As the year draws to a close we look back at lessons learned in 2011.
As the year draws to a close Rachael Taylor looks back at the events and trends that shaped the UK market in 2011 and asks what we can learn from this year and how these lessons can be used to push business forward in 2012.
1. DON’T PUT ALL YOUR EGGS IN ONE BASKET
If this year has taught us anything it is don’t put all your eggs in one basket. It can be tempting when a booming product sector or a strong brand starts to generate sales over and above initial forecasts to put everything else on the back burner and pour all your attentions and funds into this shiny new revenue stream, but trends and brands tend to enjoy highs and suffer lows in rolling succession. Focusing your entire business plan on just one brand or product will leave you exposed when the fad starts to fade. Even if it is not a fad but a successful brand with a long lifespan, focusing too much on it is dangerous. When business is booming for a brand, it is unlikely to be satisfied with its lot, instead brands tend to look at how to push forward further. This often involves bringing distribution back in house and cutting back on independent stockists to favour the opening of brand boutiques in successful areas. We have seen this happen numerous times in 2011 with major leading brands in the jewellery and watch sector, such as Pandora and Omega. However, there can be ways to cash in on a single brand safely through franchising, if this is an option your desired brand offers. Southeast of England retailer Emson Haig has successfully opened a number of franchised stores including Links of London, Pandora and Swarovski right next to its main Emson Haig shop. This strategy has helped it successfully capitalise on strong individual brands without allowing them to cannibalise the the core business. Another example of how to handle this issue can be found at Pressleys in Sussex. The jeweller recognised the vogue for fashion-led silver jewellery, but rather than mixing it in with its main Pressleys store it opened up a shop next door called Pressleys Etcetera with a glass wall between the two, keeping fine jewellery on the Pressleys side and fashion-led silver jewellery on the Etcetera side.
2. IT’S A GREAT TIME TO BE BRITISH
2011 brought with it an unexpected sales peak when two young things in love called Kate and Wills got married in April. While the nuptials landed cash orders – we presume – for Wartski for the Duchess of Cambridge’s wedding ring and Robinson Pelham for jewellery for the whole Middleton family on the big day, other jewellers benefitted without a sniff of a royal warrant. The Duchess’s engagement ring led to a boom in sales of blue stone rings, from The Natural Sapphire Company’s exact replicas to Debenhams’ £6 replica that became its fastest-selling piece of jewellery of all time. Welsh gold jewellery brand Clogau Gold claimed the royal wedding created a bigger trading peak for it than Christmas thanks to the Duchess choosing to have her wedding band crafted out of Welsh gold. Clogau Gold appeared on QVC shows on the day of the royal wedding in the UK, US, Canada and Italy. And the good news is Rule Britannia mentality is set to blow up again in 2012 thanks to the Olympics.
3. ETHICAL JEWELLERY IS NOT JUST FOR HIPPIES
On February 14 the Fairtrade Foundation hallmark for gold was unveiled to the public, offering jewellery shoppers an accessible in to the ethical jewellery market. The first hoard of Fairtrade gold was divided up amongst 20 jewellers in the UK and while there were sceptics at first, the rise of ethical jewellery in the months since has been noticeable and it is no longer just a niche product sector. Leading companies such as Garrard, Weston Beamor, Stephen Webster and Ingle & Rhode were among the early adopters and new ethical companies have continued to pop up including Chavin and Foundation Jewellery. Ethical diamonds have also started to gain some market share with conflict-free brand Canadian Ice being picked up by a major multiple.
4. SILVER JEWELLERY IS A LUXURY ITEM
Silver jewellery was once the reserve of the gift shop, but as precious metals prices have shot through the roof, silver has come up in the world. It is now commonplace to find the best jeweller in town dedicating a large proportion of its stock to silver jewellery. Retail prices have escalated with some brands, such as Shaun Leane (pictured), breaking the £1,000 mark for a piece of silver jewellery. With such cataclysmic changes it has been necessary for jewellers to retrain staff and re-educate their customers to view silver jewellery as a luxury purchase. Those who have failed to reset their mindsets and offers have suffered as silver sales have dominated the gap left as 9ct gold priced itself out of reach.
