Jeweller’s 2016 Buying Group Report examined how the jewellery buying groups, Leading Edge Group Jewellers, Nationwide Jewellers and Showcase Jewellers, have adapted to maintain relevance in the changing retail environment.
In doing so, the biennial report, which was published in Jeweller’s March issue, provided a breakdown of current member and store counts.
It found that overall as at 31 January 2016, the groups represented a total of 942 stores (830 in Australia and 112 in New Zealand) and 782 members (678 in Australia and 104 in New Zealand).
Although total store count decreased slightly by 11 stores since 2014, the number of members increased by 27 in Australia and remained the same in New Zealand.
The study also documented current member and store counts for each group and how the 2016 results compared with those in 2014. The snapshot revealed that instead of the groups declining, which would perhaps not be surprising given the tough retail environment, the reverse rang true.
Showcase was the only buying group to experience a decline in member and store numbers over the past two years, losing 34 members and 44 stores in Australia and two members and one store in New Zealand during the period.
Commenting on this, Showcase general manager Carson Webb emphasised that such figures were in a constant state of flux and the results reflected what was occurring in the wider industry, including store closures either due to economic conditions or retirement.
“As with any large, multi-site organisation, the number of stores and members is constantly moving but I think it’s important to recognise that globally, this is a common statistic for our industry,” he explained.
“There will clearly be more [store closures] to come for the jewellery industry purely due to the rapidly changing dynamics of our environment, such as the very real issue of our ageing industry and lack of youth coming through, not to mention the large expense of opening and running a store within the shopping centre model these days.”
Webb said the drop in numbers could specifically be attributed to the following factors: 43 per cent due to retirement; 26 per cent owing to financially-related matters; and the remaining percentage being a combination of causes, such as changing personal circumstances for members.
“Importantly, Showcase still outperforms as the group with the highest average store turnover for membership numbers,” Webb added. “So for Showcase, it’s all about quality of our membership and not the quantity of the membership. This is not to say quality is determined by a large turnover. It purely means being the best in your town and ensuring your store is the best in what you do, albeit with small or large turnovers.”
More buying group movements
A new membership deal for Leading Edge provided another example of how quickly member and store counts could alter.
Leading Edge general manager Joshua Zarb explained the group had recently secured an additional member with 10 stores since Jeweller’s report had been published.
Over the past two years, member and store count for Leading Edge rose by 25 and 23, respectively.
Zarb said the most recent addition was particularly monumental as it marked the group’s first New Zealand member; until now, membership had solely comprised Australian stores.
“We were speaking to a particular client prior to Christmas and, long story short, as of the start of February they decided to join the group,” he explained.
“We weren’t looking or planning to enter New Zealand per se – we’re still experiencing so much growth within Australia that we didn’t really have time to consider looking further afield.
”But it would have been silly to not follow up when the opportunity presented itself. Leading Edge Group also has various other businesses over there, which means we’ve already got infrastructure in place, so time will tell what happens.”
Changing retail landscape
Another issue impacting the local jewellery industry, and one that is not easily identified, is the closure of second or third stores by the same proprietor.
That is, in boom times where consumer spending is at a high, retailers will often open additional stores; however, as economic conditions tighten they will review the larger operational costs and potentially close a second store – the result being that the business remains in operation but with less outlets.
It is an issue that Nationwide managing director Colin Pocklington said affected all jewellers, whether they were members of the three buying groups or operated independently.
“Several [Nationwide] members who have opened additional stores have chosen to have a separate member account for each store (for accounting purposes) while a few other members have closed a second shop. This is why our store count increase was lower than the member increase,” Pocklington explained.
Nationwide gained 36 Australian members over the period; however, store count only increased by three. New Zealand member count increased by two and store count rose by eight.
Pocklington was understandably pleased with the result for Australia and New Zealand’s largest buying group and highlighted two areas as being major contributors to the rise in numbers: “Over the last two years we have been offering a written guarantee that stores will be better off as a Nationwide member. I think this guarantee, plus the fact that membership is 100 per cent free, has helped attract new members.”
Webb also commented on how the current retail conditions have impacted his members’ business operations.
“We’ve had members close some stores – we have many members with multiple outlets – to consolidate and work on more specific productivity strategies for their best performing store; there certainly isn’t time or cash these days to simply bumble along,” he said.