />

A Sydney jeweller found herself at the centre<br />

of a global media frenzy last month after<br />

launching a battle against Facebook.<br />

High-end jeweller Victoria Buckley lashed out<br />

as ‘Midwest American puritanism’ on Facebook<br />

after the social networking site threatened<br />

action against her for having pictures of nude<br />

porcelain dolls posing with her jewellery<br />

products on her fan page.<br />

After a week of global media coverage,<br />

Facebook eventually apologised for censoring<br />

the images and said Buckley could re-upload<br />

them, which she did.<br />

Global tribute to ‘Mr Swatch’<br />

Politicians, business people and celebrities<br />

were among the thousand people who flocked<br />

to Switzerland for a public ceremony to pay<br />

tribute to Swiss watch legend Nicolas Hayek,<br />

who died unexpectedly on Monday 28 June.<br />

Hayek, who was still Swatch chairman when he<br />

died aged 82, founded the company in the early<br />

1980s and is widely credited with breathing life<br />

into the declining Swiss watchmaking industry..<br />

His death sent shockwaves through the<br />

Swiss business community, even prompting<br />

the country’s president, Doris Leuthard, to<br />

release a statement. “With his commitment<br />

and courageous actions, Nicolas Hayek for<br />

decades gave big and important boosts to<br />

entrepreneurship,” Leuthard said. “We owe Mr<br />

Hayek a lot.”<br />

READ ALL HEADLINES IN FULL ON<br />

JEWELLERMAGAZINE.COM<br />

24 | <strong>August</strong> <strong>2020</strong>


Peter W Beck has been passionately committed to the<br />

jewellery industry for 45 years.<br />

Please be assured that we are still here and we will continue to provide<br />

you with the world class products and services that you rely on.<br />

We stand beside you through this tough time and beyond.<br />

OUR TEAM IS HERE TO SUPPORT YOU:<br />

Toll Free 1800 888 585 | Email customerservice@pwbeck.com.au<br />

14 Duncan Court, Ottoway Park, SA, 5013 Australia<br />

Toll Free 1800 888 585 | Email customerservice@pwbeck.com.au | Web www.pwbeck.com.au


INSIDE<br />

My Store<br />

The Collective<br />

DUBLIN, IRELAND with Emma Counihan, lead interior designer and assistant to the director • SPACE COMPLETED October 2019<br />

4Who is the target market?<br />

We are proud to reveal that clients from every walk<br />

of life come through our doors and so for us, it<br />

was pivotal that our store was a safe place where<br />

everyone felt welcome.<br />

Nestled in the heart of Dublin’s renowned Creative<br />

Quarter, The Collective is a two-storey treasure<br />

trove, featuring stunning designs from more than 30<br />

independent jewellery designers, the overwhelming<br />

majority of which call Ireland home.<br />

Our goal has always been to support the craft<br />

and embrace the incredible unique style of each<br />

of our artists by creating the perfect backdrop to<br />

showcases their designs.<br />

Drury Street, and the building itself, is steeped in<br />

history and charm and our intention was to create<br />

“Each of the 100-year-old<br />

alcoves that make up the<br />

space have been lovingly<br />

tailored with bespoke polished<br />

brass and glass shelving,<br />

illuminated to illustrate<br />

a glittering display for<br />

each jewellery designer’s<br />

collection.”<br />

–Emma Counihan<br />

the perfect storm. For us, that meant a marrying of<br />

the past and the future.<br />

As an homage to the building’s past, we uncovered<br />

the natural beauty of the space, showcasing<br />

the exposed brick, embracing the quirky layout<br />

and exhibiting original features such as the two<br />

charming chimney breasts.<br />

Simultaneously, as a toast to the future, we added<br />

in unexpected surprises, like the crittal-style sliding<br />

door and accompanying half-window. The blackframed,<br />

New York-style door leads to our stateof-the-art<br />

studio which hosts our silversmithing<br />

workshops and jewellery courses all year round.<br />

Which features encourage sales?<br />

Often our new clients visit us after a<br />

recommendation from a friend or because<br />

26 | <strong>August</strong> <strong>2020</strong>


something in our window has caught their eye. From<br />

the outset, our priority was for our clients to have an<br />

experience when they visit us and so every element<br />

has been carefully thought out, in order to provide<br />

them with the best possible service.<br />

As our clients step through The Collective doors onto<br />

the restored wooden planked floors, they are greeted<br />

by the scent of ‘Dublin Dusk’ a woody, fresh yet<br />

relaxing fragrance burning in the periphery.<br />

As Dublin is home to Rathbornes, the world’s<br />

oldest candle company, it felt fitting as a nod to the<br />

city’s history.<br />

Each of the 100-year-old alcoves that make up the<br />

space have been lovingly tailored with bespoke<br />

polished brass and glass shelving, illuminated to<br />

illustrate a glittering display for each jewellery<br />

designer’s collection.<br />

Drawing the eye up, the ceiling comprises glass birds<br />

floating from hanging plants, giving a magical and<br />

whimsical feel against the dark, moody backdrop<br />

above. An old restored railway sleeper rests above<br />

one of the chimney breasts, framing a collection of<br />

large, circular golden plinths, inviting your eyes for<br />

a feast of the newest collections.<br />

The counter – the backbone of the store – waits for<br />

you at the end of your journey while also acting as<br />

a gateway to the workshop beyond. The crittal-style<br />

windows behind offer a peak into where the magic<br />

happens!<br />

4What is the store design’s ‘wow factor’?<br />

I think the store’s wow factor is the combination and<br />

flow of all of the separate entities. No one aspect<br />

demands your attention – it is rather like a collection<br />

of little surprises that draw you in!<br />

<strong>August</strong> <strong>2020</strong> | 27


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REVIEW<br />

Gems<br />

CANDLELIGHT<br />

MIXED LIGHT<br />

DAYLIGHT<br />

L to R: Omi Privé alexandrite rings; Rubius loose Alexandrite; Alexandrites under different light<br />

The exotics: colour change gemstones<br />

Magicians have used the illusionary power of<br />

light for centuries, but consider a gemstone<br />

that could harness this power to create a<br />

different kind of magic show.<br />

Introducing colour change gemstones: the<br />

perfect illusionists to take centre stage<br />

upon any wrist, finger or neck.<br />

Colour change gemstones are<br />

commanding a growing audience, and<br />

the price of admission ranges from the<br />

surprisingly affordable to the seriously<br />

stratospheric.<br />

These rarities are chameleons of the<br />

gemstone world, coveted for their ability to<br />

change colours in different light.<br />

The human eye perceives light in the visible<br />

spectrum, comprised of red, orange,<br />

yellow, green, blue and violet wavelengths.<br />

Colour change gemstones have two<br />

transmission windows in the visible<br />

spectrum of roughly equal size, and the<br />

nature of the illumination dictates the<br />

perceived colour.<br />

For example, alexandrite is coloured by<br />

the trace element chromium that produces<br />

transmission windows in red and blue<br />

wavelengths.<br />

As candlelight is rich in red wavelengths<br />

and daylight is rich in green/blue<br />

wavelengths, alexandrite looks red when<br />

viewed in candle light and green when<br />

viewed in daylight.<br />

This effect is applied to any gemstone with<br />

an ability to transmit two (or more) different<br />

ranges of wavelengths and is known as<br />

“the alexandrite effect”.<br />

The value of these extraordinary gemstones<br />

is primarily based on the strength of the<br />

colour change (weak, moderate or strong),<br />

followed by the actual colours of the stone.<br />

Factors such as size, cut and clarity are<br />

less important due to the rarity of the<br />

colour change phenomenon.<br />

Locations like Madagascar, Sri Lanka,<br />

Burma, east Africa, Russia and Turkey<br />

are rich sources of these gemstones.<br />

Top billing in any colour change<br />

performance is alexandrite, a rare variety<br />

of chrysoberyl originally found in the Ural<br />

Mountains and named after Czar Alexander<br />

II of Russia.<br />

The finest specimens display a vivid<br />

bluish-green in daylight and a purplishred<br />

in incandescent light. Fine quality<br />

Russian alexandrites larger than one carat<br />

command a premium.<br />

For an exotic twist on a conventional stone,<br />

there is colour change sapphire, a variety<br />

Alexandrite<br />

Named for Czar<br />

Alexander II of Russia<br />

Colour: Deep green<br />

when viewed in<br />

daylight, purplish-red<br />

in candle light<br />

Found in: Russia, Sri<br />

Lanka, Zimbabwe,<br />

Burma, Tanzania,<br />

Madagascar, India<br />

and Brazil<br />

Mohs Hardness: 8.5<br />

Class: Chrysoberyl<br />

Lustre: Vitreous<br />

Formula: BeAl 2<br />

O 4<br />

of corundum. The most popular type<br />

changes from blue or violet in daylight to<br />

violetish purple or strong reddish purple in<br />

incandescent light.<br />

Another very rare variety changes from<br />

green to reddish-brown.<br />

A well-kept secret is Australian colour<br />

change sapphires from the central<br />

Queensland gemstone fields that display<br />

some unusual colour changes – brown to<br />

green, yellow to pink, or golden orange to<br />

orangey-green.<br />

Another twist on a favourite is colour<br />

change garnet, either pyrope type or a<br />

mixture of pyrope and spessartite varieties.<br />

These gemstones change from a deep<br />

green or blue-green in daylight to red or<br />

purple in incandescent light.<br />

Rivalling alexandrite and sapphire for<br />

hardness and durability is colour change<br />

spinel. This chameleon can change from<br />

blue to purple or from light bluish-violet<br />

to light pink, resembling colour change<br />

sapphire without the hefty price tag.<br />

The captivating magic of colour change<br />

gemstones will far outlive any show, and<br />

as prices of conventional gemstones in fine<br />

qualities are rising, these exotics present<br />

alternatives for those who demand unique,<br />

collectible gemstones.<br />

<strong>August</strong> <strong>2020</strong> | 29


STRATEGY FEATURE<br />

Retail Rent Review<br />

SEEING<br />

EYE to EYE<br />

RETAIL RENT REVIEW<br />

The COVID-19 pandemic has caused the bubbling tension between<br />

retailers and landlords to boil over – but the crisis has cleared the way<br />

for a new paradigm, writes ARABELLA RODEN.


