Much ink has been spilled by the trade press over the sudden and barely explicated departure of Willie Hamilton, the polarising chief executive of the Company of Master Jewellers. Apart from those at the top, it would seem nobody knew he was about to vacate his post, and those in the know were scarcely willing to comment on the matter as the news broke. This was not your textbook CEO departure, where executives array to take questions from the press and give at least the impression of a pre-planned and orderly changing of the guard. But gone he has, and the quasi-eulogies have come thick and fast from his friends in the industry.
So to his legacy. Hamilton has overseen formidable growth in his decade-long tenure, and that is to be applauded from a Business 101 perspective – CEOs are paid to deliver growth and momentum, and there is no denying he has done his job. The exaltation of his efforts, though, bears scrutiny. His greatest single achievement, as enumerated by his fans, was the bringing of Pandora onto the CMJ’s supplier roster. It is hard to see what was so special about this deal: Pandora was wildly popular already and its Western Europe boss Peter Andersen, having taken control of UK distribution, presumably wanted simple, unitary access to a large portion of the UK market. It was an open goal, and Hamilton tapped it in – if he hadn’t managed to capitalise on the craze for his members then one might have asked whether he was the right man for the job. Aside from the fact that Pandora is a monstrously large firm, there is nothing particularly awe-inspiring about convincing a manufacturer – which was already active in the UK – to sell to 400 retail outlets at once. I would add that Hamilton did not ‘bring Pandora to the UK’ with this deal, he secured decent terms for his members on an exploding brand, again as he was paid to do.
In any case, fast-forward 10 years, now that Pandora has shifted focus to own-brand stores and more restrictive franchise agreements, and suddenly the fact that it makes up a very large portion of the CMJ’s sales looks more like a weakness than a strength. Other trade press have spoken of how CMJ’s “core business” has grown 25% in 10 years – apparently something to be “proud of”. But with inflation variously hovering above 3% over the last decade, this represents at times real-terms stagnation or even contraction. If Pandora changes tack again, the CMJ contract may be for the chop, and where would the buying group be then?
Where indeed. The organisation Hamilton leaves behind is now a hodgepodge of different functions, with no single identifiable customer and the potential for a smorgasbord of conflicts of interest. What started as a buying group to give independent retailers some collective clout is now a Lernaean Hydra consisting of a buying group, a jewellery distribution business, a PR and marketing agency, a design and merchandising agency, a ‘big data’ company, and a conference/events organiser. It even fancies itself as a publisher, producing a glossy magazine at what I know from experience will be extraordinary expense. There are some important questions to be asked about these functions, because they do not make easy bedfellows.
First, why does the CMJ have a PR wing some of whose clients are neither members nor accredited suppliers? There are actually people on the payroll whose job it is to build demand for brands that member retailers cannot buy through CMJ. Yes, it is for a fee, and Facets may be a lucrative little operation putting some profit into the central pot. But who cares if the shared annual rebate goes up by a few hundred quid per retail member? The rebate is not why 140 or so people whose actual business is selling jewellery joined the CMJ.
Second, how can the CMJ act on behalf of member retailers to secure preferential prices, but also act as a distributor that will sell product to non-members, who by definition compete with the membership? Hamilton told the trade press in February last year that: “If we managed to bring another brand like Pandora to the UK…then CMJ retailers and non-CMJ retailers would source it from us.” He did add that there would a “margin advantage” to CMJ members, but this is still fundamentally problematic. If I were a paid-up member – counting on the competitive advantage this is supposed to give me – then I would ask what on earth my buying group is doing forging business relationships with Competing Jeweller & Sons, just down the road.
Thirdly, is it really fair that the CMJ’s various services to third party clients presumably lean on central resources and infrastructure that the membership fees paid to establish? That there may be some profit in it again misses the point: rebates are not why the members join. The CMJ website says that in 2016’s AGM it announced “sales through the group [rose] to over £166.6m and gross profit [rose] by 6.6% to £2.44m”. Sales through the group, excellent – that’s what it’s there for. But why does a buying group turn a profit in the first place – surely only the administrative overheads needed to run the thing must be raised each year? Why would there be money left over to declare triumphantly as profit at the year-end?
At best, the CMJ has lost sight of its customer and its purpose. At worst, there are serious questions to be answered about why it allocates resources to activities that in some cases do not benefit the membership either directly or indirectly. No organisation can occupy several parts of the supply chain, run ancillary services for each of them, and then say it is acting comprehensively in the interests of just the retail part – especially when each needs to take its own cut.
Whoever next takes the reins at the venerable institution that is the Company of Master Jewellers has a crucial task on their hands if they wish to assure its future. For all its talk of existing for “the good of the industry”, it is not a trade association. The business needs rationalising. It needs a clear customer, it needs a clear suite of services directly targeting that customer, and it needs to eradicate distractions, for in business they do not come cheap. If the CMJ is a buying group, let it be a buying group, and long may its retailers prosper.
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CORRECTION: In the original version of this article, in reference the CMJ’s gross profit figure, we included the line: “Share that rebate out on an average across every CMJ-affiliated outlet (400 of them) and it’s £6,000 each. That’s a lot of pedalling and ‘diversification’ for an annual payout equal to the cost of one Rolex Submariner.” This is incorrect, since the rebate/dividend will amount to less than this after expenditure, corporation tax and other deductions.