Jeweller - December 2020

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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
Brand-only stores | STATE OF THE INDUSTRY OV ER V IE W Rise & Fall TABLE 1: BRAND-ONLY STORES 2020 Increased from 32 to 44 stores BRAND 2020 NSW VIC QLD WA SA TAS ACT NT TOTAL 2010 APM Monaco 4 2 1 7 Tiffany & Co between the brand and the consumer. With that perception in mind, the brand – justifiably – wants to exert more control over its relationship with the customer. After all, it takes a great deal of time, money and effort marketing and developing a product, and a vital component of the product’s image is the perception of value and prestige. Arguably, a $100 watch can tell the time in the same way as a $10,000 watch, so why pay the extra cost? As a result, the more expensive Swiss watch brands began cultivating the flagship store model, establishing high-profile outlets in premium CBD locations as ‘destination’ stores that complemented their wider distribution to independent stockists. Yet in some cases the strategy backfired by souring relationships with those retail stockists. One notable case was the 2010 decision of luxury conglomerate Moët-Hennessy Louis Vuitton (LVMH) to open new Tag Heuer flagship stores in the Melbourne and Sydney CBDs, while simultaneously closing the accounts of neighbouring stockists. The move was met with howls of protest from retailers who were already worried about losing sales to rival watch and jewellery stores – let alone dealing with direct competition from their own suppliers! In April of that year, jewellery chain Angus & Coote took a stand. Reacting swiftly, the high-profile jewellery chain withdrew the Tag Heuer brand from all its stores. Asked at the time whether Tag’s decision would affect the way Angus & Coote would select its watch brands in future, Andrew Nock, then-general manager of merchandising and marketing said, “Yes,” adding, “We see the supply chain as being a partnership; we give respect and we expect respect in return. We want a winwin situation for all involved.” There was a similar uproar in 2007 when Increased from 4 to 8 stores Increased from 5 to 8 stores Increased from 2 to 6 stores Increased from 2 to 6 stores Increased from 2 to 6 stores Increased from 14 to 19 stores Decreased from 10 to 0 stores 18 stores down to 7 stores, recovered to 17 stores Bell & Ross 1 1 Bremont 1 1 Bulgari 1 3 2 6 2 Cartier 2 1 1 4 5 Chaumet 1 1 Daniel Wellington 2 1 3 Dior* 1 1 2 Fossil 5 8 4 2 19 14 Franck Muller 1 1 Georg Jensen 2 4 3 1 10 12 Graff 1 1 Gucci 2 1 2 1 6 7 Hèrmes 1 1 Hublot 1 1 IWC Schaffhausen 1 1 2 Jaeger-LeCoultre 1 1 2 Kailis 4 4 3 Longines 1 1 2 Louis Vuitton 2 3 2 1 8 Michael Kors 9 5 14 Montblanc 2 2 4 Ole Lynggaard 1 1 Omega 2 3 1 6 2 Panerai 1 1 2 Paspaley 1 3 1 2 1 8 4 Piaget 1 1 Rolex 2 1 2 1 6 Secrets Shhh 2 4 9 1 1 17 18 Seiko 2 1 3 Swarovski 20 12 10 2 1 1 46 Swatch 1 1 2 3 Tag Heuer 1 2 2 1 6 2 Thomas Sabo 1 2 3 4 Tiffany & Co. 2 2 2 1 1 8 5 Tissot 2 2 Vacheron Constantin 2 2 1 1 6 Van Cleef & Arpels 1 2 3 TOTAL 75 79 42 18 4 0 1 1 220 There are 220 brand-only stores in Australia as at 1 December 2020, across 38 individual brands. This represents a 72 per cent increase in store numbers since 2010 and shows 24 new entrants in the same period. *While Dior operates several boutiques in Australia, only two sell the brand’s watches and jewellery. December 2020 | 47
Page 1 and 2: VOICE OF THE AUSTRALIAN JEWELLERY I
Page 6 and 7: Australian Argyle pink diamonds are
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 36 and 37: BACKGROUND STATE OF THE INDUSTRY RE
Page 38 and 39: STATE OF THE INDUSTRY | Chains thro
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
Page 68: Australian Argyle pink diamonds are

Jeweller - December 2020

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