Professional Jeweller editor Stacey Hailes sat down with influential individuals from some of the UK’s leading jewellery brands to discuss growth prospects for the jewellery sector and ways the whole industry can work together to achieve success in a rapidly-evolving marketplace.
On the panel
- Hayley Quinn, managing director, Swarovski UK
- Jon Crossick, managing director, Thomas Sabo UK
- Lisa Levinson, country manager, Forevermark UK
- Pam Aujla, managing director, Trollbeads UK
Reflecting on the last 12 months and looking forward to the year ahead, what key factors are currently driving growth in the UK jewellery sector?
Jon Crossick: If we’re being truthful about whether there’s going to be growth in branded jewellery, I think it’s going to be tough this year. I don’t know how much growth there’s going to be. I think it’s actually more about how much share each brand takes.
Hayley Quinn: The devaluation of the pound against other currencies is massively driving the luxury end of the jewellery market. As of yet, we’re not seeing an enormous benefit in fashion jewellery, but I think that will come.
Lisa Levinson: It’s different in different categories. Looking just at the diamond sector, we are seeing a very small market at the moment for branded diamonds and branded diamond jewellery, so there the projections are really go. We’ve seen growth over a lot of years and we do have our consumer data indicating that the demand for it is growing and for the diamond category in the UK, given the big space that’s been taken up by non-diamond jewellery, for diamonds, there is an opportunity to move back into it, so we see potential there.
If growth is a concern, how can retailers work with brands to help steer business forward?
Jon Crossick: There’s a big shift in branded jewellery. We’ve come off the days of everyone waiting for the next big thing to happen. I think it is now more about selling proper jewellery and upskilling your workforce.
Hayley Quinn: Independent jewellery retailers are still coming to terms with the decisions made by big brands. By big brands, I start with the watch brands. The downscaling of their portfolios left an awful lot of jewellery retailers, both independents and multiples, in a very difficult position. We’ve seen that now with some of the fashion brands pulling back and changing their distribution strategy, and therefore as the global and national strategies change that’s bound to influence the independent retailers. Those that sit back and wait for it to happen to them are the ones that are going to be in trouble.
Pam Aujla: If I look at how jewellery is sold and displayed, there’s been a big push of brands putting their own furniture in and telling the retailers how to sell it. That isn’t really working for us because I think unless you’re perpetually training these people up constantly, we’re finding a big issue with people not being able to sell the brand in the way we want it to be sold. For us, we’re taking the strategic decision of really looking at where we want to be and how we want the brand to be sold. It doesn’t really matter whether it’s in our furniture or not, I’d rather it was sold in a hidden draw somewhere but sold in the right way – with the right passion and understanding. For me, the whole retail and branded partnership has to really come into its own going forward, especially when the economics this year are going to be challenging.
Lisa Levinson: There’s a lot of responsibility on the brands to provide a very faceted story for the retailers so they can share with the customers, and ultimately, it’s for the retailers to find that passion. It’s an emotional product and you have to find it within yourself. That passion doesn’t come as a one size fits all, it has to come through a story and brand line that has many, many facets to it, so each individual sales person can go, ‘that part connects with me’. It’s then authentic. That is something that we’re going to focus a lot on over this year, because it’s key for the growth to almost find on an individual sales ambassador level, which facet of the brand can you get that passion from.
Hayley Quinn: The bigger the brand you are you have to face different challenges. For me it’s more about consistency and getting the partner to understand that the representation of the brand, and the way that the brand is sold is really important to all of us. The biggest challenge for the independent is what one brand wants is different from what another one wants and they’ve got to do everything for everybody. That’s actually very difficult for a small independent organisation.
Jon Crossick: Part of that issue is that smaller, multi-brand retailers shouldn’t go chasing every brand. If you don’t get the spine of your business right, it will all fall down around you. Concentrate on brands that you know deliver season in, season out, and make sure you work with them properly. Up to now, there’s been a point where the industry has been lucky. Branded jewellery was the big thing and it was like selling sweets – it’s no longer like selling sweets. You can’t just wait for someone to come in and buy that brand, you have to sell it. We’re in a very different place to where the industry was a few years back, we’ve seen it in our own stores and we’ve definitely had to up-skill our retail staff to sell better, because there’s other things we know – footfalls not going up into stores, it’s going online. What do you do? You convert better and you raise your average transaction value. To do that you have to sell better.
Hayley Quinn: One of the challenges I would add to that is that retailers need to understand what they want out of their business. It’s no longer good enough just to buy products and hope at some point you’ll sell it. The first question we always want to ask retailers is who’s your customer? Is their customer the same as ours? Most don’t think like that. We talk about upskilling staff but actually most work these days is being done behind the scenes. It’s all about supply chains, stock-turn and working your capital investment that much harder. A lot of retailers just aren’t on the same page yet. It’s not just about what we can do for their staff but also what can we do to help their business.
