Jeweller - December 2020

STATE OF THE INDUSTRY | Buying Groups Report
QUICK NUMBERS
Members’
Whereabouts
leave centres, leading to a decrease in foot traffic. As noted in
Jeweller’s feature ‘Seeing Eye to Eye: The Retail Rent Review’,
overall retail precinct footfall declined 8.1 per cent between 2017
and 2020, while shopping centre vacancy rates reached a 20-year
peak in June this year.
Pocklington pointed to the number of store closures to
illustrate the seriousness of the situation. “More than 300
Australian jewellery stores – representing 10 per cent of all
retailers – have closed in the last four years, with the main
factor being falling sales.
“Without doubt, the biggest challenge has been the significant
drop in jewellery industry sales over the last three to four years.”
“From late March to October, we spent
considerable time supporting members on how
to access the various government benefits,
negotiating rent relief with landlords –together
with our specialist jewellery store rent consultants
we helped over 200 members achieve substantial
rent reductions – and implementing various
marketing activities to boost sales”
COLIN POCKLINGTON
Nationwide Jewellers
COVID-19 accelerated another key trend in the retail sector,
which is the shift to e-commerce. According to figures from
Australia Post, 12 per cent of Australian retail sales took place
online in March 2020 – a new record high.
“Over the past two years, I think the changing face of our
consumers and their purchasing habits is something that
remains challenging for many independent jewellers,” Zarb
told Jeweller in March.
Davey agreed: “Bricks-and-mortar retailers are suffering due
to the online shopping experience. With each store closure in
regional Australia comes a loss of brands and items someone
once purchased.
“This drives consumers online to replenish those items –
encouraging online shopping in people who have traditionally
shopped locally.”
Lingering challenges
The variety of support on offer from buying groups places
independent jewellers in a strong position for the future, but the
same challenges that existed pre-COVID are likely to continue –
both within the jewellery category and across the retail sector.
At the same time, the Australian economy is not expected to
fully recover from the deep shocks of the COVID-19 for more
than a year.
Analysts at PriceWaterhouseCoopers (PWC) estimate overall
Australian household consumption fell 8–11 per cent in 2020 and
predict a recovery to “pre-COVID-19 levels towards the beginning
of 2022”, with the greatest impact felt in discretionary retail
categories – which includes jewellery.
33%
of buying group
members are
in New South
Wales
3%
of buying group
member stores
are in Tasmania
12.5%
of buying group
members’ stores
are in New
Zealand
165
stores in
Victoria are
part of a buying
group
117
buying group
members are
in Queensland
A recent report by management consultancy McKinsey, Australia’s next
normal: The cautious consumer – published in August – found that
“spending cutbacks and frugal, recession-like behaviour are showing
up in our data across all segments and categories, with the exception
of groceries” and that temporary relief measures were “masking”
consumption patterns.
The PWC report Where Next For Retail and Consumer? notes that
while the JobKeeper program, loan and mortgage deferrals, and other
government stimulus cushioned the initial blow of COVID-19, consumer
spending is expected to drop and then remain stagnant in the mid-term.
“The Australian retail sector was already struggling before COVID-19.
2020 saw the collapse of some iconic Australian retailers. The expected
drop in consumer spending, especially in discretionary categories, will
put further pressure on the sector,” the report’s authors noted.
Pocklington succinctly described the trading reality in March, telling
Jeweller, “We recognised the start of these difficult trading conditions
back in mid-2016 and started developing strategies, training and
marketing initiatives to assist members in maintaining profitability in a
declining market.”
Zarb explained that there is no simple answer to solve the challenges
retailers currently face.
“Unfortunately, there is no one ‘magic bullet’ that will be the single
solution to thrive in today’s retail climate,” he says.
However, that doesn’t mean there is nothing retailers can do to
improve:“If I had to get specific, I would suggest that retailers really
focus on identifying who their customer is and start to ensure their
marketing targets them.
“Thankfully, as a group, we went into
the pandemic period in very good financial shape with
a brilliant six months of trade in the second half of 2019.
This provided us with excellent leverage to support all
our membership throughout the period –
especially those in Melbourne.”
CARSON WEBB
Showcase Jewellers
“I would recommend that, if they are struggling, they reach out for
assistance. All the groups offer numerous support services to assist
their members.”
In the new digital world, where consumers are spoilt for choice,
Pocklington also advised retailers to undertake more marketing
activity each month, across more channels and platforms. They should
also look to offer different merchandise with different price points
than their competitors, especially chain stores. He advises Nationwide
members that better inventory management can also substantially
improve profitability.
Webb had similar advice at the start of the year, which is even more
pertinent in the ‘COVID normal’ reality: “First, work your stock levels
smarter. Customers are wanting ‘the same, but different’. Adjust now,
or you’ll drown in stock. The average store is sitting at 38 per cent of
stock value over two years old.
“Secondly, a really pertinent question to ask is, ‘Why me?’ Why should
54 | December 2020