The pandemic is having a dramatic impact on customer demographics and purchasing channels, especially at the high-end, writes Rob Corder, Professional’s jeweller’s founder and managing editor…
What permanent changes will the current Covid-19 crisis bestow or inflict on the jewellery business? It is a question I have been asking a number of retailers and brands over recent weeks as they emerge blinking into the light of a post-lock down world.
From Beaverbrooks to Berry’s, the story of lockdown was the same: initial incredulity that the entire UK retail industry was being shut down for months, followed by the most impactful management decisions any executive team will ever have to make to secure their companies against an existential threat. And then flip immediately into rebound mode.
Brick and mortar sales were at zero, but ecommerce began to boom. GfK, a retail analyst that provides point of sale data on the British watch industry, reported a 75% year on year increase in online sales in May and a 55% rise in June.
Beaverbrooks managing director Anna Blackburn tells me that their experience was the similar across watches and jewellery and has continued to grow since non-essential retailers were allowed to reopen in June.
Berry’s, which specialises in more expensive brands, says online sales have softened since the end of lockdown, but remain above normal.
There is a cut-off point of around £5,000 above which customers continue to want to come into stores, but this price point was about £1,000 a few years’ ago.
Ecommerce is here to stay, and the price at which customers are comfortable to shop online will continue to rise.
The other permanent change, in my opinion, will be for top-end jewellers and jewellery brands to focus their sales and marketing on domestic customers.
Selfridges announced at the end of July that it was laying off 450 staff; Harrods said it was losing almost 700 employees.
Layoffs at jewellery boutiques on Bond Street will be less dramatic, but just as necessary as high-spending tourists from China and the Middle East stay home.
Mark Hearn, the former UK managing director for Patek Philippe, used to tell his authorised dealers not to rely on tourists for sales because one day they might not come. That day has arrived.
Boodles is arguably the only jeweller on Bond Street that has a buffer against cratering sales in Mayfair because it has boutiques in Liverpool, Manchester and Dublin that focus on their local communities.
Tiffany has concessions within Selfridges in Manchester and Birmingham, but nine of its stores are in London, including two at near deserted Heathrow terminals.
Brands like Cartier, Bulgari and Chopard are somewhat shielded from the worst of the tourist drought because they have distribution outside the capital, although mainly for their watches.
All of these companies need to either replace foreign visitors’ sales with domestic customers, or simply redirect their product to places like China — a strategy that would surely destroy London showrooms if it persisted for any length of time.
Now might be the time to remember there are exceptional family jewellers up and down the country that already have the fantastic relationships the world’s largest jewellery maisons now crave.
If they engage constructively now, it could create a permanent and welcome change for the top end of the market.