BY THE NUMBERS<br />

Retail Reality<br />

Leasing premises is one of the highest<br />

fixed costs associated with traditional<br />

retail, alongside staff. Yet unlike staff<br />

contracts, lease agreements are largely inflexible<br />

– often with fixed minimum terms of five years<br />

– and can increase beyond inflation for years<br />

at a time regardless of trading conditions,<br />

demanding tenants sacrifice margin or<br />

constantly increase sales.<br />

During good economic times, these fixed terms were<br />

somewhat tolerable for businesses. However, the retail<br />

environment has become increasingly challenging in<br />

recent years; changing consumer habits, shrinking<br />

margins, and increased competition have all served to<br />

erode profitability.<br />

Simon Fonteyn, managing director of retail leasing data<br />

firm LeaseInfo Group, says, “Over the past five years, there<br />

has been an increasing amount of capital required for<br />

retailers to do business. In terms of leasing structures,<br />

rents have generally been outstripping sales. Typically,<br />

rents have escalated between 4–5 per cent per annum,<br />

whereas retail sales have increased by, on average, 2 per<br />

cent per year.”<br />

Fonteyn says there was already a “shake-out” occurring<br />

in the sector prior to the COVID-19 pandemic, pointing to<br />

the high-profile collapse of several fashion and footwear<br />

retailers – such as Bardot, Ed Harry, and Ziera – in 2019.<br />

The arrival of the virus in January <strong>2020</strong> “accelerated<br />

and amplified cracks that were already visible” in the<br />

retail sector, according to the KPMG white paper Beyond<br />

COVID-19: The Shifting Foundations in Retail Property,<br />

which was published in June <strong>2020</strong>.<br />

“Retail precinct footfall had been in decline for years as<br />

e-commerce penetration grew – recording 8.1 percent in<br />

cumulative footfall losses over the three years to <strong>2020</strong>.<br />

Retailer profit margins and retail landlord yields were<br />

being squeezed since 2017 and consumer confidence had<br />

been in decline for most of 2019,” the paper’s authors note.<br />

By mid-year, the Australian economy was in recession for<br />

the first time in nearly three decades, and the effective<br />

unemployment rate had reached 13 per cent, according to<br />

Federal Treasurer Josh Frydenberg.<br />

Consumer spending see-sawed, with the Australian<br />

-8.1%<br />

overal retail precinct<br />

footfall decline,<br />

2017–<strong>2020</strong><br />

KPMG, Beyond COVID-19:<br />

The Shifting Foundations of<br />

Retail Property<br />

4–5%<br />

average yearly<br />

increase in retail<br />

rental cost<br />

Simon Fonteyn<br />

analysis<br />

1,338<br />

shopping centres<br />

in Australia<br />

The Retail<br />

Doctor Group<br />

5.1%<br />

vacancy rate in<br />

shopping centres,<br />

June <strong>2020</strong> – a<br />

20-year peak<br />

JLL Australia<br />

12%<br />

proportion of<br />

Australian retail<br />

sales that took<br />

place online in<br />

March <strong>2020</strong><br />

Australia Post, <strong>2020</strong><br />

eCommerce Industry Report<br />

Bureau of Statistics (ABS) recording the most precipitous<br />

fall and meteoric rise in retail trade figures consecutively<br />

in April and May. At the same time, foot traffic at shopping<br />

centres and retail precincts collapsed by up to 80 per cent,<br />

leaving businesses out in the cold.<br />

In the midst of the unforeseen and turbulent conditions<br />

precipitated by the virus, Paul Zahra, CEO of the Australian<br />

Retailers Association, notes that some landlords have<br />

been unwilling to accept this new reality.<br />

“The challenges endured by retailers over the course of<br />

the pandemic have put a spotlight on the high cost of<br />

rents,” he explains.<br />

“Unsustainable annual increases to rent have been<br />

a persistent problem for some time now, with rents<br />

far outpacing revenue growth amid a changing retail<br />

environment. We expect many stores will require ongoing<br />

rent relief to help them recover – and when retailers win,<br />

landlords win.<br />

“Unsustainable annual increases to rent have<br />

been a persistent problem for some time now,<br />

with rents far outpacing revenue growth amid<br />

a changing retail environment.”<br />

Paul Zahra, Australian Retailers Association<br />

“Landlords need to remember that we are in a recession.<br />

It’s a false economy for landlords to try to extract rent from<br />

retailers that need cash reserves to survive,” he adds.<br />

Peter Ryan, director of retail strategy firm Red<br />

Communication, predicts that retailers will be in ‘survival<br />

mode’ for at least the next two years as a result of the<br />

pandemic. “Foot traffic is down, there has been a ‘forced’<br />

shift to online retail, and sales and margin are under<br />

enormous pressure,” he says.<br />

“As household disposable incomes succumb to economic<br />

pressure, stores will be subjected to intense pressure –<br />

some of it appropriate, a lot of it unwarranted. Lease costs<br />

and inclusions must be reduced or they run the risk of<br />

becoming uneconomic.<br />

“No retailer will be able to support high rents any longer<br />

and therefore renegotiating terms is a critical success<br />

factor both in terms of survival and growth,” Ryan says.<br />

<strong>August</strong> <strong>2020</strong> | 31


RE A L ESTATE GI A NTS<br />

Australia’s<br />

Largest<br />

Retail Property<br />

Groups by Gross<br />

Lettable Area<br />

It’s a conclusion supported by the KPMG paper, which<br />

notes, “Even if COVID-19 is quickly resolved, retailers<br />

and landlords will need to ‘lean in’ to create a new and<br />

more sustainable retail business model, which in turn will<br />

require adaptations to the property model.”<br />

Given the impact of the pandemic, the questions to<br />

be answered remain: what will the retailer-landlord<br />

relationship look like, post-COVID, and how can retailers<br />

shift the balance toward more favourable terms?<br />

Examining the retail landscape<br />

According to analysis by the Retail Doctor Group’s Brian<br />

Walker, Australia has 1,338 shopping centres, which<br />

comprise 85 per cent of stores and attract 85 per cent of<br />

overall shopping visitation.<br />

These shopping centres are, in the main, owned and<br />

operated by real estate companies including Scentre<br />

Group, Vicinity Centres, and Stockland, many of which are<br />

publicly traded.<br />

ASX: SCG<br />

37 shopping centres in<br />

Australia and 5 in NZ<br />

Approximately<br />

3.8 million sqm<br />

lettable retail space<br />

ASX: VCX<br />

64 shopping centres<br />

Approximately<br />

2.5 million sqm<br />

lettable retail space<br />

officer of large chain The <strong>Jeweller</strong>y Group (TJG), which<br />

operates 67 stores under the Mazzuchelli’s and Zamels<br />

brands. Notably, TJG’s store count has decreased dramatically<br />

since 2010, when it operated more than 120 stores.<br />

When asked about the challenges of negotiating leasing<br />

agreements, he said, “Landlords were unilaterally<br />

considering only their property valuation and returns, with<br />

less scope to look at the retailer’s commercial viability of<br />

operating the store.”<br />

He added, “There was lots of pushback in negotiating the<br />

multiple stores as one portfolio, as they were stating that<br />

each store has different cost dynamics and the owners’<br />

expectations were different.”<br />

When negotiating the terms of a lease, the retailer has<br />

historically been at a disadvantage, with Ryan noting that<br />

retailers have often had to supply trading information<br />

to landlords “only for them to turn around and use that<br />

information to negotiate onerous terms based on a<br />

percent-of-sales formula”.<br />

85%<br />

OF RETAIL VISITATION TAKES<br />

PLACE IN SHOPPING CENTRES<br />

Ideally, the relationship between retailer and landlord<br />

is one of mutual benefit; while the latter collects rental<br />

income, the former is meant to enjoy increased and highquality<br />

footfall as well as reduced occupancy cost.<br />

Yet it is not always so. Frank Salera, director Salera’s –<br />

a jewellery chain which has been dealing with landlords<br />

since 1953 and operates 20 stores across Victoria<br />

and Queensland – observes, “The key challenge is<br />

that landlords seek to maximise the returns to their<br />

shareholders, who expect year-upon-year increases –<br />

and this objective is irrespective of the challenges of<br />

increasing retail performance, which is often declining.<br />

“This results in a situation where now, more than ever,<br />

retailers are required to ‘throw the keys on the table’ [threaten<br />

to vacate] before the landlords will consider a rent that affords<br />

the retailer a minimum return on investment.”<br />

It’s a perspective shared by Balaji Sambasivam, chief financial<br />

ASX: SGP<br />

35 shopping centres<br />

Approximately<br />

1.02 million sqm<br />

lettable retail space<br />

QIC Global Real Estate<br />

Government-owned<br />

13 shopping centres<br />

ASX: GPT<br />

12 shopping centres<br />

Approximately<br />

960,800 sqm<br />

lettable retail space<br />

“The key challenge is that landlords seek to<br />

maximise the returns to their shareholders,<br />

who expect year-upon-year increases –<br />

and this objective is irrespective of the<br />

challenges of increasing retail performance,<br />

which is often declining.”<br />

Frank Salera, Salera’s<br />

Zahra also describes another “information imbalance”:<br />

“Smaller retailers, in particular, don’t fully know their rights<br />

and what they can ask for. Landlords are in the business of<br />

collecting rent, whereas for retailers, rent is just one of many<br />

parts of the business they need to manage.”<br />

Additionally, many Australian states and territories have<br />

required a minimum five-year term for commercial leases.<br />

While providing stability for retailers and security for<br />

landlords, these terms have made it more challenging for<br />

retailers to respond to downturns.<br />

As a result, several states have taken steps to amend the<br />

legislation governing commercial leases.<br />

“In NSW, which accounts for about a third of all Australian<br />

retail, there used to be a requirement of minimum five-<br />

32 | <strong>August</strong> <strong>2020</strong>


Retail Rent Review | STRATEGY FEATURE<br />

NO RESOLUTION OUTCOME<br />

ALTERNATIVE FUTURE: THE RETAIL LANDSCAPE<br />

If current trends continue unabated, without<br />

a flexible and reasonable response from<br />

landlords, the retail landscape in Australia<br />

could look dramatically different in the<br />

coming years.<br />

Overall, retail footfall has been in decline<br />

since at least 2017 and at an accelerating<br />

rate – which will likely continue as<br />

e-commerce penetration increases.<br />

Yet over the same period, rents have<br />

increased, on average, by 4–5 per cent<br />

per year, according to LeaseInfo Group<br />

managing director Simon Fonteyn.<br />

Tellingly, the vacancy rate across Australian<br />

shopping centres reached its highest rate in<br />

more than 20 years – 5.1 per cent – in June<br />

<strong>2020</strong>, according to data from commercial<br />

real estate firm JLL Australia.<br />

For CBD-based shopping centres, the<br />

vacancy rate is at more than 10 per cent.<br />

Shopping precincts and strips have fared<br />

even worse; an analysis by real estate<br />

advisory firm Plan1 Project Management<br />

found that Melbourne’s Chapel Street had<br />

a vacancy rate exceeding 20 per cent<br />

in June <strong>2020</strong>.<br />

Across the city’s 11 major retail strips, the<br />

vacancy rate was 12.3 per cent, an increase<br />

of more than 4 per cent when compared<br />

with 2018.<br />

Speaking at the Australian Financial<br />

Review’s Virtual Retail Summit earlier this<br />

year, Julia Forrest, a portfolio manager at<br />

investment firm Pendal Group, speculated<br />

that vacancy rates would likely increase<br />

further, and that more retailers would opt<br />

for holdovers – month-to-month contracts –<br />

rather than long-term leases.<br />

Peter Ryan, director of retail consultancy<br />

RED Communication, says “The economic<br />

reality is that we face an extended period<br />

of poor market conditions with some<br />

economists suggesting the impacts could<br />

last a decade or more and that we have not<br />

seen the worst of it yet.”<br />

“The economic reality is that we<br />

face an extended period of poor<br />

market conditions with some<br />

economists suggesting the impacts<br />

could last a decade or more and<br />

that we have not seen the worst<br />

of it yet.”<br />

Peter Ryan, RED Communication<br />

However, Ryan believes “online is only part<br />

of the solution” and that stores will “regain<br />

their position as the centre of the customer<br />

relationship – [but] when that happens<br />

though is the critical question.”<br />

Without a sustainable reduction in rent,<br />

Ryan says retailers will face increasing<br />

pressure to exit tenancies.<br />

Meanwhile, Fonteyn argues that shopping<br />

centres will not disappear from the<br />

Australian landscape – but that they will be<br />

“forced to change”: “Their model is getting<br />

shoppers in, getting them to spend, and<br />

getting them to stay as long as possible.<br />

“After<br />

COVID-19,<br />

that has to be readjusted.<br />

There will<br />

be another iteration of<br />

different types of use within<br />

shopping centres.”<br />

He adds that shopping centre<br />

owners are constrained by strict<br />

planning laws. “It’s not that easy to<br />

introduce new shopping centres.<br />

“There have been a couple of new centres<br />

built [in the past 10 years], but the majority<br />

have been there for decades and have<br />

simply expanded their trading area.”<br />

However, the shift toward mixed-use,<br />

including residential, offices, services, and<br />

lifestyle, may be hampered as consumers<br />

increasingly opt to avoid crowded spaces<br />

due to safety concerns.<br />

Additionally, the KPMG white paper Beyond<br />

COVID-19: The Shifting Foundation of Retail<br />

Property notes that ‘destination shopping’<br />

at large-scale centres is in decline, with<br />

consumers increasingly preferring to spend<br />

locally in what is referred to as ‘village<br />

shopping’.<br />

At the same time, replacing tenants has<br />

become “increasingly difficult”, with<br />

landlords “having to work much harder to<br />

attract new tenants and repurpose their<br />

centres to make them relevant to their<br />

communities.”<br />

In order to justify rental costs, the report’s<br />

authors suggest that landlords provide<br />

“supporting infrastructure” for retailers<br />

who are moving toward omni-channel<br />

sales, such as “kerb-side pick-up zones,<br />

dark stores/floors, shared click and collect<br />

counters, or parcel lockers”.<br />

If these changes do not occur, the value<br />

of shopping centre assets will continue to<br />

decline – as will the Australian retail sector.<br />

<strong>August</strong> <strong>2020</strong> | 33


1<br />

0%<br />

0% Investments by retailers and landlords in<br />

Australian retail footfall had been in decline for years - 1%<br />

1<br />

before COVID-19<br />

the shopping Investments experience Australian by retailers had been and consumer landlords in confidence<br />

- 1% working to the reduce shopping the experience rate of footfall had been decline<br />

12 month rolling average YoY growth rate<br />

- 2%<br />

Index (>100 = positive outlook)<br />

1<br />

STRATEGY FEATURE | Retail Rent Review<br />

working to reduce the rate of footfall decline<br />

Jan 2017 – Mar <strong>2020</strong><br />

- 2%<br />

Jan 2017 – Apr <strong>2020</strong><br />

- 3%<br />

1<br />

- 3%<br />

- 4%<br />

150<br />

1<br />

0%<br />

- 4%<br />

Australian retail<br />

Investments by retailers and landlords in<br />

- 1%<br />

- 5%<br />

140<br />

1<br />

footfall had been<br />

the shopping experience had been<br />

- 5%<br />

working to reduce the rate of footfall decline<br />

in decline for years<br />

- 6%<br />

- 2%<br />

- 6%<br />

130<br />

before COVID-19<br />

- 7%<br />

- 3%<br />

- 7%<br />

120<br />

12 month rolling average<br />

2017 2017 2018 2018 2019 2019 <strong>2020</strong> <strong>2020</strong><br />

YoY growth rates from - 4%<br />

110<br />

January 2017 – March <strong>2020</strong><br />

2017 2017 2018 2018 Positive 2019outlook<br />

<strong>2020</strong> <strong>2020</strong><br />

- 5%<br />

-3.9% -3.9% -6.7% 100-6.7% -8.1% -8.1% -11.7% -11.7%<br />

Source: KPMG report,<br />

Negative outlook<br />

using ShopperTrak data,<br />

- 6%<br />

90<br />

Jan 2017-March <strong>2020</strong><br />

. .<br />

- 7%<br />

80<br />

Consumer confiden<br />

2017 2018 2019<br />

<strong>2020</strong><br />

Cumulative Cumulative % growth % in growth footfall in footfall since 2016 since 2016<br />

