Jeweller - December 2020

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BACKGROUND STATE OF THE INDUSTRY REPORT EXPLAINED The first detailed analysis of the Australian jewellery industry was published in 2003. It examined, and measured, the number of jewellery stores in the major shopping centres in each state and, interestingly, found that jewellers accounted for a ‘standard’ five per cent of all specialty stores in shopping centres. The research also surveyed the number of jewellery chains and compared their store count by state, also comparing that data against each state’s population data. In the following years, Jeweller conducted adhoc research and in 2007 we published a more comprehensive analysis of the chain stores. At the time, there were around 1,000 stores listed, however, a need emerged to refine the research by better defining store types and product categories. This process culminated in the 2010 State of the Industry Report, published in December that year. The 68-page 2010 report offered a definition of – and differentiation between – independent jewellery businesses, fashion and fine jewellery stores, chain stores, brand-only and flagship stores, and finally jewellery kiosks. Unsurprisingly, the jewellery industry has continued to evolve to the extent that, in some ways, it’s a little like going ‘back to the future’; the industry appears to be evolving full circle, back to its roots. That is, independent jewellers are increasingly focusing on high-value items – often custom-made jewellery for specific clients – along with repairs and remodels. In part, it’s a crucial move to differentiate from easily purchased, lowvalue/low-priced items sold on the internet. At the same time, a notable change from previous reports is suppliers (wholesalers) altering their distribution models, becoming defacto retail operations that compete with independent jewellers. What began as high-profile watch and jewellery brands establishing ‘Flagship’ stores – purported to assist independent stockists – has, in some cases, morphed into full-on competition. As part of the evolution, Jeweller has redefined the flagship and brand-only categories, which is explained in the article. It largely affected how we define Pandora’s business model, moving it from the brand-only category to the chain store category. As the industry changes in the coming years, there may be a need to re-evaluate the definitions used in future State of the Industry Reports. Jeweller endeavours to maintain definitions where they are appropriate and relevant to the current trading environment, and to enable simple comparison with data in previous reports. This edition, therefore, covers the chain and brand-only store categories as well as the current membership and stores counts of the four buying groups – Nationwide, Showcase, Leading Edge and the new entrant, Independent Jewellers Collective. SAVING THE BEST FOR LAST At the beginning of 2020, Jeweller’s intention was to include an analysis of the most important category of all: independent jewellery stores. It would mark the 10-year anniversary of the first detailed analysis of the true state of the industry. However, the COVID-19 pandemic not only dramatically affected our ability to undertake the research but, more importantly, the resulting economic crisis has had a major impact on jewellery stores – to the extent that many closed. For that reason, we decided to research and quantify the number of independent jewellers after the 2020 Christmas trading period. This report will be available in the New Year. 36 | December 2020
STATE OF THE INDUSTRY Chains through the Decade CHAIN REACTIONS Australian jewellery retailing has undergone significant evolution over the past decade, but, surprisingly, the changes are very different to what was expected when Jeweller published its last State of the Industry Report in 2010. A decade on from Jeweller’s first State of the Industry Report, the jewellery retail industry – mirroring the broader retail sector – has undergone momentous change. Yet over the past 10 years, fine jewellery chain stores have remained relatively resilient, at least in terms of store numbers. However, the same cannot be said for the fashion jewellery category! There were 21 fine jewellery chain store ‘brands’ in 2010, operating a total of 977 stores nationally. On a Like-By-Like basis, by 2020 that number had declined by 125 stores to 852, representing a 13 per cent reduction in total store count. That contraction could be considered small when compared with the performance of other consumer categories. Some fine jewellery chains – such as Prouds and Michael Hill – managed to increase overall store numbers, while others marginally decreased. Only two ‘names’ entirely disappeared from the list: Blue Spirit, a lesser-known small franchise, which operated six stores in 2010, and the high-profile Thomas Jewellers, with nine stores. James Thomas founded Thomas Jewellers in 1896 in