Pam Aujla: I find this a lot – some retailers will ask ‘what are you doing to push your brand?’ They want you to drive footfall into their stores. It’s almost like you come and sell your brand in my store, all I do is stock it. Not everybody is like that but that tends to be a bit of an attitude.
Jon Crossick: We talk a lot about the 360 degrees of effort, so it’s absolutely a two-way street between the brand and the wholesale partner as well. But in terms of marketing, the brands are in there to help push footfall into the stores, absolutely, we should be footfall drivers, and we can do so much at a national level, but then we go back to retailers and say we’re doing it at that national level, you need to make sure you’re doing it locally, with our help.
What do you think the jewellery industry can do to keep thriving during uncertain times?
Hayley Quinn: It doesn’t have to be a challenge, it can be an enormous opportunity. We are now very cheap compared to the rest of Europe. Certainly in London, the London business has gone through the roof! Yes, it’s uncertain, but retail’s uncertain. Therefore, you can take as many opportunities as there will be risks.
Lisa Levinson: At the moment it’s an excellent situation. The stock was purchased, at least in the diamond world, in dollars a while back, and currently, it’s not massive re-pricing happening just yet, so it’s a massive benefit with the crashing of the pound. Long term, it’s never good to be in a market in huge economic flux, but there’s always a silver lining, it’s just about trying to navigate it.
Jon Crossick: All you can do is get better at what you do. Generally, whether it’s the brands or retailers, everybody is running a lot faster to keep up. They’re having to work as hard as they ever have to make sure that they keep coming in like-for-like or whatever else, but it’s tough. There’s always something that happens every few years and that’s part of retail and it’s part of trading.
Hayley Quinn: Haven’t we got something like 36 months of retail deflation in the UK? So actually, if prices go up, maybe that’s not just a bad thing. How long can they continue to go down for before everybody goes bust?
Jon Crossick: We’ve just had our cheapest November so far, and that’s -2% in November. It won’t be too bad. In a period of uncertainty, people should concentrate on what they know and get it right. A few percent increase, if you’re staff are good and everything else is good, shouldn’t make that much of a difference. People are scared of price increases much more than they should be.
Lisa Levinson: It causes each retailer and brand to focus on what they’re good at, diversify from the others. Looking at the diamond industry, the biggest worry we have is commoditisation at the moment. If any change pushes brands to find their own niche and what they’re good at, it’s not a bad development.
Hayley Quinn: If I think about retail as opposed to the jewellery and watch business, the biggest challenge facing retailers is National Living Wage, plus the apprenticeship levee plus business rates. As a major retailer with 1,000 employees and a lot of retail property, they’ll cripple me. That’s far more of an issue for me and for most of the other UK retailers than anything that’s coming out of Brexit at the moment.
How do you find balancing your stock in independent retailers, your own stores and online?
Jon Crossick: Being a multichannel business is unavoidable now. The balance is you’ve got to try and keep it under control to an extent, but it’s moving very, very quickly and you can’t rest your laurels for a second. You’ve got to understand that’s how people want to shop now. If you’re a retailer you’ve got to make sure that experience is second to none because people do still want to go shopping, they do still want human interaction. We also have to try and help retailers as much as possible to drive that digital element. We have to encourage them to have that digital place.
Lisa Levinson: All consumer data for millennials is indicating that online interaction with the brands is and will be the key factor. And obviously the store interaction, so those, both sides of it are so crucial. So you can’t drop any of those channels you have to keep them both going.
Pam Aujla: The consumer experience, no matter what channel it is, needs to be seamless because the consumer doesn’t care whether it’s a franchise partner or your own website or a retailer’s site. For us there’s going to be a clean-up operation because consumer interaction experiences are so varied. We have people ringing us confused having ordered something on someone else’s website but they thought they ordered it from us. Some of the independents don’t have things in stock but they take the money then keep consumers waiting for days while we ship it but then the consumer complains to us because we’re the brand. They think it’s all our fault. The brands have to identify what that experience should be, not retailers.
Hayley Quinn: To try and combat that we now license our web. Basically we provide the service and we pay them a handling fee. The customer doesn’t see the difference, they don’t lose out and we control all the way how the brand’s represented. We’re not there yet, we only started last year with all our franchise stores – but so far – it’s brilliant. It’s either front ended or we offer through their facilities. It’s a way of us controlling the back-ends and we control the service proposition but they benefit from it. You could argue we almost shot ourselves in the foot because we’re rewarding our partners financially for participating but it allows us to control the way the brand is presented. The customer gets a completely seamless experience, and we handle the wooden dollars exercise behind the scenes.
