Posted by Stephen Welfare, Partner
6 things jewellery retailers can’t ignore this year
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 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 current year and the year to come, and as a lawyer, how I respectfully suggest retailers approach these challenges.
We started talking about Brexit nearly three years ago – and we are not likely to stop anytime soon. With the political game of Deal of No Deal still unfolding, there is so much uncertainty around this subject that challenges are likely to go on for some time. However, we consider the two most pressing concerns for retailers to be those around employment and intellectual property.
The post-Brexit immigration 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? In September 2018, the Government published its technical notices on trade marks, designs, patents and copyright if there’s no Brexit deal. IP rights is a massive issue, but not one that is likely to be considered a priority to the UK Brexit negotiating team. 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.
2. Staffing costs
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, we 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.
3. The economy
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, and as the UK has seen a significant fall in the value of the Pound, this ebb and flow is 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. 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.
4. Customer experience
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.
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!
6. Internet presence
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.
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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