What lessons did we learn from the pandemic? MALCOLM SCRYMGEOUR reviews the current climate for Australian jewellery retailers.
Cable Beach in Western Australia was named after the telegraph cable that connected Broome and Java in 1889.
It’s well known for its low cliffs of red ochre that rise behind a very flat and wide beach. It was on this beach, on a warm Sunday in September 2016, that Bindi Lee Porth was happily collecting shells.
While hundreds of tourists watched the sun setting over the Indian Ocean, Porth fossicked around for shells. “I went to put my foot down, and the best way that I could describe it is that I felt a very strong energy,” she later said to ABC Radio.
As Porth lifted her foot, she could see a hole. She brushed the sand away and revealed what, at first glance, appeared to be the impression of a large bird’s foot. It was, in fact, a dinosaur footprint estimated to be 130 million years old and is thought to have been created by a theropod.
These prints are still visible in the rocks at low tide. At high tide, you’d never know that the sea was hiding 130-million-year-old footprints. For many jewellers, the almost two-year COVID-19 high tide has hidden a myriad of ills. However, confronting these issues is increasingly important as the high tide recedes.
Aged stock is an issue for many retailers. As sales generally settle at what appears to be a lower level, buying ‘mistakes’ are becoming apparent. An over-abundance of aged stock means constrained cash flows, which must be addressed.
The industry has also experienced employee shortages, staff disruptions, and, in some cases, increasing competition from online competitors, higher inflation, and increased consumer uncertainty.
The most alarming factor is reducing customer counts; aged stock is partly responsible for that.
It should go without saying that fewer customers isn’t good – it means that your business needs to sell more at a higher margin to fewer people.
Jewellers become more reliant on a smaller group of customers. While you could argue it’s easier to market to these people, it is also frightening because if any of them stops shopping with your business, it creates an ever-larger income gap.
It’s a dangerous scenario, and I’m sure you’d agree that having fewer customers isn’t recognised as being a great business strategy.
The obvious response is to ‘hit the streets’ and get more customers. That’s easy to say; however, when is business ever that simple?
It should be noted that the alternative to getting more customers is to embrace the ever-popular ‘hope’ strategy, also known as the ‘do nothing’ strategy! It’s low cost and requires no effort; however, sadly yields no result at all. Frustratingly, this remains a widely adopted strategy.
To expand your customer base, you need to understand what these hypothetical customers desire. Retail Edge’s data tells us what your customers want from their jeweller – and that is manufacturing, re-manufacturing, custom and repairs.
We know this because those areas are increasing. From a business perspective, these areas have strong margins, stock investment is generally low, and the stock turn is excellent.
This focus doesn’t mean forgetting everything else by any means! Speaking to several jewellers at the International Jewellery Fair in Sydney in August revealed that diamond rings – specifically engagement rings – are selling well.
We know another jeweller who is selling watches like hotcakes. The rule is simple – give customers what they want. Don’t try to outsmart yourself or them by providing customers with what they don’t want.
Aging stock tells us that many jewellers are busy presenting too many products that customers don’t want. If your business is not relevant, customers will go elsewhere. The rules are simple: be relevant, acquire the right stock, and then tell your customers.
Those retailers adopting a strategy focused on repairs, manufacturing, re-manufacturing and custom jewellery, augmented with whatever else is selling in your store, are performing better.
This is particularly evident among jewellers that adopt and use effective marketing. It doesn’t mean this is the formula for success for all stores because situations differ; however, you should review and decide what areas of your strategy need the most focus.
It’s a straightforward process – determine what your customers want and promote these products via marketing, websites, and in-store communications.
Final thoughts
Some outstanding jewellery leaders regard the current circumstances as an opportunity to reshape and refocus their business. Some owners didn’t get a high tide, while others did and didn’t make the most of the opportunity.
Regardless, as the COVID high tide recedes, ensure the new low tide doesn’t expose you as a dinosaur. Instead, your business should exit the aged stock and extend the categories that are selling well.
Finally, make sure the market knows what you have to offer via marketing. Provide your customers with a positive, happy, memorable in-store experience, and then, you will experience your own rising tide.
More reading:
Sales tips you can apply to everyday life
Six big ideas to increase sales
Great customer experience: steps to woo your audience
Simple and effective ways to boost your word-of-mouth referrals
Key marketing and PR predictions for the year ahead
