Christmas 2015 Sales Report and some retail therapy

Christmas 2015 Sales Report and some retail therapy

Whether it was the “Turnbull effect” or simply that people had got sick of keeping their wallets in their pockets, the general consensus seems to be that Christmas 2015 was a vast improvement on prior years. Sales in all retail sectors are reported to be up.

For example, the latest results from David Jones, put like-for-like sales growth at 9.7 per cent while retail space increased by 1.5 per cent. In Australian dollar terms, sales, including David Jones' concessions, increased by 11.2 per cent compared with the same half-year period last year. Similarly, Myer's most recent sales increased by 3.4 per cent to $714.8 million in the first quarter of fiscal 2016, while comparable sales were 3.9 per cent stronger.

All of this made me think about some of the reasons why people buy jewellery.

From a purely investment/return perspective, jewellery might not be a typical investment. You see, gold and diamonds sitting in a safe don’t produce income.

But jewellery isn’t historically bought by people who want to make money (although with increasing precious metal prices, this can be a very profitable side-effect). While some people buy jewellery (and particularly gold and high quality diamonds) as a hedge against economic uncertainty and a highly transportable, liquid store of wealth, most people buy jewellery for emotional reasons.

And perhaps that is the secret to success in the jewellery industry.

When I look at some of our more successful customers, they tend to have a very good hold on the emotional reasons as to why people buy jewellery. They don’t necessarily have the biggest marketing budgets. Indeed, many of our most successful clients don’t advertise at all. What all of these jewellers have in common is a real understanding of the importance of the relationship in jewellery sales. These business people invest their time in developing desire in their customers. They educate them about the benefits of quality. They don’t chase a sale every time that their customer walks in their door in pursuit of a quick sale. They’re in for the long term.

So when I read that retail sales figures are up, jewellers who are in tune with their customers generally tell me that while the market generally might have given them a bit extra in the way of sales over the Christmas period, their sales were not so markedly different from what they have come to expect in line with their business plan of consistent sales and growth. That’s because their customers have been educated by them to expect to spend at certain times of the year and to commemorate certain events. Their customers aren’t so influenced by what the general retail herd is doing.

I think that there’s a lesson in this. As I’ve said before, Australian jewellers hold a unique position by being able to offer their clients the benefits of an investment quality material (ie, gold and diamonds), in the form of an emotional statement (ie, jewellery).

Written by

Andrew Cochineas

Chief Executive Officer

Pallion (ABC Bullion, ABC Refinery, Palloys, AGS│PJW, A&E Metals, Regentco & Goldenage International)