70<br />

deteriorating prior t<br />

2017 2018 2019 <strong>2020</strong><br />

Notes: (1) Based on ShopperTrak 60 data, ShopperTrak uses in-store foot traffic counters to collate foot traffic data;<br />

-3.9% -6.7% -8.1% -11.7%<br />

Notes: (1) Based on ShopperTrak data, ShopperTrak uses in-store foot traffic counters to collate foot traffic data; (2) G<br />

Sources: Livewire Markets, Chart of the day: foot traffic for Australian retailers; AFR, Weak retail spending an un<br />

Sources: Livewire Markets, Chart of the day: foot traffic for Australian retailers; AFR, Weak retail spending an uninten<br />

year terms, but that has now changed [with in penalties for parties “not providing<br />

2019; ANZ - Roy Morgan Australian consumer confidence; KPMG analysis (<strong>2020</strong>)<br />

2019; the ANZ right - Roy Morgan different Australian types consumer of confidence; shoppers KPMG throughout analysis (<strong>2020</strong>) the day.”<br />

10<br />

legislation passed in 2017],” Fonteyn explains. information or doing the right thing, or seeking<br />

. It’s a trend Salera has also observed: “With<br />

information they are not required to,” according<br />

In South Australia, amendments to the Retail<br />

or without COVID,<br />

Cumulative % growth in footfall since 2016<br />

2017<br />

the centres have spent<br />

2018<br />

the<br />

to Chapman. These penalties had not been<br />

2019<br />

And Commercial Leases Act came into force<br />

last few years in considering how to maintain<br />

updated since 1995.<br />

in June and have streamlined the process for<br />

centres as a hub of consumer activity. In the<br />

acquiring a certified exclusionary Notes: clause (1) Based to on ShopperTrak In the data, past ShopperTrak five years, uses Fonteyn in-store notes foot traffic that counters shopping to collate foot past, traffic specialty data; (2) Growth retailers rate from and previous department to current year’s stores 12-month average (e.g. Jul 16<br />

shorten a lease term.<br />

Sources: Livewire Markets,<br />

centre<br />

Chart of<br />

landlords<br />

the day: foot<br />

have<br />

traffic<br />

also<br />

for Australian<br />

made<br />

retailers;<br />

significant<br />

AFR,<br />

efforts<br />

Weak retail spending formed an unintended the basis consequence of attracting of the shoppers banking royal to commission; Savills Research Qua<br />

2019; ANZ - Roy Morgan Australian consumer confidence; KPMG analysis (<strong>2020</strong>)<br />

The changes also provide added protection and<br />

to improve footfall, namely by shifting the retail mix centres, which then created a demand for food<br />

reduce confusion for small and medium retail toward services and lifestyle.<br />

and lifestyle – such as cinemas.<br />

tenants. John Chapman, South Australian Small<br />

“The apparent trend is that now landlord owners<br />

Business Commissioner, explains that the<br />

are focusing on food and lifestyle as the primary<br />

amendments resulted from a lengthy period of<br />

attraction for consumers, who will then frequent<br />

consultation and an independent judicial review.<br />

the specialty stores.”<br />

“Some of the changes that have flowed through<br />

include that landlords will be required to provide<br />

prospective tenants with a disclosure statement<br />

and a draft lease as soon as negotiations<br />

commence,” Chapman says.<br />

“What that is aiming to do is make sure people<br />

have as much information up front so they can<br />

go away and think about it early. That provides<br />

transparency around the stages of negotiation.”<br />

Additionally, the South Australian Small<br />

Business Commission has produced a Retail<br />

Commercial Leasing Guide, which is now<br />

required to be provided to prospective tenants.<br />

“This document is very much aimed at helping<br />

tenants understand their obligations and what<br />

a lease may contain, with frequently-askedquestions<br />

and indeed tips on what to look out<br />

for,” Chapman says.<br />

Other changes include a “significant increase”<br />

“Shopping centres have tried, generally,<br />

to change the mix to ‘experiential’<br />

retailing – lifestyle precincts, casual<br />

dining precincts, gyms – and away<br />

from more traditional retail...<br />

Unfortunately that has backfired<br />

during COVID-19 because experiential<br />

retail has been hardest hit.”<br />

Brian Fonteyn, LeaseInfo Group<br />

“Shopping centres have tried, generally, to<br />

change the mix to ‘experiential’ retailing –<br />

lifestyle precincts, casual dining precincts,<br />

gyms – and away from more traditional retail<br />

like apparel and footwear. Unfortunately that has<br />

backfired during COVID-19 because experiential<br />

retail has been hardest hit,” he explains.<br />

“Centres have also become more ‘all hours’ –<br />

opening early and closing late – and they appeal to<br />

As Fonteyn notes, the viability of the lifestyledriven<br />

strategy has been significantly hampered<br />

by COVID-19, at least in the short-term. Whether<br />

footfall will recover to previous levels remains<br />

to be seen, given that COVID-19 has also<br />

accelerated another major retail trend of the<br />

past five years: e-commerce.<br />

Facing the headwinds<br />

COVID-19 dealt a devastating blow to the<br />

Australian economy, plunging it into recession<br />

and increasing the official unemployment rate to<br />

7.5 per cent, its highest level in 22 years.<br />

At the same time, shopping centre footfall<br />

declined by more than 80 per cent in <strong>2020</strong>, when<br />

compared with 2019, during the nationwide<br />

lockdown. It remains about 20 per cent lower<br />

in states that have emerged from restrictions,<br />

according to data from ShopperTrak.<br />

“The higher the footfall, the more time consumers<br />

7.5%<br />

AUSTRALIAN<br />

UNEMPLOYMENT<br />

RATE, JUL ‘20<br />

82.5%<br />

INCREASE IN<br />

E-COMMERCE<br />

SALES FOR ALL<br />

RETAILERS, APR ‘20<br />

80%<br />

DECLINE IN<br />

SHOPPING CENTRE<br />

FOOTFALL, Q1 <strong>2020</strong><br />

34 | <strong>August</strong> <strong>2020</strong>


Retail Rent Review | STRATEGY FEATURE<br />

dwell and the more confident consumers are in<br />

their financial wellbeing, the more money they<br />

spend with retailers, who can then pay rent to<br />

landlords and make a profit.<br />

“The COVID-19 physical distancing measures<br />

and the resulting recession work against all<br />

three of these value drivers – footfall, dwell times<br />

and consumer confidence,” notes the KPMG<br />

white paper.<br />

For practical reasons, consumers increasingly<br />

turned to e-commerce while under lockdown and<br />

have adapted to its convenience. The Australian<br />

Financial Review reported that in <strong>August</strong> <strong>2020</strong>,<br />

