Jeweller - December 2020

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STATE OF THE INDUSTRY | Chains through the decade A GLANCE THROUGH 2003 - 2020 CHAIN SNAPSHOT: STORE COUNTS The charts below detail the changes in store count across a number of well-known fine and fashion jewellery chains over time. These changes reflect factors such as the evolving nature of the retail environment, individual business decisions including the re-branding of ‘sister’ chains, and macroeconomic factors such as the Global Financial Crisis. Tables have been updated since we reported figures in July at the height of the pandemic in Australia. Michael Hill Michael Hill Zamels Mazzuchelli's Stores Stores Stores 2003 2007 2010 2018 2020 2003 2007 2010 2017 2020 2007 2010 2020 Store count decreased by 2 since July ‘20 Store count decreased by 4 since July ‘20 Store count decreased by 2 since July ‘20 Wallace Bishop Bevilles Saleras 150 40 Stores 100 50 Stores 30 20 10 Stores 0 2003 2007 2010 2020 0 2003 2007 2010 2020 2007 2010 2020 Store count decreased by 2 since July ‘20 Bevilles Shiels Gregory Hoskings 40 20 20 30 15 15 Stores 20 10 Stores 10 5 Stores 10 5 0 2003 2007 2010 2020 0 2003 2007 2010 2020 0 2007 2010 2020 Store count increased by 4 since July ‘20 Lovisa Diva Equip Accessories 200 150 Stores 2010 2014 2020 Stores 150 100 50 0 2007 2010 2020 Stores 100 50 0 0 0 2007 2010 2017 2020 Store count increased by 12 since July ‘20 44 | December 2020
HILLS AND VALLEYS KEY MOMENTS FOR MICHAEL HILL It’s been a topsy-turvy decade for Michael Hill International. Following the opening of his first store in 1979 in the New Zealand town of Whangarei, jeweller Michael Hill became well known for unique designs and utilised highimpact advertising to elevate the business to national prominence. The company grew steadily, and by 1987 it had 10 stores and was listed on the New Zealand Stock Exchange (NZX). At the same time, the company expanded into Australia, opening four stores in Brisbane over four weeks. In 2002, the company opened five stores in Canada and six years later made inroads into the US market by acquiring and re-branding 17 stores from Whitehall Jewelers. In January 2011, and the age of 72, founder Michael Hill was granted a knighthood in New Zealand’s New Year Honours List. After a long and illustrious career, Sir Michael retired as his namesake company’s chairman in November 2015 and the following year Michael Hill International (MHI) was listed on the Australian Stock Exchange (ASX). At the time, 60 per cent of its stores were in Australia and more than 80 per cent of MHI’s revenue and profits were generated outside of New Zealand. The company began trading on 7 July 2016 at $1.15 per share. At the time of publication its share price was $AU0.32 on the ASX and $NZ0.34 on the NZX. The company’s 2020 Annual Report recorded a total of 290 stores; 155 stores in Australia (dropping to 154 by December 2020), 49 in New Zealand and 86 in Canada. It reported revenue of $492 million and post-tax profit of $3 million. In October 2016 the Hill family trust, Hoglett Hamlet, sold 10 per cent of its stake – 16 million shares – in MHI for $25.6 million. However, it remains the company’s largest shareholder, owning 38 per cent of the company. CONTINUED FROM PAGE 42 restructured and four months later a new store was opened at Melbourne’s Westfield Fountain Gate. Then, in December 2015, the chain opened a new Melbourne CBD store, having exited Bourke Street Mall in 2011 when it was “outbid” by Swarosvki for the ‘flagship’ location where it had been mall positioned for more than a decade. At the time, Michelle Beville said, “The lease was up and we put in a bid to renew, however the landlord decided to go out to market after international interest [from other retailers]. “International players have come to town and they have the ability to pay fabulous rent. The right rent moving forward [for smaller companies] is difficult, due to these international companies.” In October 2017, Indian jewellery company Tara Jewels acquired a 49 per cent stake in Bevilles, four years after forming a “strategic alliance” with the Australian jewellery retailer. While the recent history of Bevilles is tumultuous, its current position perhaps indicates the resilience of its management. After ‘losing’ the high-profile Bourke Street Mall store and entering administration, the business was subsequently rebuilt, bringing its store count back to 24 – close to its peak of 29 in 2010. By anyone’s reckoning, that’s no mean feat. Another Victorian-based chain has also proved quite resilient over the past 10 years. Salera’s began 2010 with 21 stores – 15 in Victoria and six in Queensland – increasing to 23 the following year. Alfredo Salera founded the business in 1953; by December 2020, its store count was 18 – a