As we enter the next chapter of Brexit, and negotiations face the hurdle of a general election, how can UK jewellery retailers stay profitable and prepare themselves for the final outcome next year?
We recently conducted research which found that there is already a great deal of uncertainty in the industry, with one in five SME jewellery retailers saying Brexit presents the most significant threat to them in the next 12 months. This lack of clarity on how it will affect them and how they can prepare, is further impeded by deadline extensions, scuppering existing plans and safeguards.
The two big risks that jewellery retailers and manufacturers face are changes to the tariff regime and possible customs delays. Increased tariffs will have an instant impact on the bottom line, while customs delays could leave businesses with an inadequate amount of stock. Experts have suggested that there will be border delays even if the UK leaves the EU with the most “reasonable best case” deal – so jewellery retailers who send and receive stock from the EU will need to factor in much longer delivery times.
Some businesses operating in the jewellery industry have taken potential trade barriers into their own hands. Last year luxury cargo company, Malca-Amit introduced a Temporary Admission Scheme for exhibitors at the annual International Jewellery London (IJL) show, removing the 23 percent of taxes and duties normally paid upfront to UK Customs.
While these kinds of initiatives are great news for the industry, it isn’t enough to completely soften the Brexit blow for everyone. Recently the owners of M. Kemp Antiques and Fine Jewels announced that they are closing down on Christmas Eve, after 70 years of trading. Despite being one of the oldest jewellers in Nottingham and having previously survived economic downturns, one of the reasons cited for closing was attributed to the uncertainty of Brexit.
This isn’t to say that bigger players in the market are exempt from Brexit issues. Following the result of the referendum in 2016, Tiffany and Co, with almost 200 years of trading under its belt, made the headlines as it was reported that the company may move its hallmarking operation to Europe to avoid being caught up in potential trade disputes. While these conversations seem to have settled down for now it is not to say that this won’t become a reality once the final Brexit decision has been reached – with the worry that other traditional British companies will follow suit.
Boris Johnson’s decision to agree another Brexit negotiation extension means the current recognition of UK hallmarks by EU countries and the recognition of the EU marks currently recognised in the UK will continue as usual. However, if a “no deal” Brexit happens all of the UK’s obligations to recognise EU marks would cease and vice versa – the uncertainty of which is leaving more than a third (39%) of jewellery retailers currently feeling unprepared for the final decision.
So, what can retailers do to ensure they are prepared for every potential outcome Brexit can throw at them and ensure sales don’t dip?
Make jewellery more accessible
Brexit uncertainty hasn’t quite managed to grind everything to a halt, people are still getting married, having birthdays and finding occasions to gift someone with a beautiful piece of jewellery. Therefore, both online and bricks-and-mortar retailers should ensure they take advantage of these opportunities through a good range of stock, impactful marketing strategies and good customer service to name a few.
Offering a variety of manageable ways for customers to pay for jewellery is another way that retailers can ensure they stay competitive. Afterall, Brexit could be causing some customers to assess their own financial situations – leaving them looking to invest as little as possible or not buying at all.
To make jewellery more accessible, retailers can offer a range of alternative finance options to customers who may be unable to afford the full cost upfront. Our research found that 34% of shoppers would be more likely to buy from a retailer offering point of sale (POS) finance options, such as an interest-free loan, highlighting the additional sales potential this could have.
Jewellery businesses will know that each customer’s purchase is unique, so ensuring that finance options are also tailored to each person and their financial circumstances is important. At a glance, making individual decisions for each customer could sound like hard work. However, partnering with a third-party finance provider would give businesses access to dedicated credit teams who can make these expert financial decisions quickly for them – giving businesses more time to focus on increasing their jewellery sales.
For businesses that do decide to implement finance, it’s important to advertise their offering clearly in-store and online so customers have this information to hand before the decision-making process. For example, online retailers should communicate the different finance options on the home page, as well as product pages where they can give examples of monthly payment options next to the full cost of an item.
Making customers aware that they are able to split the cost of a product at the beginning of their journey will allow them to factor in potentially higher value pieces, which they might not have considered otherwise.
Offering a good user experience is key
The way in which customers shop is constantly changing. No longer are customers just buying expensive jewellery instore, they are also looking to buy online – with online sales doubling over the past five years. Ecommerce sales now account for 10 per cent of the US and western European jewellery market, according to Gartner L2.
Also, according to PayPal’s mCommerce Index the number of businesses selling on social media sites and apps is predicted to double in the next six months.
To therefore remain competitive, jewellery businesses need to bring their distribution channels up to date, whether it is in store or online so that customers can easily go from finding inspiration for a piece they like the look of to actually buying it.
Making the customer’s user experience (UX) as easy as possible, both instore and online, also reduces the number of hurdles customers have to jump through to get to the product they want to buy. This includes simplifying the payment process.
Customers’ expectations are increasing, and they now expect more ways to pay than ever before. For online retail, it’s no longer common practice for consumers to reach for their wallets, so bridging the gap between payment and bank details is important. The process also needs to be quick and streamlined so returning customers should not have to re-enter all of their payment details.
If jewellery businesses decide to offer finance, this process should also be as quick and smooth as possible. People assume that applying for finance will be time consuming, involving a lot of forms and background checks. However, offering a simple application process with quick decision turnaround times, can convert more customers who may have otherwise have been priced out of the market.
The uncertainty of Brexit is already having an obvious impact on jewellery retailers and manufacturer’s confidence. Therefore, retailers should not waste time in ensuring they have solid plans in place to prepare for any eventual Brexit outcome. Jewellery retailers offering a smooth user experience and access to alternative finance solutions have an opportunity to attract more customers, which will be key in ensuring retailers optimise their profits in time for 2020, despite the Brexit decision.
By Michael Bevan, CEO at consumer finance specialist, Duologi