e-commerce sales increased 56 per cent for<br />

omni-channel retailers when compared with<br />

April 2019. For online-only retailers, the figure<br />

was 109 per cent.<br />

The shift – however temporary – away from bricksand-mortar<br />

shopping has placed significant pressure<br />

on retailers and landlords alike.<br />

Vicinity Centres – which operates 60 shopping<br />

centres across Australia, including Melbourne’s<br />

Chadstone and Chatswood Chase in Sydney<br />

– was recently forced to launch a $1.4 billion<br />

capital raising to mitigate the decline in rental<br />

income, while its overall real estate portfolio<br />

declined in value by $1.8 billion for the first half<br />

of the year.<br />

While retail sales fell a record 17.7 per cent in<br />

April due to widespread lockdowns, the figure<br />

rebounded 16.3 per cent in May as government<br />

stimulus flowed through to consumers and<br />

businesses, before stabilising in June.<br />

TRENDS OVER TIME<br />

CENTRE OF<br />

CHANGE: RETAIL<br />

EVOLUTION<br />

Since 2015, several major trends have<br />

been noted in shopping centres. These<br />

have occurred as a result of changing<br />

consumer behaviour as well as external<br />

pressures on specific categories within<br />

the retail sector.<br />

Foot traffic has been driven by different<br />

factors: The number of department<br />

stores and discount department<br />

stores in shopping centres has been<br />

shrinking, but grocery stores – such<br />

as Woolworths – and lifestyle<br />

businesses, such as gyms, as well<br />

as cinemas have been making up<br />

some of that lost foot traffic.<br />

Shopping centres have become<br />

more ‘all hours’: Early opening and<br />

late closing has increased in order to<br />

appeal to different types of shoppers<br />

throughout the day.<br />

A move toward mixed-use<br />

development: Shopping centre<br />

landlords have shifted their model<br />

to include a combination of retail,<br />

residential, and offices. In the future,<br />

this mixed-use model could also<br />

include hotels.<br />

Instability in the discretionary retail<br />

sector leading to changing tenancy<br />

mix: Retailers, particularly in fashion<br />

and footwear, have been vulnerable due<br />

to a combination of factors, in particular<br />

increased competition from large<br />

international entrants to the market, as<br />

well as online-only fast retailers. This<br />

has led to a ‘shake out’ of such tenants.<br />

However, the spending was largely concentrated<br />

in necessities such as groceries, hardware, and<br />

homewares. Fonteyn said the jewellery category<br />

had been “heavily impacted”, though urban<br />

areas had again borne most of the brunt.<br />

With bricks-and-mortar retailers across<br />

discretionary categories in dire straits, the<br />

necessity of rent reductions, waivers, and<br />

deferrals became clear.<br />

“Meeting rental obligations is a significant<br />

concern for retailers, with many stores still<br />

suffering diminished revenue, particularly<br />

discretionary retailers and stores in CBD or<br />

tourist-dependent locations,” Zahra says, adding<br />

that retailers would also incur costs due to<br />

COVID-19 safety requirements.<br />

On 7 April, the National Cabinet released a<br />

Commercial Tenancy Code of Conduct to guide<br />

good-faith rent renegotiations between retailers<br />

and landlords.<br />

At the time, Peter Allen, CEO of Westfield owner<br />

Scentre Group and chairman of the Shopping<br />

Centre Council of Australia (SCCA), said, “We<br />

all accept that retail leases are legal obligations<br />

and enshrined in the laws of the states and<br />

territories, yet we are also commercial people<br />

and we understand there needs to be many<br />

factors taken into consideration as we come to<br />

an agreement on temporary arrangements.<br />

“Our aim is, in a proportionate and measured<br />

way, to share the financial risk and cash flow<br />

impact during the COVID-19 [pandemic] with the<br />

interests of all our stakeholders.”<br />

17.7%<br />

FALL IN RETAIL<br />

SALES, APR ‘20<br />

12.3%<br />

16.3% 2%<br />

VACANCY RATE<br />

INCREASE IN RETAIL<br />

SALES, MAY ‘20<br />

OF MAJOR<br />

MELBOURNE<br />

RETAIL STRIPS<br />

AVERAGE YEARLY<br />

INCREASE IN TOTAL<br />

RETAIL SALES<br />

<strong>August</strong> <strong>2020</strong> | 35


STRATEGY FEATURE | Retail Rent Review<br />

INSIGHTS<br />

The Response<br />

to COVID-19<br />

When it comes to<br />

assessing the impact<br />

of COVID-19 on<br />

shopping centres,<br />

Simon Fonteyn,<br />

managing director<br />

of retail data firm<br />

LeaseInfo Group,<br />

argues that the<br />

figures paint a<br />

nuanced picture.<br />

“[The impact is]<br />

location-specific,<br />

sector-specific,<br />

geographically<br />

specific – and within<br />

shopping centres,<br />

certain categories<br />

are doing better than<br />

others. Generally<br />

speaking, the<br />

smaller shopping<br />

centres – what we<br />

IMPACT ON SHOPPING CENTRES<br />

PAIN AND GAIN<br />

% change<br />

by precinct<br />

format<br />

Sm all shopping<br />

centres<br />

Large format<br />

stores 2<br />

Medium<br />

shopping c entres<br />

Major<br />

retail strips<br />

Large shopping<br />

centres<br />

Me lbourne<br />

CBD<br />

Outlet<br />

precincts<br />

Reference periods<br />

A vs. BA vs. C<br />

27/01 –1 6/03 27/01 –2 7/04<br />

-20%<br />

-10%<br />

-19%<br />

-30%<br />

39%<br />

-47%<br />

14%<br />

-32%<br />

-39%<br />

-45%<br />

-59%<br />

-66%<br />

-87%<br />

-87%<br />

Impact of COVID-19 on shopping centre<br />

footfall by type. Source: KPMG/GapMaps.<br />

term Neighbourhood centres – have been the least impacted<br />

because customers are tending to spend and shop locally,<br />

particularly for groceries. The most impacted have been<br />

CBD shopping centres, for obvious reasons: the lack of office<br />

workers and no international tourists,” he explains.<br />

“In between those, in general the bigger the shopping centre,<br />

the more impact has been felt, usually because of what their<br />

mix entails. The exception to that rule would be shopping<br />

centres in regional areas, which have not been impacted to<br />

the extent of metro areas.” Fonteyn’s analysis is supported by<br />

data from KPMG and GapMaps (see chart, above).<br />

In terms of shopping strips or precincts, Fonteyn says the data<br />

point to even more of a “mixed bag”.<br />

“Some have been devastated by COVID-19. As an example, I<br />

was recently at a strip mall in northwest Sydney which used to<br />

be very busy, and the number of vacancies astounded me. Strip<br />

malls have been affected because a lot of the businesses that<br />

tend to go there are SMEs [small and medium enterprises] and<br />

they have been hit really hard.”<br />

“There are also high vacancy rates in Oxford Street in Sydney<br />

and Chapel Street in Melbourne – the fashion districts – and<br />

that gives you an idea that it’s really a mosaic.”<br />

This information should be taken into account when predicting<br />

how centres may recover in the medium- and long-term.<br />

Paul Zahra<br />

Australian Retailers<br />

Association<br />

“Many landlords are treating<br />

the Code’s minimum<br />

provisions for rent relief as<br />

their maximum requirement,<br />

and are unwilling to offer<br />

rent abatement higher than<br />

50 per cent of the total rent<br />

relief. However, it is unfair to<br />

be entirely critical, as we’ve<br />

also received a lot of positive<br />

feedback.”<br />

Peter Allen<br />

Scentre Group & Shopping<br />

Centre Council of Australia<br />

“We all accept that<br />

retail leases are legal<br />

obligations and enshrined<br />

in the laws of the states and<br />

territories, yet we are also<br />

commercial people and we<br />

understand there needs to<br />

be many factors taken into<br />

consideration as we come to<br />

an agreement.”<br />

John Chapman<br />

South Australian Small<br />

Business Commissioner<br />

“The vast majority of the<br />

[mediations have been]<br />

successful with the parties<br />

in agreement. We don’t<br />

expect a lot to go to court.<br />

What we are finding is that<br />

a lot of people, once we go<br />

to the other party, come to a<br />

resolution. They go away and<br />

start talking again, and that’s<br />

a great outcome.”<br />

Between March and May, SCCA members were able to complete<br />

more than 6,400 revised rent agreements with small and<br />

medium-sized retailers, representing approximately 45 per cent<br />

of those who had requested relief.<br />

As of 14 <strong>August</strong>, the SCCA’s assistance extended to retail tenants<br />

totalled $1.6 billion.<br />

Angus Nardi, executive director SCCA, said, “Our industry has<br />

provided substantial rental assistance to both SME [small-andmedium<br />

enterprise] and non-SME retailers... We have strived<br />

to strike a balance between helping those who need it while<br />

at the same time confronting our own financial pressures in<br />

the face of ongoing disruptions to regular trading to protect<br />

public health.”<br />

He added that SCCA members would continue “working closely<br />

and co-operatively” with SMEs, saying, “It is in our commerical<br />

interests as well as the broader economy that SMEs have<br />

longevity within our centres as they provide products and<br />

services our customers want and support local jobs.”<br />

“It is in our commercial interests as well as the broader<br />

economy that SMEs have longevity within our centres<br />

as they provide products and services our customers<br />

want and support local jobs.”<br />

Angus Nardi, Shopping Centre Council of Australia<br />

Meanwhile, Grant Kelley, CEO Vicinity Centres, has drawn ire for<br />

suggesting that lease agreements could include base rent plus<br />

a variable component based on retailers’ e-commerce sales,<br />

justified by bricks-and-mortar stores acting as ‘showroom and<br />

fulfilment channel’.<br />

Across the retail spectrum, the ARA’s Zahra reveals that<br />

renegotiation results have been moderately successful: “We have<br />

heard from retailers that the majority of landlords are sticking<br />

strictly to the provisions specified by the National Cabinet’s Code<br />

of Conduct, however some landlords are extending better offers<br />

than the code requires which is welcome feedback.<br />

“Disappointingly, we have heard that many landlords are doing<br />

as little as possible under the law. Many landlords are treating<br />

the Code’s minimum provisions for rent relief as their maximum<br />

requirement, and are unwilling to offer rent abatement higher<br />

than 50 per cent of the total rent relief,” he says.<br />

“However, it is unfair to be entirely critical, as we’ve also<br />

received a lot of positive feedback. One medium-sized landlord<br />

36 | <strong>August</strong> <strong>2020</strong>


Retail Rent Review | STRATEGY FEATURE<br />

Top 3 retail categories offered<br />

rental assistance<br />

26%<br />

21%<br />

14%<br />

CAFES, FOOD CATERING & TAKEAWAY<br />

RETAIL SERVICES (I.E HAIRDRESSERS,<br />

KEY-CUTTING & SHOE REPAIR)<br />

CLOTHING, FOOTWEAR &<br />

ACCESSORIES<br />

AT THE TA BLE<br />

Approaching<br />

Negotiation<br />

wrote to all tenants to advise them of a six-month holiday for<br />

rental payments to affected tenants.”<br />

The most potent and visible example of the conflict between<br />

retailers and landlords has been the public campaign of Premier<br />

Investments, Australia’s largest retail tenant and the owner of<br />

brands such as Peter Alexander, Just Jeans and Smiggle.<br />

Led by chairman Solomon Lew and CEO Mark McInnes,<br />

Premier refused to pay rent during a six-week shutdown in<br />

the first wave of the pandemic, and has since advocated for a<br />

percentage-of-sales-only model.<br />

Prominent chains, such as jeweller Michael Hill and fashion<br />

retailer City Chic, chose to rationalise their store network and<br />

close locations due to the intransigence of landlords.<br />

In the jewellery category, Salera said his business was offered<br />

the opportunity to renegotiate with landlords, but the terms<br />

were “not acceptable”.<br />

In contrast, Sambasivam said The <strong>Jeweller</strong>y Group’s<br />

landlords were “by and large more than willing to discuss the<br />

opportunities to defer, renegotiate or waive rent”.<br />

On the state level, support has been extended by various<br />

governments to assist retailers. The Victorian Government<br />

launched the Commercial Tenancy Relief Scheme in March,<br />

which included a six-month moratorium on evictions for SME<br />

tenants who had applied for rent relief and were participating<br />

in the JobKeeper scheme.<br />

Judy O’Connell, Victorian Small Business Commissioner, told<br />

<strong>Jeweller</strong>, “We want to help tenants and landlords negotiate<br />