Jon Crossick: I agree, again we go back to the independents who are going to find it tough in a digital world, in a way something like that is going to be the future. It’s about how do you help with and work with that independent to extend their commerciality and make sure the experience is seamless and the right stock is in and the customer gets the experience that they want.
Hayley Quinn: And of course the legal agreements aren’t set up ideally. As you all know, all of our legal agreements, even EU legislation, were created for an offline world and none of it is really relevant for an online world so there’s all sorts of issues.
Pam Aujla: For me an element of what you [Swarovski] have done is brilliant because then you can do a loyalty scheme on top of that. It’s about sharing data and being more transparent and saying this is how much money I make and this is how much you make let’s be honest about it and share the pot.
Is gathering data from retailers becoming an easier task?
Jon Crossick: We pretty much insist on it now and get it from 60% or 70% of our doors and we can work with some of the EPoS providers, but a lot of retailers don’t want to give it for whatever reason. But they have to, because we need to be able to run the business with them and sit down with them and say how much are you retailing and therefore how much should you buy.
Hayley Quinn: We’ve taken the route of saying ‘this is everything I can give you and I can’t give you that because I don’t have access to your data’. Over a period of a year or two we’ve built up an enormous amount of trust. You get to a point where many of them then will allow you to be more prescriptive because they trust that you’ve done your analysis and you’re not going to stitch them up. The minute we recognised we weren’t going to be able to force retailers, that we could incentivise them, then they came with us much more quickly.
Lisa Levinson: The key is trust. Our transaction values are £3,000 and above so people do keep track on those values quite well. £5,000 diamond rings usually don’t go missing – you know if you’ve sold it and you know if you’re holding it. But the trust to get that kind of data, which a big part of the diamond industry is based on, it takes time to build up and it’s absolutely crucial. And we’re also working with the same positive reinforcement – if you get us that data we’re able to help. We can give you all this data back.
What would you say to retailers who do tend to hold their data back? What are the benefits for sharing data?
Jon Crossick: If we understand their business we can work with them closely. That’s not telling them exactly what to hold but if we understand what they should be buying and we can tell them how they’re doing versus others in their area, we can give them a guide. If you work with us then we should be able to set it out so that you buy the right amount of stock for what you’re retailing and then we can all set targets together and we can go for those goals. But we can’t do that if you don’t give us the numbers.
Lisa Levinson: And we do ultimately want to assist each individual retailer to sell more and to grow their business. From a brand perspective, you have an overview of a lot of retailers and you get insights from it and you learn how to analyse data. There is a great benefit to working together in partnership around the data.
Pam Aujla: The other point for me is the way you sell into them as well. When I came into the business the way we had sold previously was horrendous. We stuffed these retailers full of stock to hit targets and to look good in the short term. That clean-up operation has taken us a long time but what we’re doing now is saying we’d rather you just bought what you need. That drives their excitement and passion too . I think that applies to the brands as well. You don’t just visit customers to get an order, you have to check if everything’s okay and get feedback. The overarching thing for me is that we need to work much closer together because we’re all here to achieve the same result. This previous approach in this industry was not great, we didn’t do ourselves any favours.
Jon Crossick: I agree. There’s a point where there needs to be an industry approach. That’s just the way the industry was. Everyone was doing it and they were all grabbing at the start of the season. Everyone was doing so well and there was a lot of cash around. Now it’s about proper retailing. In a way it’s up to the industry to help independent retailers – it’s about being sensible and making sure you understand their business because if you all overstock it’s a total nightmare, if everyone works properly then they can push those brands forward. We all want to see the overall pie grow and then we’ll all fight for our share in between. But you want to see that pie grow because everyone’s buying the right stock and they’re not bogged down.
What are your thoughts on the next 12 months?
Jon Crossick: The discussions are interesting, I think everyone feels pretty much the same. There’s a point where the industry needs to become more sensible and everybody’s going to have to work damn hard this year. It’s not going to be easy and I think it will be about commitment from customers to the right brands and from the brands back to the right customers.
Hayley Quinn: I agree. There’s no easy money any more. There is still very good money to be made and the consumer still wants to spend but you’ve got to be at the top of your game if you want to benefit from it. That’s for everyone – whether you’re a brand or a multiple or an independent – there is no easy ride.
Pam Aujla: What’s also interesting for me is this is the first time I’ve had such an open dialogue with other brands. It doesn’t happen that often, and because no one’s got anything to hide and it seems like there are a lot of similarities between us, the more connected we are and consistent in our approach, the better it’ll be for the whole industry.
Hayley Quinn: We’re all trying to do the same thing, we’re all incredibly aligned. We’re just at different places on the same path.
Lisa Levinson: I’ve noticed ultimately this is what the consumer wants – branded jewellery. Regardless of whether it’s silver or diamonds or whatever, there is a huge demand for it and it’s growing.