Jeweller - December 2020

STATE OF THE INDUSTRY
Brand-Only Stores
BRAND and DELIVER
Part two of Jeweller’s analysis of the jewellery and watch industries explores how international
brands have expanded their presence in the Australian market – and how the brand-only store
model has increased competition with retailers.
The trend of jewellery retailing moving
towards two distinct ‘types’ has
continued over the past decade with
few surprises in store numbers. However, there
have been some very significant changes to the
mix of the Brand-Only retail category.
When Jeweller published the 2010 State of The Industry
Report there were 153 brand-only stores along with 17
flagship stores operating in Australia – a total of 170
outlets. And while the number is similar a decade later,
the structure and mix is not.
In 2010 Jeweller defined a brand-only retailer as a fine
or fashion jewellery store – or group of stores – that sells
and markets its own brand of jewellery and/or watches.
It is usually a vertical-market operation, does not utilise
local suppliers, and does not distribute to third-party
stockists on a large scale.
Brand-only stores are often owned and operated by the
proprietor of the brand, or they can be operated under
license. Before we look at the state of play in 2020 it’s
important to recognise and acknowledge a few issues.
Firstly, as markets and industries evolve, the consumer’s
perception of products and brands changes, which in
turn alters the market via different shopping habits.
Therefore, to develop and collate industry information in a
consistent manner, it’s vital to define categories so that the
data can be measured and analysed fairly and accurately,
allowing meaningful comparisons to be drawn.
In other words, to count something you must first define it.
It should be noted that we did not classify airport stores
or shop-in-shop arrangements, such as concessions, as
brand-only stores in either the 2010 or 2020 reports. Under
the concession model, brands occupy space within a host
store like Myer or David Jones, in return for paying a lease
and/or a percentage of their sales to the larger store.
A decade ago we considered that flagship stores were
different to brand-only stores in that they were owned
and operated by the brand itself, rather than a third
party. These outlets usually stock the largest range of the
brand’s merchandise and are regarded as a ‘landmark
store’ or ‘face’ of the brand.
Flagship stores take their name from a nautical term,
referring to the headship in a fleet of vessels – one
determined as the fastest, largest, newest, and mostheavily
armed or the best known.
BY THE NUMBERS
Brand-Only
In this report, a ‘brandonly’
retailer is defined
as a fine or fashion
jewellery store, or
group of stores, that
sells and markets its
own brand of jewellery
and/or watches. Brandonly
stores are often
owned and operated
by the proprietor of the
brand, or they can be
operated under license.
24
watch and
jewellery brands
opened their first
brand-only stores
in Australia over
the past 10 years
5
brands from the
2010 State of the
Industry report
no longer operate
stores in australia
126%
increase in new
entrants to the
brand-only watch
and jewellery
store category
In retailing, flagship stores stand as ideal examples of
their featured brand, excelling beyond lesser stores in
every way – they have more product, a greater access to
brand marketing, occupy more floor space and hold a
better position in terms of foot traffic. They are designed
to be the very best of what a brand has to offer.
Therefore, flagship stores usually form part of a
company’s marketing and advertising budget, which can
mean the profitability of the store is less important than
its presence within a specific market.
For these reasons, flagship stores are usually not large
in number because, by definition, they are designed to
be the lead store – the archetype of the company and
the brand. By nature, there can only be one or a few
leaders. They are also more expensive to operate.
We believed it was appropriate to distinguish between
brand-only and flagship stores in 2010. However, after
10 years of evolution in the market, the difference is
arguably irrelevant – particularly in the watch sector,
which has changed dramatically over the past five years.
Given these changes as well as the closure of many
flagship stores (Autore, Briel, Storm, Georgini), Jeweller
has determined that the distinction between flagship
and brand-only stores is no longer substantially
significant for the purposes of a State of the Industry
Report.
The flagship category has therefore been discontinued
and all flagship stores will be considered brand-only
stores, regardless of the commercial nature of the outlet.
Strategy backfire
A decade ago, high-profile watch brands – mainly Swiss
– were distributed via a wide wholesale channel to
independent stockists/retailers. Many watch companies
began to establish flagship stores as a way to promote
the brand, while arguing that the flagship store itself
was not a direct competitor to its independent stockists.
However, many jewellers did not agree! While the
flagship store strategy can work, especially in jewellery
where repeat purchases are common – think charms,
for example – it’s more complex for expensive ‘one-off’
purchases, such as luxury watches.
This complexity stems from the fact that successful
brands often consider their customer as the end
consumer and the ‘bricks-and-mortar’ retailer is
simply seen as the delivery method; while the retailer
is undoubtedly an integral part of the transaction, they
are viewed as a facilitator of the transaction – a conduit
46 | December 2020