Posted by Stephen Welfare, Partner
6 things jewellery retailers can’t ignore this year + predictions for the decade ahead
The retail sector is a fast moving and highly competitive industry, one in which failure to foresee challenges ahead of the competition can make the difference between boom and bust. This is particularly poignant in the jewellery industry, where discerning customers expect the highest quality products to go hand in hand with customer service and experience.
When I look online or speak to retailers, it’s fair to say that there’s a broad mix of challenges ahead; from market forces that are balanced on the wider economy, all the way to creative marketing issues that elevate your business above the competition.
As a lawyer specialising in jewellery and intellectual property law, I spend much of my time listening to jewellery designers, manufacturers and retailers and providing advice on how they can protect their businesses. So with this in mind I’ve written a guide on what challenges we can expect for the year to come and the decade ahead, and as a lawyer, how I respectfully suggest businesses and retailers approach these challenges.
The year 2020
We started talking about Brexit over three years ago – and we are not likely to stop anytime soon. With the political game of Deal or No Deal between The European Union and the British Government still unfolding, there is so much uncertainty around this subject that challenges are likely to go on for some time. However, I consider two of the most pressing concerns for retailers to be those around employment and intellectual property.
The post-Brexit immigration; the regime will be based around skills, not nationalities, and severely limits the ability of UK employers to recruit so-called low-skilled workers from the EU after Brexit. Under the new system, skilled migrants from the EU would have to earn at least £30,000, (the salary threshold that is already imposed on non-EU workers), before being allowed into the UK on five-year visas. Now is the time to gather employee data to understand who may be impacted by the changes are, what roles they carry out and what you can do to retain them.
Changes in intellectual property rights once the UK leaves the EU; those Pan European rights presently enjoyed by UK individuals and businesses will fall away, but what will replace them? On 18 October 2019, the Government published its technical notices trade marks, designs and copyright. Whilst the UK “looks forward to exploring arrangements on IP cooperation that will provide mutual benefits to UK and EU IP rights holders” (to quote the Government), retailers should be wary of the many pitfalls they may fall into.
Videos offering guidance on the changes to trade marks and international designs after Brexit can be viewed on the Government website –https://www.gov.uk/guidance/intellectual-property-and-brexit
I was pleased to write a Guidance Note for the NAJ ahead of a possible No Deal Brexit that NAJ members should consider; see the NAJ website for details – www.naj.co.uk
As mentioned above, changes to employment law pose a significant risk to your business, especially as it’s one of the fastest changing areas of the law. Legislation, both domestic and European, has made significant inroads, many of which are beneficial to the workplace. These concern the conditions, pay and contract terms under which staff operate. These changes however are often most keenly felt in the retail sector where there may be a greater than average reliance upon casual or seasonal workers.
With the ever increasing competition from online operators, the High Street feels the greatest squeeze on profit margins. Of the various factors that contribute to this challenge, I often speak to retailers who are concerned about the National Living Wage, apprenticeships and compulsory workplace pensions. All of which are very real challenges, but when navigated correctly do not have to be a roadblock to your overall success.
We know that few businesses experience a greater pressure on costs and profit margins than the retail sector. Manufacturers and importers will adjust their prices according to fluctuations in the exchange rates, after Brexit this ebb and flow could be particularly pronounced. This makes foreign imports more expensive, and this can be felt particularly keenly in the jewellery sector where so much of the High Street jewellery is made overseas.
Whilst Britain continues to be a leader of design, it is not, and has not been for many years, a manufacturing powerhouse, so uncertainties in world economics do have a direct impact on the cost of items in UK shops. How de-stabilising will the disputes with Iran and across the Middle East prove? With added staff costs referred to above, and higher import costs through, amongst other things, poor exchange rates, the retail jeweller does face pretty serious challenges to maintaining profit levels.
Is the customer always right? You may have your fair share of anecdotes about dealing with… ‘misinformed’ customers, but at the end of the day, if you provide poor customer experience, your competitors benefit.
Competition is the force that drives innovation when it comes to customer experience and the sophistication of competition never seems to slow down. Today the retailer is competing in the High Street, with shop-in-shops, concept stores, pop-ups, and national and multi-national chains. That is before we even begin to consider the seemingly endless choices available online.
When considering the ‘retail experience’, one cannot overlook the inconvenience to many consumers of travel and parking. With councils enforcing ever restrictive parking limitations and penalties for transgression, the High Street needs to continue developing a retail experience to rival that of the retail parks, super malls, and online. But where they may be big, high street retailers are small and nimble, with a closer relationship that has a greater emphasis on customer care. During their interviews on BBC Breakfast (16 January 2020), John and Irene Hays of Hays Travel (who now own much of Thomas Cook stores) talked of connecting with the local community through various means including sponsorship of local sports and charitable concerns.
Another issue to consider in respect of the client experience these days is sustainable retail consumption. Increasingly consumers are becoming concerned about sustainable practices and climate change (see Decade Ahead below). Approached both sympathetically and commercially this could be a real opportunity for high street jewellers.
Good leadership or governance really means having a good decision making process. Possibly the biggest, or certainly a significant factor to poor governance is apathy. Retailers must ensure that they have good processes for the management of their business and must look analytically at these and consider taking consultants advice. Look at the differences made to businesses by celebrity consultants, Mary Portas and Gordon Ramsay!
Linked to this is reward. Staff have to be engaged and connected to the business.
Businesses are expected these days to have a website or some presence on the internet. It is a challenge for retailers to ensure that the digital content of their business makes the right impression on its customers and crucially its potential customers. Laws and rules are generally in catch-up mode when it comes to the digital marketplace, and is therefore considered a fast moving area of law and commerce full of potential pitfalls.
The Decade Ahead
2020 is the start of a new decade and with Brexit now a certainty, we consulted with practical futurist, and former, IBM Global Managing Partner, Andrew Gill on what we might expect. Here are some of his predictions:
- Jobs – increased focus on digital literacy.
- Climate Change – tackling the problem from out of space.
- Same hour deliveries – delivery by drone to become standard.
- Health and Data value exchange – wearables enable the healthcare industry to reduce length and cost of clinical trials
- Facial recognition – access granted (and restricted) by AI with personal data.
- Space travel – lunar landings on the South Pole of the moon, and space tours.
Modular living – will be commonplace with houses built within days.
As IP legal partners to the National Association of Jewellers (NAJ), we have has a strong track record in advising jewellers on intellectual property rights as well as on various aspects of commercial law. Contact Stephen Welfare on:
020 7842 1426 Email us
Jewellery & luxury goods
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