the best possible rental outcomes, so they have one less<br />

thing to worry about and can focus on coming out of this<br />

pandemic in good shape. We’re confident the new reforms to<br />

commercial tenancy laws will give tenants and their landlords<br />

the much-needed support and security they need during<br />

these incredibly tough times.”<br />

By July, O’Connell’s office – the Victorian Small Business<br />

Commission – had received 825 applications to resolve rent<br />

disputes; of those that were finalised, 96 per cent resulted in<br />

rent relief for the tenant.<br />

Meanwhile, Chapman said the South Australian Small Business<br />

Commission had seen a doubling of lease-related work in the three<br />

months to June, including almost 80 disputes.<br />

“The vast majority of the [mediations have been] successful with<br />

the parties in agreement. We don’t expect a lot to go to court. What<br />

we are finding is that a lot of people, once we go to the other party,<br />

come to a resolution. They go away and start talking again, and<br />

that’s a great outcome,” Chapman said.<br />

Judy O’Connell<br />

Victorian Small Business<br />

Commissioner<br />

“We want to help tenants and<br />

landlords negotiate the best<br />

possible rental outcomes, so<br />

they have one less thing to<br />

worry about and can focus on<br />

coming out of this pandemic<br />

in good shape. We’re<br />

confident the new reforms<br />

to commercial tenancy laws<br />

will give tenants and their<br />

landlords the much-needed<br />

support and security they<br />

need during these incredibly<br />

tough times.”<br />

Jane Cohen<br />

KPMG<br />

“I don’t necessarily think<br />

retailers will be able to get<br />

more out of the landlords,<br />

but both will be able to<br />

create more value if they<br />

shift to a more collaborative<br />

approach.”<br />

Peter Ryan<br />

RED Communication<br />

“The problem about<br />

renegotiating rent is one of<br />

fairness to both parties. A<br />

landlord must get a return on<br />

investment or the asset will<br />

become starved of capital<br />

and operational expenditure<br />

– and that includes<br />

promotions which attract<br />

customers.”<br />

RENT READY<br />

NEGOTIATION CHECKLIST<br />

FOR RETAILERS<br />

Assessment<br />

Examine your business model and decide whether it is<br />

viable<br />

for the long-term: what is the existing occupancy<br />

cost, and what is a sustainable rent going forward? How<br />

expensive is the store fit-out and how long will it take to<br />

amortise the cost?<br />

Analyse market trends and uncertainty to determine<br />

whether a short, flexible lease is preferable to a longer term<br />

Analyse the performance of your store and the shopping<br />

centre or precinct: is it in the best possible location in terms<br />

of the centre’s retail mix, and delivery of quality foot traffic?<br />

Would it be better suited to another area, or even moving to a<br />

shopping strip?<br />

Given the changes in consumer behaviour, how is the<br />

shopping centre management planning to support retailers<br />

and drive foot traffic over the next two to five years?<br />

Education<br />

Seek advice from your buying group or industry<br />

organisation, such as the Australian Retailers Association:<br />

inform yourself about the landlord’s obligations, what you are<br />

entitled to as a tenant under legislation, and what you are not<br />

required to provide – such as cash flow projections or financial<br />

statements<br />

Refer to the relevant retail tenancy legislation in your state<br />

– several have been updated in recent years with increased<br />

protections and flexibility for tenants<br />

Check your relevant Small Business Commissioner’s<br />

website for guidelines and frequently asked questions<br />

regarding commercial tenancies<br />

Negotiation<br />

Bring an attitude of fairness and good faith to the<br />

conversation, but recognise that the survival of your business<br />

is paramount<br />

Be honest with the landlord about what you can afford<br />

The Australian Retailers Association recommends retailers<br />

avoid signing a non-disclosure agreement, as this limits<br />

their options for collective bargaining<br />

If you are unable to come to an agreement, seek support<br />

from your state or territory’s relevant Small Business<br />

Commissioner, as many are equipped to provide mediation<br />

services at low or no cost<br />

<strong>August</strong> <strong>2020</strong> | 37


STRATEGY FEATURE | Retail Rent Review<br />

KEY<br />

TRENDS<br />

FOR<br />

RETAILERS<br />

He added, “There will be those periods for<br />

businesses who were shut down and a lot<br />

of them have already come to agreements<br />

with their landlords.<br />

“There will be others that haven’t. There will<br />

be those that open up and landlords saying,<br />

‘Well, you’re open now, I want all my rent.’<br />

That is not realistic in some cases and there<br />

will be a lot subject to negotiation.”<br />

Indeed, the need for negotiation and<br />

managed expectations – on the part of<br />

both retailers and landlords – is critical<br />

in the post-COVID period.<br />

Bridging the gap<br />

For retailers, the COVID-19 pandemic<br />

dramatically rebalanced the value<br />

equation with landlords, most notably<br />

by the decrease in footfall, the increase<br />

in e-commerce trading, and the rising<br />

number of store vacancies.<br />

“Since the early 2000s at least, supply has<br />

always exceeded demand for shopping<br />

centre space. As a result of COVID-19, with<br />

the number of retailers that have gone out of<br />

business, you are seeing a situation where<br />

demand exceeds supply,” Fonteyn explains.<br />

“Retailers can’t afford now to hold any<br />

space that is not making money. Large<br />

groups may have one or two stores that<br />

they are prepared to take a loss on, but<br />

the majority will have to be profitable<br />

or breakeven. The pandemic has simply<br />

created a seismic shift in supply and<br />

demand – and hence, rent.”<br />

Indeed, at the Australian Financial<br />

Review’s Virtual Retail Summit, held on<br />

25 June, Ian Bailey, managing director<br />

Kmart Group, confirmed that 10–20 year<br />

leases and yearly increasing rents would<br />

no longer be acceptable to large anchor<br />

retailers, which are still responsible for<br />

driving a substantial portion of foot traffic<br />

to shopping centres.<br />

“None of us are going to be signing<br />

anything like that in the future because<br />

what this period of time has told us is<br />

things can happen where sales decline<br />

completely outside of the control of the<br />

retailer – and rents do not,” he said.<br />

Jane Cohen, a partner at KPMG Australia<br />

and co-author of the white paper, observes<br />

that consumer behaviour has been drastically<br />

changed by the virus and those trends are<br />

likely to continue, placing more pressure on<br />

both landlords and retailers to create a more<br />

sustainable framework.<br />

“There will be [consumers] who<br />

jump straight back to the way<br />

they were, but even if just a<br />

small percentage move [their<br />

shopping patterns], it makes such<br />

a difference on these fixed-cost<br />

businesses – both the landlords<br />

and the retailers.”<br />

Jane Cohen, KPMG<br />

“There will be people who jump straight back<br />

to the way they were, but even if just a small<br />

percentage move, it makes such a difference<br />

on these fixed-cost businesses – both the<br />

landlords and the retailers,” she says.<br />

It’s a conclusion supported by Fonteyn,<br />

who says, “Post-COVID, it’s a whole new<br />

world. People are preferring to work<br />

from home, at least part of the time,<br />

because they don’t have to bother with the<br />

commute and it’s convenient for them.<br />

”That means the consumer behaviour will<br />

change; they might shop more locally, so<br />

there will be less demand in the CBD.”<br />

Salera notes, “Landlord’s expectations<br />

of achievable rent will need to change. In<br />

the short run, the only way that landlords<br />

will accept the possibility that they will<br />

generate less rent from sites is when they<br />

get an increased level of vacancy.<br />

Higher<br />

vacancy<br />

rates means<br />

there is less<br />

competition<br />

for retail<br />

space, both in<br />

centres and<br />

precincts<br />

Economic<br />

uncertainty<br />

creates a good<br />

environment<br />

for negotiating<br />

a new, better<br />

deal as<br />

landlords look<br />

for repeat<br />

income<br />

Large<br />

shopping<br />

centres<br />

are still<br />

beholden to<br />

shareholders,<br />

putting<br />

upward<br />

pressure<br />

on rents<br />

The consumer<br />

shift to<br />

‘village<br />

shopping’<br />

makes smaller<br />

centres more<br />

appealing for<br />

retailers<br />

As<br />

e-commerce<br />

grows,<br />

shopping<br />

centres must<br />

adapt to offer<br />

infrastructure<br />

for omnichannel<br />

retailing<br />

“This may well escalate in the years<br />

immediately after the end of the COVID<br />

financial support as more businesses<br />

are very likely to close their doors due to<br />

unsustainable rent levels.”<br />

Zahra adds, “If retailers fall over due to rental<br />

costs, landlords may not be able to replace them<br />

– it’s better to have a tenant with reduced rent<br />

than an empty store. It would make more sense<br />

to come to an arrangement that allows that<br />

tenant to continue to trade profitably.”<br />

For retailers, the balance of power has tipped<br />

slightly in their favour. In addition to further<br />

regulatory protections and free state-based<br />

mediation services, the Australian Competition<br />

and Consumer Commission (ACCC) recently<br />

issued a draft determination granting new<br />

collective bargaining powers to the ARA and its<br />

members.<br />

“The ACCC’s draft determination will help<br />

our members exchange information and<br />

collectively bargain with landlords to achieve<br />

more productive outcomes during this<br />

uncertain time,” Zahra says.<br />

“I am sure the relationship will be<br />

more amicable with more mutual<br />

benefits, rather than it being a ‘my<br />

way or highway’ approach.”<br />

Balaji Sambasivam, The <strong>Jeweller</strong>y Group<br />

“The provision is time-bound, and is<br />

scheduled to elapse on 1 September<br />

2021, which will provide retailers with a<br />

crucial opportunity to inform themselves<br />

and understand what is going on in the<br />

marketplace. This will help press the reset<br />

button on future lease agreements.”<br />

Meanwhile, Sambasivam predicts that “the<br />

valuations and cost structure of operating the<br />

stores will come to realistic levels, and landlords’<br />

objective at this point in time is ensuring that<br />

more stores are open for trading.”<br />

38 | <strong>August</strong> <strong>2020</strong>


Retail Rent Review | STRATEGY FEATURE<br />

When it comes to the timing of a negotiation,<br />

Fonteyn observes that landlords have been<br />

“very accommodating” for his clients and<br />

have presented the most favourable terms in<br />

10 years.<br />

“Landlords are desperate for certainty or<br />

repeat income, so the next year or two is a<br />

great time to negotiate if you are due for a<br />

lease renewal,” he says, adding the caveat<br />

that with so much uncertainty, particularly<br />

the potential for further lockdowns and<br />

closures, retailers may instead take a ‘waitand-see’<br />

approach.<br />

Indeed, he notes that many commercial tenants<br />

are “on holdover” – paying rent month-bymonth:<br />

“They are dealing with all the COVID-19<br />

legislation and paperwork, so most are not<br />

even thinking of renewals at the moment, they<br />

are just getting through to September.”<br />

In the long-term, Fonteyn predicts rents will<br />

adjust in line with the retailer’s sales: “Retailers<br />

can’t continue to run businesses that are not<br />

profitable. It’s going to be much more about<br />

what’s sustainable for that business – and if<br />

the business is profitable, then the rent should<br />

align more broadly with the average for that<br />

sort of category,” he explains.<br />

While jewellery stores have previously been<br />

“in the crosshairs of shopping centres” to pay<br />

a higher rate per square metre for premium<br />

sites, Fonteyn advises that jewellers will be less<br />

receptive, as the vulnerabilities of the category<br />

have been laid bare.<br />

“If retailers<br />

fall over due<br />

to rental costs,<br />

landlords may<br />

not be able to<br />

replace them<br />

– it’s better to<br />

have a tenant<br />

with reduced<br />

rent than an<br />

empty store.<br />

It would make<br />

more sense<br />

to come to an<br />

arrangement<br />

that allows<br />

that tenant<br />

to continue<br />

to trade<br />

profitably.”<br />

Paul Zahra,<br />

Australian<br />

Retailers<br />

Association<br />

Speaking at the Virtual Retail Summit,<br />

Julia Forrest, a portfolio manager at<br />

investment firm Pendal Group, said,<br />

“We’re looking at it as an opportunity for<br />

rents to be reset to sustainable levels<br />

and once they’re at sustainable levels it<br />

will give us the confidence to put a high<br />

multiple on those earnings as retailers<br />

and sales improve.” She rejected a Premier<br />

Investments-style model as unacceptable<br />

to shareholders.<br />

Salera views the future of retailerlandlord<br />

negotiations through a<br />

pragmatic lens: “There are certain lease<br />

parameters that landlords have considered<br />

to be non-negotiable, and I doubt that we<br />

will see a situation where small to medium<br />

retailers will be able to vary these core<br />

terms.<br />

“However, I believe that landlords will<br />

be inclined to be more lenient in areas<br />

where they have greater latitude to<br />

negotiate, rent being one such area.”<br />

Those sentiments were echoed by<br />

KPMG’s Cohen, who said: “I don’t<br />

necessarily think retailers will be able to<br />

get more out of the landlords, but both<br />

will be able to create more value if they<br />

shift to a more collaborative approach.”<br />

Sambasivam reached a similar<br />

conclusion, saying, “I am sure the<br />

relationship will be more amicable with<br />

more mutual benefits, rather than it<br />

being a ‘my way or highway’ approach.”<br />

Meanwhile, Ryan cautions retailers against<br />

dismissing landlords’ requirements – yet<br />

insists landlords must also manage their<br />

obligations to tenants.<br />

“The problem about renegotiating rent<br />

is one of fairness to both parties.<br />

“A landlord must get a return on<br />

investment or the asset will become<br />

starved of capital and operational<br />

expenditure – and that includes<br />

promotions which attract customers.<br />

A retailer needs the lowest rent possible<br />

to survive,” he explains.<br />

“It is not landlords’ job to subsidise a retail<br />

business, but lease costs should reflect<br />

what is being delivered to the retailer. If it is<br />

the wrong type of foot traffic or a low level<br />

of foot traffic, then the onus falls to the<br />

landlord to either improve the outcome or<br />

reduce the rent.”<br />

Ultimately, the onus is on both retailers and<br />

landlords to negotiate leases that benefit<br />

both parties. Without sustainable rents,<br />

more retailers will fail – and landlords will<br />

lose tenants and therefore income.<br />

However, with realistic and flexible<br />

terms in place, retailers can thrive in<br />

the new trading environment while<br />

landlords can expect stable profits that<br />

perform over the long-term. The result<br />

is mutually assured success, rather<br />

than destruction.<br />

USEFUL LINKS & RESOURCES<br />

Victorian Small Business Commission<br />

13 87 22<br />

NSW Small Business Commissioner<br />

South Australian Small Business<br />

Commissioner<br />

Small Business Development Corp. (WA)<br />

13 31 40<br />

Queensland Small Business<br />

Commissioner<br />

1300 312 344<br />

Business Tasmania<br />

1800 440 026<br />

Tenancy Unit, Consumer Affairs (NT)<br />

1800 019 319<br />

ADDITIONAL RESOURCES<br />

Australian Retailers Association (ARA)<br />

1300 368 041<br />

National Cabinet Mandatory Code of Conduct<br />

Australian Treasury<br />

KPMG Beyond COVID-19: The Shifting<br />

Foundations in Retail Property<br />

<strong>August</strong> <strong>2020</strong> | 39


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BEST OF BUSINESS<br />

Feature<br />

Navigate the future of customer relationships<br />

by embracing technology<br />

As online shopping increases, STEVEN VAN BELLEGHEM says that customer relationship remains an important<br />

driver of loyalty – and retailers can boost it by understanding consumers’ digital expectations.<br />

