The more things change, the more they stay the same. SAMUEL ORD discusses the recent collapse of fashion jewellery chain Colette by Colette Hayman.
While Jeweller has documented many significant changes in the jewellery industry over the past decade, one thing remains true.
Fashion jewellery is an extremely volatile business.
It was announced on 4 April that the Marquee Retail Group (MRG), the owner of fashion jewellery brand Colette by Colette Hayman, has been placed into voluntary administration.
The Sydney-based company announced that Domenic Calabretta, Mitchell Ball, and Richard Lawrence from the insolvency firm Mackay Goodwin have been appointed to oversee the company’s business affairs.
In the immediate aftermath of the announcement, the company’s collapse was quickly attributed to many factors, including a sales downturn over the past six months, the impact of rising inflating and increasing interest rates, and ongoing debt issues with the Australian Taxation Office.
While the degree to which each of these factors has contributed to MRG’s woes is uncertain, what is clear is that there is a great deal at stake.
Jeweller’s 2024 State of the Industry Report recorded 58 Colette stores in Australia. The chain has a significant presence on the east coast, with 19 stores in New South Wales, and 16 in Victoria and Queensland.
MRG employs more than 400 people, with an announcement from the company suggesting there are no plans to reduce staff.
Customers have been assured that there are no plans for store closures and that it will be ‘business as usual’ under new management. With that said, the volatility of fashion jewellery has been exposed once again.
History repeats itself yet again
This is the second time in four years administrators have been appointed to Colette, a jewellery chain that once had more than 100 stores across Australia and New Zealand.
To understand the history of the company and the volatility of fashion jewellery, we must first rewind the clock more than 20 years.
In 2003, husband and wife Mark and Colette Hayman launched Diva, a fashion jewellery chain that experienced rapid expansion. Diva was sold to BB Retail Capital in 2005.
At its peak, more than 500 Diva stores operated worldwide; however, the company was liquidated in 2015. Diva was ‘dethroned’ by Lovisa, also owned by BB Retail Capital.
Lovisa remains a fashion jewellery juggernaut today, with more than 170 stores in Australia and more than 800 stores worldwide.
Around the time of Lovisa’s launch in 2010, Colette Hayman re-emerged in the Australian jewellery industry after the expiry of a three-year non-compete clause connected with the sale of Diva to BB Retail Capital.
Hayman launched Colette Accessories, beginning with a single store in the Sydney CBD. The company would quickly expand into a network of 120 stores in three years.
It was another rapid rise in the world of fashion jewellery for Hayman; however, once again, it may have been ‘too much, too soon’.
Colette Accessories was active until February 2020, when the company was renamed Colette By Colette Hayman and placed into administration. Management of the business was handed to Deloitte Restructuring Services.
Colette continued trading through administration, and after an initial deal fell through, former Myer boss and current MRG chairman Bernie Brookes eventually acquired the business.
Brookes was to own 90 per cent of the business, with the remaining 10 per cent owned by an unidentified silent investor. Around the time of the purchase, he suggested that the fashion jewellery chain’s store network was too large.
Just four years after the first collapse of Colette, the company once again faces an uncertain future. Addressing the state of the Colette four years later, Brookes said the board “regrets that these events have come to pass.”
MRG has confirmed it is exploring “the potential sale of the business (whole or in part) as part of its strategic options”.
Why fashion jewellery?
Fashion jewellery is a remarkably volatile business. Colette and Diva are far from the only chains to have experienced an abrupt collapse.
In 2010, Jeweller recorded seven fashion jewellery chains accounting for more than 370 stores. Over the ensuing years, seven of those would eventually fail. Bijoux, Butterfly Silver, Equip Accessories, Magnolia Silver, and Myka went ‘the way of the dodo’.
However, the category’s volatility and the history of fashion chain demise in Australia extends further back. Budget jewellery chain Kleins, with more than 180 franchised stores, was placed in voluntary administration in 2007 and liquidated in May of the following year.
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| Budget jewellery chain Kleins collapsed in 2008, owing around $25 million. |
Klein’s collapsed owing around $25 million, with $15 million owed to secured creditors.
On a case-by-case basis, these chain stores collapsed for unique reasons; however, they faced similar pressures.
Competition is fierce in fashion jewellery, and chain stores must fight entrenched online businesses and emerging ‘flavour of the month’ rivals for consumer dollars.
Often based abroad but able to penetrate the Australian market because of international trade, many of these fashion jewellery competitors are savvy e-commerce veterans.
Fashion jewellery chains have also been subject to consistent increases in shopping centre tenancy costs.
Finally, online shopping has become increasingly popular as consumer behaviour has evolved over the past decade. As a result, the viability of physical fashion jewellery stores is increasingly questionable.
The target market for fashion jewellery — typically teenage girls influenced by changing fashion trends — is rich and bountiful. Although this target market may not be able to purchase fine jewellery, they’re also sheltered from specific economic pressures.
Said another way, teenage girls don’t lay awake at night worrying about car loans, mortgage repayments, and the impact of inflation!
With that said, these consumers are subject to rapidly evolving trends and should a fashion jewellery chain fall out of favour and the ‘well runs dry’ – the consequences are dire.
This is a lesson that fashion jewellery chains have learned in the past decade, and it’s a lesson that Colette is now learning for the second time in just four years.
More reading
Fashion Chain Stores: Rapid rise and dramatic demise
Births, Deaths, & Marriages: Good night and good luck
2020 State of the Industry Report: In-depth analysis of Australia’s jewellery chain stores
Fashion jewellery chain is latest retail casualty
Diva jewellery stores shutting down, or maybe not!
Lovisa defies retail downturn; plans new stores
Diva jewellery chain in liquidation?