5. BRANDING IS KING
In a price sensitive market, unless you want to get into a down and dirty pricing war, retailers need to be able to add value to jewellery some other way. Some have very successfully gone down the high quality bespoke route, but the strongest, most marketable way to make one gold ring stand out from another is branding. As a result, major brands such as Ti Sento (pictured) have prospered this year. At any trade show in 2011 the dominance of branded product over unbranded was unmissable. Even more traditional jewellery companies are getting in on the act, such as Weston Beamor which launched a branded jewellery distribution arm called Advalorem at IJL this year. But it is not just about product branding, it is also about making your store a brand. Retailers that have done this have registered a much deeper level of customer involvement, the key to repeat business.
6. WE ARE WILLING TO FIGHT FOR HALLMARKING
When the government included hallmarking its Red Tape Challenge in April this year the industry was outraged. A band of industry big shots signed a joint letter to Prime Minister David Cameron and Business Secretary Vince Cable urging them to remove it from the initiative set up to detect and remove unnecessary legislation. The request was denied but the industry was invited to give feedback online. The result was more than 6,000 comments, overwhelmingly in favour, and hallmarking has been kept as vital consumer protection.
7. JEWELLERY IS A FASHION BUSINESS
The jewellery industry has long loathed to see itself paralleled with the fashion industry; something it saw as fast and fickle. But attitudes have been steadily changing. Even the most traditional of jewellers now recognises that fashion and trends have a huge part to play in jewellery sales. Trends still do not move as fast in jewellery as they do in fashion, and they may not be as directly associated with the catwalks, but they are shaping consumer purchasing decisions, from whether to opt for a palladium gents wedding band rather than platinum, or a silver Pandora charm versus gold. Trends can be as simple in jewellery as metal choice or sizing. Professional Jeweller understands that this is still an area that some jewellery retailers find daunting, which is why we team up with jewellery trends analysis service Adorn Insight every month to give you a digestible insight into the trends influencing the jewellery market.
8. PEARLS ARE BACK IN VOGUE
Over the past couple of years pearls have enjoyed a resurgence as the fashion industry embraced faux pearls on everything from clothing and hair clips to jewellery and Lady Gaga’s face. As we mentioned in Point 7 of what we have learned from 2011, the jewellery industry is influenced by fashion and as a result younger shoppers who have liked the look of a £5 string of plastic pearls have upgraded to cultured pearls. Pearl companies such as Jersey Pearl, which has enjoyed phenomenal business growth since opening its wholesale division two years ago, have reported increasing demand from retailers. And that demand is not just for classic strings of pearls but also for everything from 1920s-inspired Art Deco earrings to Tahitian pearls set on diamond encrusted gold bands. While pearls have always formed an important art of a jewellery retailer’s offer it seems that the once reserve of retired ladies is now opening up jewellery shops to a younger demographic with money to spend.
9. IT IS NEVER THE RIGHT TIME TO INVEST
If you need an excuse not to invest in your business it will always be easy to find one: the economic climate, poor consumer confidence. The list is long. And while not corner-cutting in place of investing can feel shrewd and in line with what the rest of the industry is doing, it is in fact sometimes better to buck the trend and invest when others are not. Not only because investing in your business is always a positive, as long as you can carry the financial burden, it is perhaps the perfect time to do it: excel your business while others are standing still. If you invest in the recession, when times are better and your competitors start investing again you will have made it harder for them by putting a lot more distance between your business and theirs. Rox, Laings of Glasgow, Aurum and Pressleys are among the retailers that have launched serious investment programmes this year, while there have been a raft of new jewellery retail businesses popping up this year including Black Box Boutique and SH Gallery in Scotland and Hersey in Surrey-on-Thames.
10. CASH FOR GOLD IS NOT JUST FOR PAWNBROKERS
This year has seen a continuation of jewellery retailers introducing cash-for-gold services into their business models. Once only the territory of pawnbrokers, cash for gold has dominated the high street. While it is by and large still a pawnbroking business, with major pawnbrokers running most of the cash-for-gold pop-up counters in shopping malls and the like, jewellers, and even designer-makers including Sophie Harley, have been slowly offering in-store cash- or credit-for-gold services as rising prices have led to a boom in the scrapping of precious metals. Scrap services are now offered by pawnbrokers, independent jewellers, multiples including Signet and even Tesco got in on the act and caused a stir earlier in the year by offering seriously high prices for any gold scrapped through a dedicated website.