Customer relations are in transformation<br />

and pre-sales, sales and after-sales<br />

are changing at high speed. Companies<br />

need to figure out the current customer<br />

journey, the role of self-service, their<br />

data strategy and much more.<br />

A few years ago, this author conducted<br />

a global study on the future of customer<br />

relationships in collaboration with datacollection<br />

company SSI and translation<br />

agency No Problem!<br />

The study investigated all aspects of a<br />

modern customer relationship and the<br />

highlights were as follows:<br />

Adoption of new technologies<br />

Rogers’ Adoption Curve is a concept by a<br />

communications studies professor named<br />

Everett Rogers that seeks to explain<br />

how, why and at what rate new ideas and<br />

technologies spread.<br />

Rogers first published the concept in 1962<br />

in his book The Diffusion of Innovations<br />

and the curve is well-known – every<br />

manager, marketer and entrepreneur<br />

refers to this body of thought from time<br />

to time. He divides adopters into five<br />

categories: innovators, early adopters,<br />

early majority, late majority and laggards.<br />

People are more aware than ever before of<br />

the newest products and models as soon<br />

as they hit the market, and never has the<br />

public been so awake to the possibilities<br />

that are coming their way.<br />

Furthermore, the intention to buy these<br />

new products is high, a position that<br />

sharply contrasts consumers’ approach to<br />

new technology a few decades ago.<br />

In studies from the early 1990s in which<br />

respondents were asked about their<br />

intention to buy a mobile phone someday,<br />

the most popular answer was a firm ‘No!’<br />

Some 25 years later, that sentiment has<br />

changed completely.<br />

This is how it usually went with new<br />

concepts: the ‘average Joe’ or Rogers’<br />

so-called ‘early majority’ failed to see the<br />

point of most new technology.<br />

Yet reactions today are very different.<br />

For instance, 66 per cent of people say<br />

they are interested in buying a smart TV<br />

one day, one in two are actually looking<br />

forward to the introduction of smart cars,<br />

Never<br />

underestimate<br />

the impact of<br />

real people.<br />

Human contact<br />

is crucial in<br />

most customer<br />

relationships,<br />

even in the<br />

digital world<br />

smart shoes and refrigerators are slightly<br />

lower down on the wish list but the idea of<br />

a smart thermostat is very popular.<br />

Today, a mobile phone has become just<br />

another fast-moving consumer good<br />

(FMCG) and the average consumer<br />

replaces their smartphone every 18<br />

months – one wouldn’t have to travel back<br />

in time too far to find a generation who had<br />

the same home phone for 18 years!<br />

Things are moving quickly indeed. The<br />

classic Rogers’ Adoption Curve probably<br />

still exists, although its upward or<br />

downward tilt is probably slightly more<br />

pronounced than before.<br />

Life is faster nowadays, not only in the<br />

introduction of new technologies but the<br />

obsolescence of outdated ones.<br />

The rise of digital offline<br />

Traditional retailers are afraid of<br />

‘showroomers’, the shoppers who look<br />

around their stores and ask staff for expert<br />

advice only to go home and order the<br />

product online.<br />

This fear is justified: a study has shown<br />

that 46 per cent of Americans have been<br />

<strong>August</strong> <strong>2020</strong> | 41


Best of Business | NAVIGATE THE FUTURE OF CUSTOMER RELATIONSHIPS<br />

known to ‘showroom’.<br />

However, the same study also revealed<br />

that ‘reverse showrooming’ is an even<br />

bigger trend – 69 per cent of consumers<br />

research products online and then visit an<br />

offline store to order the product of their<br />

choice.<br />

In the SSI/No Problem! study mentioned<br />

earlier, one of the aspects under<br />

investigation was how consumer<br />

expectations are changing with regard<br />

to the offline (bricks-and-mortar) shopping<br />

experience.<br />

The results were clear: consumers<br />

expected the online and offline worlds to<br />

integrate in the near future. In many cases,<br />

that’s exactly what is happening.<br />

The study showed that consumers expect<br />

an increasing level of interaction and<br />

digitisation in the offline sales outlets.<br />

For example, 63 per cent expected stores<br />

to install interactive screens enabling<br />

consumers to look up details on specific<br />

products during their visit, and 64 per cent<br />

wanted the option of ordering a product<br />

online right away if it was not on stock.<br />

The latter figure illustrates the evolution<br />

of offline toward online and back again.<br />

What’s more, 73 per cent of consumers<br />

feel it’s a plus when an online store also<br />

has an offline sales outlet.<br />

Flexible pickup and delivery options will<br />

also become an increasingly crucial part of<br />

any retailer’s online strategy.<br />

Know the customers<br />

Consumers exhibit a growing aversion<br />

to repeating themselves so the key issue<br />

for consumers is to be recognised as a<br />

customer across all channels.<br />

Currently one in three people expect sales<br />

personnel to know that they searched<br />

online and browsed a product prior to their<br />

visit; they want to hear the right answers<br />

right away without having to tell the same<br />

story over and over.<br />

Strikingly enough, this phenomenon is<br />

roughly the same across the world.<br />

Data benefits all<br />

A large portion of the public is still clueless<br />

as to how companies can use their data.<br />

The SSI/No Problem! report showed very<br />

little opposition to the possible use of<br />

consumer data for specific purposes but<br />

only a limited number of consumers are in<br />

favour of such practices – most consumers<br />

are indifferent and have adopted a ‘wait<br />

and see’ attitude.<br />

If consumers had their way, retailers<br />

would primarily use their data to send<br />

them personalised information, something<br />

that 46 per cent of respondents would<br />

welcome.<br />

It’s striking to note that the Dutch, who<br />

are traditionally frontrunners in the field<br />

of digitisation, are the most sceptical of<br />

corporate use of personal data – just 30<br />

per cent of Dutch consumers are okay with<br />

companies using their data.<br />

Countries such as Belgium, Spain, Italy<br />

and also Singapore are much more open<br />

to such strategies, and more than 50<br />

per cent of consumers in those nations<br />

expect better service through the use of<br />

consumer data.<br />

The personal digital world<br />

Several years ago, Peter Hinssen wrote<br />

The New Normal, where he argued that<br />

businesses would need to address a<br />

society without digital limits, where they<br />

are increasingly faced with customers<br />

and consumers who no longer tolerate<br />

limitations in terms of pricing, timing,<br />

patience, depth, privacy, convenience<br />

and intelligence.<br />

This is now a reality. Still, it would be<br />

premature to write-off everything situated<br />

in the human and offline realm just<br />

because the digital society has become<br />

the norm.<br />

On the contrary, consumers all over the<br />

world share the same basic concern for<br />

wanting to build a digital relationship<br />

without losing the interpersonal, human<br />

contact of face-to-face relationships.<br />

Only a handful of companies can do<br />

without but, as always, there are<br />

DIGITAL<br />

CUSTOMER<br />

SERVICE<br />

Upgrade<br />

technology<br />

Consumers are<br />

increasingly<br />

oriented to<br />

new channels<br />

and products<br />

– don’t get left<br />

behind<br />

Embrace the<br />

showroomer<br />

Integrate online<br />

and offline<br />

sales to take<br />

advantage of<br />

showrooming<br />

and ‘reverse<br />

showrooming’<br />

Use data<br />

wisely<br />

Shopper<br />

data can be<br />

leveraged<br />

responsibly<br />

to improve<br />

service and<br />

increase<br />

satisfaction<br />

Retain the<br />

human touch<br />

Consumers<br />

still prefer a<br />

human option,<br />

so be wary of<br />

full automation<br />

when it comes<br />

to customer<br />

service<br />

exceptions to the rule – companies like<br />

Amazon and Booking.com are hugely<br />

successful despite minimal human<br />

intervention.<br />

Google is another case in point, but how<br />

many companies can do what these<br />

leading companies are doing?<br />

The answer lies in their excellent track<br />

record when it comes to customer<br />

interaction. Consider these and it’s easy<br />

to see why they are the exceptions.<br />

In contrast, a company like Dutch<br />

e-commerce business Coolblue has<br />

made a conscious choice to cultivate<br />

human contact.<br />

When an online player opens offline<br />

stores and records videos of employees<br />

recommending their services, it is a wellconsidered<br />

and very intelligent strategy.<br />

Closing thoughts<br />

Never underestimate the impact of real<br />

people. Human contact is crucial in<br />

most customer relationships, even in the<br />

digital world.<br />

Nearly three quarters of consumers like to<br />

have the option of talking to a flesh-andblood<br />

person, even when digital channels<br />

are working perfectly.<br />

The simple fact that this possibility exists<br />

creates peace of mind that many people<br />

still value.<br />

The personal touch is in the little things<br />

– one in two consumers like it when a<br />

business addresses them by name, for<br />

example. Retailers must get to know their<br />

customers so they can personalise the<br />

customer experience.<br />

Of course, the great thing about all this is<br />

that jewellery retailing is one business that<br />

still thrives on human contact, excellent<br />

advice and emotional purchasing.<br />

STEVEN VAN BELLEGHEM is a keynote<br />

speaker and author focusing on customer<br />

relationships and marketing in a digital<br />

world. Visit: stevenvanbelleghem.com<br />

42 | <strong>August</strong> <strong>2020</strong>


BEST OF BUSINESS<br />

Selling<br />

Shut up and listen to your customers<br />

Listening is central to the selling process and is also at the core of good customer service practices.<br />

RICHARD SHAPIRO explains the true meaning and benefits of this crucial sales tactic.<br />

When staff listen patiently, it gives<br />

customers a feeling of control.<br />

Customers want to know they are<br />

uniquely important and that their<br />

specific needs are being addressed.<br />

They don’t want to feel trapped because<br />

you are trying to sell them something.<br />

After all, selling is not about offering<br />

customers a long list of items but<br />

discovering what the customer wants and<br />

matching a product to it.<br />

What is the best way to achieve that<br />

goal? By engaging the customer in a<br />

meaningful and personal dialogue.<br />

If staff spend their time listening, they<br />

will give the customer that special feeling<br />

of priority.<br />

Listening pays big rewards<br />

Joe Girard is the world record-holder<br />

for selling cars. He began in 1963 at<br />

a Chevrolet dealership in Detroit, US<br />

and retired in 1977 with an average<br />

sell-through rate of six automobiles (or<br />

trucks) a day over the length of his career.<br />

To put that in perspective, the average car<br />

salesperson sells seven cars a month!<br />

In fact, Girard exceeded his own lofty<br />

expectations when he sold a whopping<br />

18 cars in a single day!<br />

Girard gave so much attention to each<br />

customer that word spread and it wasn’t<br />

long before there was a line outside his<br />

office with people waiting to exclusively<br />

see him.<br />

He started making appointments to<br />

ensure each customer would get his<br />

undivided attention.<br />

He also did this because he knew his<br />

attention was worth the wait and he<br />

advised others of this, saying, “People<br />

may have had to wait for an appointment<br />

but when I was with them, I was with<br />

them body and soul.”<br />

Listening to emails<br />

Recently, one of my clients wanted to<br />

know how their service and support for<br />

email responses compared with those<br />

of 20 other companies, each of whom<br />

were customer service leaders in their<br />

respective fields.<br />

You never<br />

know where a<br />

conversation<br />

may lead! Listen<br />

with your<br />

ears and your<br />

heart before<br />

responding.<br />

Make the<br />

customer feel<br />

respected and<br />

important<br />

To achieve this, 10 different email<br />

enquiries were developed to send to<br />

target companies so we could measure<br />

the speed and type of responses.<br />

In one scenario, the test email began,<br />

“I just had a baby and have a question<br />

about your product.” Only one of the<br />

companies acknowledged the news in its<br />

response: “Congratulations on the birth<br />

of your child.”<br />

Obviously the other respondents ignored<br />

the underlying emotion even though it is<br />

easier to pay attention to an email than<br />

to a conversation.<br />

For example, you have an opportunity to<br />

re-read the email, which is considerably<br />

easier than asking a customer to repeat<br />

what they have just said.<br />

Another test email went like this:<br />

“My dog accidentally chewed and<br />

digested part of your packaging. Do<br />

I need to worry?”<br />

Several of the companies answered<br />

almost instantly with the reply, “Please<br />

take your dog to a veterinarian.”<br />

44 | <strong>August</strong> <strong>2020</strong>


EARS THE<br />

THING<br />

Give<br />

your full<br />

attention<br />

Focus on your<br />

customer and<br />

engage with<br />

their needs<br />

Keep emails<br />

personal and<br />

relevant<br />

Reply to queries<br />

in a timely<br />

manner and<br />

address the<br />

specifics of<br />

each one<br />

Start a<br />

dialogue<br />

Listen for<br />

key phrases<br />

and create a<br />

conversation<br />

Good reply. The only problem was that a couple<br />

of the companies didn’t send that message<br />

until two weeks later!<br />

Listening is not just listening; it’s also acting<br />

upon what you have heard. In this case, offering<br />

such a slow response to a potential emergency<br />

might actually communicate less care on<br />

the company’s part than if there had been no<br />

response at all.<br />

Missing the signal<br />

Do you remember the great comedian and<br />

TV personality Groucho Marx? He had a show<br />

called You Bet Your Life where any contestant<br />

that mentioned the magic word of the day<br />

would be rewarded with a prize, and a rubber<br />

duck would fall from the ceiling to celebrate<br />

the moment.<br />

When I was doing research for my first book,<br />

I would frequently make a statement, a ‘magic<br />

phrase’ to determine if a sales associate was<br />

a good listener. It’s intended as an opening to<br />

engage the customer.<br />

For example, I would start the conversation<br />

by saying one of the following:<br />

• This is my first time in your store;<br />

• I just moved into the neighbourhood;<br />

• My friend suggested I might like your<br />

merchandise;<br />

• I’ve never used your website before;<br />

• This is the first time I have called your<br />

contact centre;<br />

• I have been buying this since I was<br />

a teenager.<br />

A representative who answers with just “Okay”,<br />

“That’s nice” or says nothing at all has missed<br />

a golden opportunity to start a dialogue critical<br />

to securing repeat business. You never know<br />

where a conversation may lead!<br />

Listen with your ears and your heart before<br />

responding. Make the customer feel respected<br />

and important.<br />

When you pay attention, you can hear the<br />

underlying emotion and then establish a<br />

human-to-human connection that has the<br />

potential to last a long time.<br />

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RICHARD SHAPIRO is founder of The<br />

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and author of The Endangered Customer:<br />

Eight Steps to Guarantee Repeat Business.<br />

Visit: tcfcr.com<br />

Contact (02) 9417 0177<br />

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BUSINESS<br />

Management<br />

“Jeff, you’re great with<br />

customers but we can<br />

tell that you’re not yet<br />

confident in jewellery<br />

knowledge. I think a few<br />

days with Lisa at the<br />

bench and sorting gems<br />

with me might be helpful.<br />

We’ve also noticed that<br />

you like working with<br />

pearls, so maybe we can<br />

give you a pearl sales<br />

quota this month. What<br />

do you think?”<br />

Top performance review tips for managers<br />

Striking a balance between praise and constructive criticism can make performance reviews more productive<br />

and satisfying for all parties. BARBARA CROWHURST outlines ways to get the most out of the process.<br />

