UK MD Pam Aujla reveals how she’s stopping the bleeding at Gems TV.
Gems TV’s US retreat has shown how hard the recession has hit, so can new managing director Pam Aujla fulfil her remit to deliver a turnaround for the UK arm of the TV shopping channel? She tells Rachael Taylor how she’s stopping the bleeding.
It must have been something close to horror that Pam Aujla felt when she first joined Gems TV as managing director in June and was faced with a shambolic warehouse, no jewellery buyer and a staff that stared blankly back at her when she used the most basic of retail terms.
But this is exactly why she was brought in. Gems TV needs a turnaround and Aujla is the one to deliver it, by making sure the business is run as a retailer, not a TV channel.
While Gems TV might not have been up on the latest retailing strategies, Aujla certainly is. She has spent her career working with heavyweight retailers, including a 16-year stint with high street chain Boots.
“My remit was to come in and to turn the business around,” says Aujla. “Since the recession, I think most jewellery retailers have taken a hit. Sales have not been where they needed to be or had been.”
It’s been a tough couple of years for the TV shopping group. In February, Gems TV Holdings posted a loss of US$6.3 million (£4.1 million) in the last three months of 2009, although this was an improvement on the year before when losses totalled US$18.5 million (£12.2 million). And in March came the announcement that the group would close its US station, ending what it called an “operational cash burn”.
While the days of Gems TV USA are numbered, Gems TV Holdings is not abandoning the US altogether. It has invested in buying 37.8 percent of its former rival Multimedia Commerce Group, which owns US station Jewelry Television.
Aujla’s interview with Professional Jeweller took place before the announcements, and as the magazine goes to press she hasn’t yet commented on how Gems TV’s stateside retreat will affect the UK, or if it will have any impact at all.
But in the UK, business hasn’t been booming either. Gems TV’s UK product revenues plummeted 45 percent in the last three months of 2009, down from US$15.2 million (£10 million) the year before.
Aujla has a gargantuan task ahead of her, but is approaching the job at hand in methodical manner, making sure the business is in good operational health before looking at more adventurous plans. “This has been about stopping the bleeding and having a solid foundation,” she explains.
The first area to fall under her scrutiny was the team. “One of the first things I did was look at how the business was structured and who was making the key decisions, and that’s where I initially put a lot of effort,” she says. “We needed to bring in people who had skills and expertise in key areas. We didn’t really have it in place to be honest, so we made a lot of management changes.”
Despite the arrival of a new boss with a remit to be ruthless in her approach to getting the business back to profitability, there was little opposition offered up by the Gems TV staff. “There’s been no resistance at all, as you might expect,” says Aujla. “From day one everyone understood the challenge we had.”
One of the first personnel changes was to hire a qualified jewellery buyer. Before Aujla’s arrival, the TV shopping channel had been relying on the purchasing department to make its buying decisions – a structure that clearly wasn’t working.
Aujla remembers her first trip around the Gems TV warehouse as a shocking experience. “You’d go into the warehouse and see towers and towers of some strange things,” she laughs.
Without a disciplined buying strategy, the purchasing department would buy in lines of jewellery in every colourway, rather than using trends intelligence to limit the selection, leaving mountains of unsold stock. The same chaotic buying process was extended to peripheral items such as jewellery boxes and packaging.
“Stock management in any company is critical and in a retail company its one of the things that can, if you’re not careful, get out of hand,” says Aujla. “Keeping a tight control over what’s been bought and how much money you’ve got is called open to buy. People in retail are familiar with it but the people at Gems weren’t really aware of those retail terms, so you have to say: you can’t just go and buy what you want to buy, it has to be within a certain framework, and if you haven’t sold some, you can’t just ignore it.”
Now Gems TV has a qualified jewellery buyer, a buyer’s admin assistant and a merchandising manager and it’s paying off. Despite the drop in product revenue in the last three months of 2009, gross margins increased 36 percent, compared to a drop of 15 percent the previous year.
Aujla has also strengthened the quality of the programming. “It was very BBC newsreader-ish,” she explains. To shake the programming up, Aujla brought in two presenters from the high-adrenaline TV shopping channel Sit Up TV. She had met the pair during her first stint in TV retail at Ideal Shopping Direct where she was head of buying and merchandising before being promoted to commercial director.
“We had to start with the right people in the right jobs,” Aujla says. “It’s bringing in people that have that expertise in retail and TV shopping. Now we’ve got a really good team in place.”
The first year of her tenure is about stopping the bleeding, as Aujla herself puts it, and she’s dead set on not making the mistake of looking at expansion before the company is ready. But when the clear up ends and the company starts looking to build on the strong foundation Aujla has created for it, what direction will the business head in?
“I’d love to think about expansion,” Aujla says. She is keeping tight lipped on exact plans, but the general ethos is to make Gems TV “a department store for jewellery”, stocking its mainstay gemstone jewellery alongside brands, trend-led ranges, celebrity collections, giftware and watches. By offering something for everyone, Gems TV will be able to expand its customer base.
Gems TV has historically focused on unbranded jewellery, but this year won exclusive UK distribution of US brand Effy, and there could be more brands set to join the ranks. “There is a place for brands and it’s something we’re thinking about,” says Aujla.
Another new avenue of growth for Gems TV has been celebrity jewellery collections. Last year it sold ranges developed with singers Lily Allen and Alesha Dixon, both of which were instant sell outs. The Alesha Dixon range sold out before it ever made it to the TV screen after shoppers flooded Gems TV’s transactional website within hours, despite the channel not spending a single penny on advertising to promote the range.
These fashion-forward, young ranges are at odds with the traditional Gems TV customer – typically women aged 35 to 65 – but widening its offer is key to Gems TV’s growth. “We are going to be selling fashion jewellery,” says Aujla. “We’re broadening our horizons to cater for what our customers are telling us they want.”
Increasing the size of the audience, as well as the demographic, is also vital. “The Freeview platform is critical to our future growth,” says Aujla. Gems TV had tried out Freeview in the past, somewhat unsuccessfully, and getting a dedicated channel on Freeview is very expensive – in the realm of tens of millions of pounds a year – but Aujla believes the time is right to try again. Gems TV has been on Freeview since the beginning of the year and Aujla describes it as “phenomenal”.
As to longer-term plans, Aujla says we’ll have to wait and see. Even she doesn’t know, and she isn’t intending to work it out until she’s convinced the business is stable enough to have a solid platform to launch from.
And as the end of her first year as managing director draws near, is she getting close? “I’m not saying we’ve completely revolutionised the company but we’ve turned the corner,” she says. “There is a part one and there is a part two. We’ve got to bake the cake and it’s quite easy to get carried away with the icing, but we want to make sure it’s cooked properly.”
And once the cake has cooled, we can hopefully expect an exciting – yet measured – period of growth for this evolving TV jewellery retailer.