sustained record for a family-owned and operated mid-sized chain. Hoskings Jewellers has also proved relatively robust. It made Jeweller’s list in 2010 with 17 stores, and today the Victorian- IN SUMM A RY Insights Fashion jewellery chain stores have seen a massive decline, due to increased competition and occupancy costs Fine jewellery chain stores have remained resilient, when compared with both fashion jewellery and the broader discretionary category Fine and fashion jewellery remain differentiated in the market Large jewellery groups have maintained control of fine jewellery chains Lovisa has become the dominant player in fashion jewellery, with 152 stores and no major competitors based jeweller still operates 16 outlets. The company also owns the Goldsmith brand, which has been less fortunate; seven stores were closed in the past 10 years, with its numbers falling from nine to two. With that said, three Goldsmith stores were converted to Pandora ‘Concept stores’; Hoskings now operates six Pandora stores in total (see page 40). The 2010 SOIR also detailed that Hoskings owned and operated four other jewellery stores: three under the Sterns brand and one Diamond House. These stores no longer exist. Once again, taking into account the demise of many high profile and long-standing retail businesses across the apparel and fashion accessory categories, the resilience of fine jewellers is impressive. Other well-known names that have stood the test of time include NSW’s Gregory Jewellers and Regency Jewellers. In 2010 Gregory Jewellers was listed as a small-sized chain with 16 stores, and today it has 15. While one Gregory store was technically closed, it was converted to a Gucci store operated by Gregorys. Another small chain, Regency Jewellers, which was founded in 1968, has also fared well. It operated six stores throughout regional NSW in 2010 and it still operates the same number today. The same cannot be said for the Queensland based Anthonys Fine Jewellers. It was listed with eight stores in the 2010 SOIR, however today it has been reduced to five across Brisbane. Owned by Queensland Wholesalers, the company also operated three Kings Jewellers stores in 2010 – all of which have ceased trading. While Anthonys, with five stores, continues to be defined as a ‘chain’, the same cannot be said for Brisbane-based Pascoe Jewellers or Melbourne-based Dio Oro Jewellers, which was re-branded to Diamond Valley Jewellers this year. Both have suffered over the past 10 years. Pascoe closed six stores (from nine to three) and a seventh – located in Ipswich, Queensland – is scheduled to close on Christmas Eve this year, due to owner Geoff Pascoe’s ill health. Dio Oro has reduced its store count from seven to one. Therefore, both businesses have been removed from Jeweller’s ‘chain’ store list, along with Goldsmith, as mentioned previously. While the wider Australian non-essential (discretionary spend) retail industry has suffered greatly in the past decade, it’s fair to say that many industry experts had predicted bleaker times for fine jewellery chains. In the past decade only two names disappeared altogether and, although there has been a net loss of 118 stores from the original 978, 63 closures were from Zamels alone. Reviewing the past 10–15 years – the first of Jeweller’s analysis of jewellery chains was published in 2003 – many jewellers lamented the rise of, and competition from, fashion jewellery. It was viewed as ‘cheap product’, however, this category has been impacted most by changes in the retail sector. To that end, fine jewellery retailers have demonstrated an adaptability and buoyancy over the past decade that was not only unexpected, but should be celebrated given the current times. Editor’s note: A previous version of this report was published digitally in July 2020. This version includes updated figures that were correct as at 1 December 2020. It should be recognised that even though some jewellery websites remain “live”, this does not mean the business or its bricks-and-mortar stores still operate. December 2020 | 45
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Page 11 and 12: DECEMBER 2020 Contents This Month I
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Page 21 and 22: Louis Vuitton purchases a second la
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Page 25 and 26: For your free copy of the Peter W B
Page 27 and 28: INSIDE Now & Then Fairfax & Roberts
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Page 32 and 33: CELEBRATING Local Talent LUCAS BLAC
Page 34 and 35: Proudly distributed by (02) 9417 01
Page 36 and 37: BACKGROUND STATE OF THE INDUSTRY RE
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
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Jeweller - December 2020

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