Performance reviews are a lot like<br />

walking a tightrope: withholding<br />

positive feedback can discourage and<br />

demoralise employees, while failing<br />

to discuss problem areas can mean<br />

employees never improve.<br />

Staff appraisals must be recurring<br />

events. In addition to providing ongoing<br />

feedback during the year, managers<br />

also must let staff know what time of<br />

year reviews take place.<br />

To ensure reviews are useful, managers<br />

should follow these tips.<br />

Allow enough time to prepare<br />

Performance reviews are only valuable<br />

if managers and employees are given<br />

the time and resources they need to<br />

prepare for them.<br />

Give staff the opportunity to identify<br />

their achievements from the past<br />

year and areas where they would like<br />

to improve.<br />

Keep files on employees<br />

When hiring a new staff member, create<br />

a file that contains performance review<br />

notes. This serves to document the good<br />

and bad aspects of that employee’s job<br />

performance and work habits.<br />

Use the file to catalogue their<br />

accomplishments and also to track<br />

performance-related issues such as<br />

tardiness. The file will act as a record of<br />

items to be discussed at the next review.<br />

Solicit third-party feedback<br />

Managers shouldn’t rely solely on<br />

their own perceptions of an employee,<br />

particularly if interactions with the<br />

individual have been limited. Seek<br />

feedback and comments from<br />

colleagues and others who work closely<br />

day-to-day with the employee.<br />

Enquire about his or her strengths and<br />

weaknesses, as well as areas that have<br />

improved over time and special abilities.<br />

Ask specific questions, such as how<br />

does he or she handle challenges<br />

and overcome obstacles and what<br />

contributions have they made to<br />

team-based projects?<br />

Employees<br />

may need time<br />

to digest the<br />

feedback from<br />

a review so<br />

encourage them<br />

to come back<br />

afterward if they<br />

have questions<br />

or concerns<br />

Does the staff member seem<br />

committed to continuing professional<br />

education and skills development?<br />

Compare the feedback.<br />

Allow enough time for assessment<br />

Don’t wait until the day before a review<br />

to start tracking and critiquing a staff<br />

member’s performance – this is unfair<br />

to the individual and will not give an<br />

accurate, comprehensive picture of his<br />

or her abilities and achievements.<br />

Instead, try to observe the employee<br />

in a variety of situations over an<br />

extended period. Assess how well he<br />

or she manages both independent and<br />

collaborative assignments.<br />

Create a conducive setting<br />

Choose a quiet, private place for<br />

the review and schedule it at a time<br />

when interruptions can be kept at<br />

a minimum. When structuring the<br />

session, incorporate time for a two-way<br />

dialogue so that the employee can<br />

respond to feedback and offer input of<br />

his or her own.<br />

46 | <strong>August</strong> <strong>2020</strong>


Treat the<br />

session as<br />

a two-way<br />

conversation<br />

To prepare for the meeting, organise all<br />

documentation – previous evaluations,<br />

comments gleaned from colleagues and<br />

other notes.<br />

Give the employee sufficient notice to<br />

prepare also.<br />

Set the appropriate tone<br />

The review should be handled in a<br />

professional manner and treated as a<br />

conversation, not a lecture.<br />

Open the discussion by talking about<br />

the employee’s accomplishments and<br />

positive attributes. When it’s time to shift to<br />

negative or problematic areas, focus not on<br />

mistakes but on ways to improve.<br />

Most employees will not be surprised<br />

by anything they hear during a review;<br />

however, if there’s a gap between an<br />

employee’s perceived performance<br />

versus actual performance, be sure to<br />

explain the difference and suggest ways<br />

performance goals might be met.<br />

During the discussion, invite comments<br />

on any observations. Talk about future<br />

expectations and clarify job requirements<br />

and responsibilities. Enquire about the<br />

employee’s professional-development<br />

goals and discuss how to work towards<br />

meeting them.<br />

Be courteous and tactful and focus on<br />

behaviour rather than personality when<br />

being critical.<br />

Maintain an open door<br />

Employees may need time to digest the<br />

feedback from a review, so encourage<br />

them to come back afterward if they have<br />

questions or concerns.<br />

If managers show that performance is<br />

REVIEW<br />

CHECKLIST<br />

Give the<br />

employee ample<br />

notice and time<br />

to prepare<br />

Seek feedback<br />

on performance<br />

from others and<br />

study previous<br />

evaluations<br />

Treat the session<br />

as a two-way<br />

conversation<br />

Focus on<br />

goals and<br />

achievements as<br />

well as areas for<br />

improvement<br />

not a once-a-year issue but a matter of<br />

ongoing importance, staff will focus less<br />

on the formal review itself and more on the<br />

feedback and guidance they receive.<br />

They’ll be motivated to see feedback as a<br />

way to help them with their performance.<br />

By preparing well in advance for<br />

performance reviews and developing a<br />

systematic, consistent appraisal process,<br />

managers can turn what could be an<br />

uncomfortable time into a chance to<br />

chat with team members and set goals<br />

for the future.<br />

Who knows? Both parties may even start<br />

to look forward to these feedback sessions<br />

and the business will benefit as a result.<br />

BARBARA CROWHURST is CEO<br />

of Retail Makeover as well as an<br />

internationally-recognised retail<br />

consultant. Visit: retailmakeover.ca<br />

We are<br />

here to<br />

help fulfil<br />

your ideas<br />

We are here to help you fulfil your ideas. As a<br />

customer-focused Australian business, we aim<br />

to service the needs of the retail and wholesale<br />

jewellery industry by helping to centralise the<br />

development of innovative products and concepts.<br />

For our existing branded products, we offer<br />

packaging, instore displays, care cards and coop<br />

advertising alongside an active social media<br />

campaign to supplement the story of the brand.<br />

We are<br />

here to<br />

make your<br />

job easier<br />

It’s been challenging, but lockdown has been a<br />

helpful time to review the way we present products<br />

on our selling platforms.<br />

To help ensure your online showcase look beautiful<br />

online, we have compiled our product images,<br />

marketing material and logos for your use. Contact<br />

us today for immediate access.<br />

Also offering credit facilities, resizing and repairs,<br />

warranties, customised manufacturing and nextday<br />

delivery.<br />

OUR BRANDS<br />

03 9555 9344<br />

SALES@PFJ.COM.AU<br />

WWW.PFJ.COM.AU


BEST OF BUSINESS<br />

Marketing & PR<br />

Grab your customers’ attention!<br />

In an age of instant communication, impersonal communications fail to impress consumers – instead, business<br />

owners must grab and hold shoppers’ attention, writes BARRY URQUHART.<br />

It is so difficult to get a message<br />

across nowadays. Nobody seems<br />

to be listening, reading or valuing<br />

relationships – consumers are failing<br />

to recognise brands, exhibit loyalty<br />

or refer services.<br />

Everyone seems distracted and<br />

uncommitted, more inclined to hit<br />

delete than reply because it’s easier<br />

to pretend that the communication<br />

was never received.<br />

The ubiquity of social and digital<br />

media means messages are no<br />

longer resonating with their intended<br />

audiences.<br />

A universal lowering of costs in digital<br />

channels has been instrumental in<br />

increasing the affordability and volume<br />

of mass communications – but it’s all<br />

for little to no avail.<br />

Even personalised greetings are<br />

marginally effective at best.<br />

Doing so much, so often is becoming<br />

a common practice that is only<br />

contributing to the problem. Attention<br />

has become a goal; however, it is<br />

commonly out of reach for many.<br />

Content is another tactic – yet, in<br />

many instances, it is poorly structured<br />

and delivered.<br />

Marketing practitioners are<br />

recalibrating the long-held maxim that<br />

50 per cent of their advertising works<br />

and 50 per cent doesn’t, they just don’t<br />

know which 50 per cent works.<br />

Today, there is an 85–90 per cent<br />

rate of ineffective, non-responsive<br />

advertising, marketing and promotion.<br />

It is a daunting set of statistics and<br />

implications.<br />

Deliver the promise<br />

Targeted consumers and existing<br />

clients are increasingly informed,<br />

discerning, price-sensitive and highly<br />

expectant of both great quality and<br />

value.<br />

They seek out, utilise and regularly<br />

return to sources which they find<br />

credible, verifiable, transparent and,<br />

above all, authentic.<br />

High expectations are believed to<br />

be the cause of considerable harm.<br />

Webinars are trying to address them;<br />

An interesting<br />

allure is to<br />

offer realtime<br />

personal<br />

responses. This<br />

is something<br />

that around<br />

80 per cent<br />

of business<br />

clients and<br />

64 per cent<br />

of consumers<br />

welcome<br />

and value<br />

however, the delivery skills of an<br />

overwhelming majority of speakers are<br />

poor – sometimes appalling – and this<br />

reflects badly on companies and their<br />

products.<br />

Personal presentation skills are<br />

only partial measures for increasing<br />

relevance and impact. Sadly,<br />

reincarnations of the late Steve<br />

Jobs seem everywhere but lack his<br />

immaculate delivery.<br />

Conference stages are regularly<br />

inhabited with storytellers dressed<br />

in black roll-neck skivvies and black<br />

trousers. Talk about commoditisation!<br />

Step up, stand up<br />

The filtering or blocking of much<br />

communication is a consequence of<br />

stereotypical perceptions and resultant<br />

generalisations. Don’t take it personally.<br />

In many instances, intended recipients<br />

don’t filter or reject individual<br />

communications.<br />

Rather, they just apply a blanket cover<br />

to every email, blog or text that comes<br />

their way. It’s a coping mechanism<br />

48 | <strong>August</strong> <strong>2020</strong>


ATTENTION<br />

RETENTION<br />

Keep marketing<br />

communication<br />

targeted and<br />

precise<br />

Short, enticing<br />

subject lines<br />

and texts<br />

appeal to busy<br />

consumers<br />

Ensure<br />

long-form<br />

communication<br />

is authentic and<br />

entertaining<br />

Respond to<br />

customers in<br />

real time and<br />

with sincerity<br />

rather than discrimination, and it seems<br />

necessary in a world swamped with advertising<br />

messages.<br />

To achieve human connection and elicit positive<br />

engagement, more focus and effort is needed<br />

on attracting attention.<br />

Short attention spans dictate the need to<br />

formulate and implement snappy headlines,<br />

limited to concise, enticing and compelling<br />

three-to-five-word phrases.<br />

Overcoming filters<br />

Consumer indifference pervades. Enthusing<br />

and motivating unmotivated and disconnected<br />

minds is a difficult challenge.<br />

Endeavouring to change people may be futile.<br />

In the words of Leo Tolstoy: “Everyone thinks<br />

of changing the world but no-one thinks of<br />

changing himself.”<br />

An interesting allure is to offer real-time<br />

personal responses. This is something that<br />

around 80 per cent of business clients and 64<br />

per cent of consumers welcome and value.<br />

Increasingly, recipients of countless<br />

communications recognise and are offended by<br />

impersonal, mass-distributed missives. In this<br />

form, personal salutations are conspicuous<br />

and often deemed to be offensively insincere.<br />

Accordingly, they do not counter those<br />

widely-held negative generalisations about<br />

promotional emails, blogs and texts.<br />

Remember that the loss of a customer is<br />

only one bad experience away. Many potential<br />

relationships are never established because<br />

the first exchange between business and<br />

consumer is a communication that lacks the<br />

vital ingredients to attract attention.<br />

It is an art form<br />

Disturbingly, many supposed digital and<br />

online-marketing experts are deficient in their<br />

ability to attract attention for clients; they are<br />

good at registering with algorithms, which lack<br />

dimensions of emotion.<br />

By ensuring concise headlines, respecting the<br />

power of brevity and providing credible and<br />

authentic personal advantages, businesses<br />

can reap benefits when targeting their<br />

promotional messages.<br />

BARRY URQUHART is managing<br />

director of Marketing Focus. He has<br />

been a consultant to the retail industry<br />

around the world since 1980. Visit:<br />

marketingfocus.net.au<br />

Offer:<br />

FREE SHIPPING<br />

on orders over AUD$300 until 31 st July<br />

As we continue to face uncertain times, we want to reach out<br />

with wishes of love, hope and strength and remind you that Stow<br />

Lockets remains committed to supporting our valued retailers.<br />

Stow Lockets can be carefully stylised, creating a sentimental<br />

heirloom jewellery piece for your customers.<br />

One which will be cherished forever.<br />

sales@stowlockets.co.nz | +64 7 281 1509<br />

stowlockets | #preciousstories | stowlockets.com


BEST OF BUSINESS<br />

Logged On<br />

Find yourself: reviewing your online presence<br />

There are multiple factors contributing to how customers see you in the digital realm – many of which you can<br />

control. DAVID BROWN asks if it’s time to conduct an online audit of your website, listings and social media.<br />

