The retail jeweller space is experiencing tough times beyond the challenges of retail. They are being hit hard by online businesses at the low end and by high operating costs at the high, designer, end. The last twelve months have seen significant structural change – closures, consolidations and significant business direction change.
Yesterday, Jeweller Magazine reported news of an ‘alliance’ (partial takeover maybe) between Tara Jewels of India and the Bevilles group. The result will be more store closures.
What is interesting about this news is that it is another significant vertical alliance in the retail jeweller space. We have not seen this type of vertical alliance in the newsagency channel but I think it is only a matter of time. here are some details from the Jeweller Magazine report:
In a media statement, Bevilles CEO Michelle Stanton said, “This strategic alliance will provide Bevilles with a wide range of product, sourcing and operational efficiencies as well as a more enhanced IT infrastructure.
“It allows Bevilles to have direct relationships with diamond site holders and remove several steps from the product sourcing process which benefits will flow through to our customers,” she said.
Note – they are cutting out the middleman, maybe several in the process from manufacture to store. This is evidenced further in the report:
The supplier notification also outlined new shipping and payment details to begin next month adding, “From 4 February 2013, all suppliers will be required to ship orders directly to the Indian jeweller’s Hong Kong office for consolidation and transhipment to Bevilles.”
The Indian company, which was established in 2006, conducts a vertical business model operating in both the manufacturing and retail channels. Currently, it has 30 retail stores in India and has quickly expanded its jewellery manufacturing and retail business to include a presence across five continents and more than 20 countries.
There are plenty of products newsagents sell that we get through local wholesalers. Smart groups of newsagents able to leverage volume in a disciplined way could do a Bevilles and cut out one or two middlemen, depending on the route products take from manufacturer to retailer. The savings from such better sourcing could increase margin on some products dramatically.
Bevilles is well positioned to make such a move because of their structure. For the majority of independent newsagents today this is not an option. But it will happen. Retail competition, cost pressures and other challenges will force it to happen.
These are retail trends we need to understand and consider as retailers as they reflect the broader changes in retail beyond those specific to our channel.
Footnote: some will know that my newsagency software company also serves over 300 jewellers. Bevilles is not and has never been a customer.