Ballarat. After 121 years of operation, the Thomas family decided to close its iconic Bourke Street Mall store in Melbourne in October 2017, as well as the Warnambool, Wagga Wagga, Albury, Shepparton, Bendigo, Ballarat and Geelong stores. In contrast, of the seven fashion jewellery chains listed in the State of the Industry Report (SOIR) 10 years ago, only one remains – six closed their physical stores. The proverbial ‘last man standing’, Lovisa, has grown from 35 locations in Australia to 152 over the past decade, following the liquidation and closure of major competitors and smaller fashion jewellery chains alike – including its sister chain Diva. The ‘downfall’ of the six fashion jewellery chains means that of the 378 stores that were operating in 2010, 343 no longer exist. Demise of fashion chains For the purpose of research and a report, it is necessary to create definitions in order to accurately measure and compare results across categories and over time. Therefore, a ‘chain’ is defined as a group of five or more BY THE NUMBERS Chain Insights In this report, a ‘chain’ is defined as a group of five or more jewellery stores trading under the one (brand) name, with one ownership entity – a person or company – co-ordinating buying and marketing activities across the group. It could include a franchise operation. 1164 fine jewellery chain stores remain open as at December 2020 343 of 378 fashion jewellery chain stores have closed since 2010 50% chains in Australia are owned and / or controlled by New Zealand entities jewellery stores trading under the one (brand) name, with one ownership entity – a person or company – co-ordinating buying and marketing activities across the group. It could include a franchise operation. In addition, Jeweller notes that a chain store usually has central management and standardised business methods and practices and will purchase product from both local suppliers and/or import its own product. In 2020, Lovisa is the largest fashion jewellery chain operating in Australia. The ASX-listed BB Retail Capital, founded by retail entrepreneur Brett Blundy, owns it. TABLE 1: FASHION CHAINS STORE COUNT 2020 VS 2010 Chain 2010 2020 Variance Diva 176 0 -176 Equip Accessories 104 0 -104 Lovisa 35 152 117 Magnolia Silver 22 0 -22 Butterfly Silver 20 0 -20 Bijoux 11 0 -11 Myka 10 0 -10 TOTAL 378 152 -226 Of the 7 chains in 2010, 6 collapsed and/or closed their physical stores to move online. Of the 378 fashion jewellery stores in 2010, 343 closed. Lovisa’s current store count, as noted in its most recent annual report, is 152; however, an article published by Jeweller in May 2014 detailing the closure of Lovisa’s 176-store sister chain Diva – also owned by BB Retail Capital – noted that Lovisa had 158 stores across Australia. Therefore, even though Lovisa has had an impressive increase of 117 stores since 2010, it has rationalised its store count over the past few years. The demise of Diva is interesting. It was launched in 2003 by husband and wife team Colette and Mark Hayman, and within two years it had expanded to 83 stores. It was sold to BB Retail Capital in 2005. By 2007, a further 72 stores had been opened, bringing to 131 the total retail outlets in Australia. Diva operated a further 369 stores overseas, primarily targeting teenage girls, while Lovisa promoted itself as being able to “fill the void for high quality, fashion forward and directional jewellery.” In 2010, and after a three-year absence from the industry due to a non-compete clause in the sale of Diva to BB Retail December 2020 | 37
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Page 8 and 9: Baumatic self-winding calibre, 40mm
Page 11 and 12: DECEMBER 2020 Contents This Month I
Page 13: Editor’s Desk Listening to the he
Page 17 and 18: Proudly distributed by 02 9417 0177
Page 19 and 20: Ethical Colombian Emeralds direct f
Page 21 and 22: Louis Vuitton purchases a second la
Page 23 and 24: Pandora launches holiday marketing
Page 25 and 26: For your free copy of the Peter W B
Page 27 and 28: INSIDE Now & Then Fairfax & Roberts
Page 30 and 31: Completing my Diploma in Gemmology
Page 32 and 33: CELEBRATING Local Talent LUCAS BLAC
Page 34 and 35: Proudly distributed by (02) 9417 01
Page 38 and 39: STATE OF THE INDUSTRY | Chains thro
Page 46 and 47: STATE OF THE INDUSTRY Brand-Only St
Page 48 and 49: L to R: Rolex; Omega IN SUMM A RY C
Page 50 and 51: Swarovski is also interesting. Of t
Page 52 and 53: STATE OF THE INDUSTRY Buying Groups
Page 54 and 55: STATE OF THE INDUSTRY | Buying Grou
Page 56 and 57: STATE OF THE INDUSTRY | Buying Grou
Page 58 and 59: BUSINESS Strategy Survival lessons
Page 60 and 61: BUSINESS Selling Six simple and eff
Page 62 and 63: BUSINESS Marketing & PR How to eval
Page 64 and 65: My Bench Leon Raper Australian Diam
Page 66 and 67: OPINION Soapbox There are many e-co
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Jeweller - December 2020

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