I was chatting with a friend recently<br />

about the ‘good old days’, back before<br />

the Internet was a part of our lives. We<br />

didn’t have data in our pockets and if we<br />

needed directions, we’d use a map.<br />

Our spare time was spent reading or<br />

watching television rather than looking at<br />

videos or surfing through Facebook.<br />

Words like Google didn’t exist in our<br />

vocabulary and swiping was something<br />

you reserved for flies and insects that<br />

bothered you!<br />

Now the Internet is a part of our lives,<br />

yet some of us are still of a generation<br />

where we occasionally forget it is<br />

there and the impact it carries as our<br />

ambassador to others.<br />

For many customers, the first experience<br />

they have of your business is online,<br />

often when searching for you in Google<br />

or Facebook.<br />

So, how does your profile stack up?<br />

The online audit<br />

A quick online search for your company<br />

should show your business appearing on<br />

various platforms – some of which you can<br />

control, such as your website, and some of<br />

which you can influence, like social media.<br />

There could be several other platforms<br />

you may not even be aware of, such as<br />

review sites or blogs.<br />

This is your online profile and it’s<br />

important you are aware of it and manage<br />

its impact, as it can be just as important to<br />

your business and its brand image as your<br />

store windows.<br />

Fix your digital presence<br />

Here are the elements you need to review<br />

to get your online profile in great shape:<br />

Your website – How close to the top does<br />

your website appear in Google’s search<br />

results? If customers have to go to page<br />

two of Google to find it, or even further,<br />

then that’s an issue.<br />

This should be your main online presence<br />

and customers can’t find you if you are<br />

buried at the bottom of the list.<br />

Business social media – The key socialmedia<br />

apps are Facebook, Instagram and<br />

Twitter. If you post images to Pinterest<br />

Positive<br />

coverage is great<br />

but if there are<br />

unfavourable<br />

reviews or<br />

articles, you<br />

should take<br />

action to deal<br />

with them –<br />

show that you<br />

are listening<br />

and that you are<br />

ready to fix the<br />

issue<br />

or your customers have shared images<br />

of your products there, you can add it to<br />

the list too.<br />

You may also publish videos for your<br />

business on YouTube or Vimeo.<br />

The good news is you can influence how<br />

you appear in any of these areas of the<br />

Internet. Are you managing your socialmedia<br />

pages? If so, when did you last post<br />

any updates?<br />

Are you interacting with followers,<br />

including responding to questions or<br />

complaints in a timely manner?<br />

If your social-media accounts have turned<br />

into ghost towns then it doesn’t reflect well<br />

on your business. Customers might even<br />

think you’re no longer trading!<br />

Update your pages regularly with engaging<br />

and informative content about your<br />

products and services including updating<br />

your opening hours.<br />

Be creative but remember to comply with<br />

the terms of use. Big companies control<br />

the space – Facebook owns Instagram and<br />

Google owns YouTube – and they can shut<br />

down profiles that don’t play by their rules.<br />

50 50 | | <strong>August</strong> <strong>August</strong> <strong>2020</strong> <strong>2020</strong>


ONLINE<br />

EVALUATION<br />

1. Check your SEO<br />

to ensure potential<br />

customers can<br />

find you when<br />

they search on<br />

Google<br />

2. Make sure<br />

your social<br />

media channels<br />

– Facebook,<br />

Instagram, Twitter,<br />

and Pinterest<br />

– are regularly<br />

updated and<br />

engaging<br />

3. Manage<br />

online reviews<br />

and ensure any<br />

questions or<br />

complaints are<br />

swiftly addressed<br />

4. Keep tabs on<br />

external coverage<br />

such as press<br />

articles and blog<br />

posts – re-share<br />

the positive<br />

and address the<br />

negative in a<br />

constructive way<br />

5. Don’t neglect<br />

your personal<br />

accounts, such<br />

as LinkedIn,<br />

which can be<br />

helpful in hiring<br />

employees as well<br />

as promoting your<br />

business<br />

Private social media – As a business<br />

owner, you may be well-known to people<br />

in your area and some of your customers<br />

may even be friends with you on socialmedia.<br />

Remember that your online actions<br />

can always be seen by others.<br />

This means last Friday’s drunken photos<br />

may be seen by your customers as well as<br />

your friends!<br />

Your LinkedIn profile is another important<br />

personal profile that can have a positive<br />

impact on your business.<br />

Make sure you have a good-quality<br />

professional picture, an up-to-date profile<br />

and a description of yourself.<br />

Build a wide network of contacts too, as<br />

this could make life easier when it comes<br />

time to hire new employees.<br />

Other sites – Where else do you appear<br />

online? You might be in a local directory<br />

listing like TrueLocal or you might appear<br />

on review sites such as Review.com.au.<br />

Perhaps an article has been written about<br />

you or your business is mentioned in an<br />

influencer’s blog post.<br />

Think about how you appear on these<br />

pages and the impression potential<br />

customers might get of your business if<br />

they were browsing these sites.<br />

Positive coverage is great but if there<br />

are unfavourable reviews or articles, you<br />

should take action to deal with them. If<br />

there is a customer complaint, give that<br />

customer the courtesy of a reply. Show that<br />

you are listening and that you are ready to<br />

fix the issue.<br />

Customers know there will sometimes be<br />

problems and misunderstandings; it’s how<br />

you deal with it that defines your business.<br />

Reviewing your online presence is a task<br />

you should complete regularly and it pays<br />

to keep a constant eye on your social<br />

media platforms at all times.<br />

Many of your new customers will discover<br />

you via these mediums, so be aware of<br />

what they see and the impact it can have<br />

on your business.<br />

We Are<br />

Your Workshop<br />

Your local service for all of your<br />

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DAVID BROWN is co-founder<br />

and business mentor with Retail<br />

Edge Consultants. Learn more:<br />

retailedgeconsultants.com.au


My Bench<br />

Laurie Moffatt<br />

Laurence Moffatt Manufacturing <strong>Jeweller</strong>s, Sydney NSW<br />

Age 64 • Years in Trade 47 • Training 4-year apprenticeship • First job Bernard Lowry <strong>Jeweller</strong>s, 1973 Other Qualifications Diploma in Gemmology<br />

SIGNATURE PIECE<br />

GOLD HOLLOW BANGLE<br />

PRIVATE COMMISSION<br />

This 18-carat gold bangle was commissioned by a client to<br />

celebrate her 30th wedding anniversary. The design was<br />

based on a costume jewellery bangle she owned. I love outof-the-box<br />

commissions and also restoring Australian antique<br />

pieces. These have included gold brooches presented to the<br />

famous Spanish dancer Lola Montes, to silver emu-topped claret<br />

jugs, emu eggs and centrepieces made by notable Australian<br />

silversmiths of the 19th Century.<br />

4FAVOURITE GEMSTONE Sapphire because of<br />

the variety of colour, durability, and that Australia<br />

is a great natural source of it.<br />

4FAVOURITE METAL 18-carat yellow gold<br />

because of its malleability, depth of colour and<br />

hue, and it is a pleasure to deal with!<br />

4FAVOURITE TOOL An Italian saw bought at the<br />

start of my apprenticeship, which allows you to cut<br />

out a baguette setting or more intricate designs.<br />

4BEST NEW TOOL DISCOVERY My coffee<br />

machine! Otherwise, it would be the best linear<br />

engine turning lathe.<br />

It was manufactured by George Plant & Son in<br />

England and has been unsurpassed for hundreds<br />

of years.<br />

4BEST PART OF THE JOB Simply sitting<br />

and creating.<br />

4WORST PART OF THE JOB Polishing!<br />

4BEST TIP FROM A JEWELLER Simplistic designs<br />

often work out the best.<br />

4BEST TIP TO A JEWELLER One of the most<br />

important elements of the job is communication<br />

and understanding between you and your clients.<br />

4BIGGEST HEALTH CONCERN ON THE BENCH<br />

The back – definitely the back!<br />

4LOVE JEWELLERY BECAUSE Of its challenges<br />

and the way it helps you to discover your abilities.<br />

52 | <strong>August</strong> <strong>2020</strong>


OPINION<br />

Soapbox<br />

Learning from the past,<br />

looking to the future<br />

It is all too easy to fall into despair during tough times, but jewellery retailers and suppliers alike<br />

shouldn’t lose sight of opportunities or be afraid to adapt, writes DARREN ROBERTS.<br />

When Neil McCammon and I acquired<br />

Cudworth Enterprises almost exactly 18<br />

years ago, we had the goal to become the<br />

market leader for men’s fashion jewellery<br />

in Australia. It was a huge undertaking to<br />

grow the Cudworth brand both here and<br />

then later, internationally.<br />

We were taking over a business that had<br />

been established in 1921 – just three<br />

years after the end of World War I.<br />

At that point it was known by the company<br />

name Norman P Joseph, and it had gone<br />

through several other changes of name,<br />

and management, in that time.<br />

The name Cudworth Enterprises was<br />

adopted in 1979, when Dennis and Leslie<br />

Cudworth took over.<br />

To put that into perspective, our business<br />

had been through the Great Depression,<br />

World War II, and various other recessions<br />

and downturns all before it fell into<br />

our hands.<br />

However, standing the test of time doesn’t<br />

mean standing still.<br />

It is about agility, the ability to move with<br />

the times while still maintaining the<br />

qualities that makes your business and<br />

your product special.<br />

It is about never being complacent and<br />

remaining positive and hopeful during the<br />

down times.<br />

We were the first company to introduce<br />

stainless steel jewellery into Australia,<br />

and three years after we bought the<br />

business, we expanded into our first<br />

international market: New Zealand.<br />

expanded internationally again – this<br />

time into the UK and Europe. Shortly<br />

afterwards, in 2013, there was another<br />

downturn and this time our business did<br />

feel the effects.<br />

However, again we pushed through, and<br />

began <strong>2020</strong> having achieved our goal to be<br />

the market leader in Australia for men’s<br />

cufflinks, jewellery and accessories.<br />

In addition, we also formed another<br />

division of Cudworth for the distribution<br />

of luxury European brands such as Hugo<br />

Boss writing instruments, Tateossian,<br />

Hoxton and Lanvin.<br />

Then came the biggest challenge any of<br />

us have faced: COVID-19.<br />

Those previous setbacks – which many<br />

other businesses in the jewellery industry,<br />

and beyond, have experienced alongside<br />

us – simply pale in comparison.<br />

Yet we have found that the lessons we<br />

learnt from the past still apply.<br />

With a proactive mindset, we have used<br />

this time to communicate with retailers to<br />

build an even closer working relationship,<br />

as well as speaking to other suppliers.<br />

We have maintained our high level of<br />

service by taking a look at our best-selling<br />

lines and ensuring they are<br />

always in stock.<br />

We have improved our website and<br />

even assisted retailers with theirs, and<br />

have worked with buying groups on<br />

Father’s Day and Christmas catalogues<br />

to ensure our products are properly<br />

promoted to retailers.<br />

Our business<br />

had been<br />

through<br />

the Great<br />

Depression,<br />

World War II,<br />

and various<br />

other recessions<br />

and downturns<br />

all before it<br />

fell into our<br />

hands. However,<br />

standing the<br />

test of time<br />

doesn’t mean<br />

standing still<br />

resilience throughout <strong>2020</strong>. Overall, I<br />

have observed strength and positivity<br />

from most retailers I have encountered<br />

during the pandemic – and even seen new<br />

blood coming into the industry, which is<br />

refreshing.<br />

One example was a young retailer in a<br />

northwest suburb of Sydney who had<br />

taken over the family jewellery business.<br />

He moved the store to a new location<br />

and began trading in April! It was a risky<br />

decision, of course, but the store is<br />

doing well.<br />

The reason for that is because the<br />

retailer could call upon the experience<br />

of the past and the established strengths<br />

of the business, while combining it<br />

with an ambitious, adaptable, and<br />

optimistic vision.<br />

It is a neat metaphor for the approach<br />

that’s needed in business – not just during<br />

crisis periods, but at all times.<br />

In this most difficult of years, we have<br />

called upon Cudworth’s nearly a century<br />

of heritage to guide us: we are sticking<br />

to what we know best – men’s jewellery<br />

and accessories – and we aren’t trying<br />

to develop products that don’t fit under<br />

our umbrella.<br />

At the same time, we are proactively<br />

developing our distribution side for the<br />

luxury European brands.<br />

And finally, we are remaining positive,<br />

remembering that our business has<br />

survived for 99 years. The future will<br />

be new and different, and it’s time to<br />

embrace it.<br />

However, a few short years after that<br />

– when we were on the road to achieving<br />

our ambitious goal – the Global Financial<br />

Crisis hit.<br />

Fortunately, we were able to withstand its<br />

impacts for a time, and in 2011 Cudworth<br />

These steps have served us well in what<br />

has been an incredibly difficult year –<br />

and they are all steps that retailers can<br />

take too.<br />

When it comes to maintaining a hopeful<br />

attitude, retailers have shown their<br />

Name: Darren Roberts<br />

Company: Cudworth Enterprises<br />

Position: CEO<br />

Location: Sydney, NSW<br />

Years in Industry: 18<br />

54 | <strong>August</strong> <strong>2020</strong>


Love isn’t cancelled,<br />

it’s stronger than ever.<br />

Our new ‘Momentum’ partnership provides<br />

the necessary tools to help steer our jewellers<br />

through this crisis with grace and gusto.<br />

We stand together, and hold our community<br />

close to our hearts.<br />

The time is now… we choose love!<br />

Discover the difference today.<br />

Sound like we are made for you?<br />

That’s because we are…<br />

Josh Zarb - CEO<br />

0448 416 070<br />

josh@jewellerscollective.com<br />

jewellerscollective.com<br />

#independentjewellerscollective


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