UK goldsmiths’ group sees education at its core
LONDON, April 2010 – Michael Hoare, Chief Executive of Britain’s National Association of Goldsmiths, tells Jewellery Outlook about what his group is doing to serve and protect the interests of retail jewellers.
Q: What impact is the high gold price having on the goldsmiths’ sector?
Michael Hoare, Chief Executive, National
Association of Goldsmiths
A: The high price of gold has certainly made the cost of re-stocking a bit higher, but not in the dramatic way that its rise on world markets might suggest. The fluctuation in currency prices can be equally significant, but actually the rise in gold has led to an unexpected bonus for many jewellers who have responded to the public’s desire to cash in old, broken, or unwanted pieces. The potential is enormous and a small cash windfall can easily be converted into a new piece of jewellery.
Q: Are you feeling the impact of competition from developing countries with much lower labour costs?
A: The vast majority of our members are retail jewellers so they benefit from the availability of more cost effective products coming on-stream from developing nations. However, an increasing number of British manufacturers are joining our association and they do suffer from the competition from abroad. But the advantage the UK has in turn-around time on bespoke pieces and the level of craftsmanship still holds sway.
Q: What action is N.A.G. taking to help its members tackle the economic slowdown?
A: We already offer members an extensive package of benefits that help their businesses, and they have included competitive credit card rates, interest free credit, mystery shopping and a host of other things for some time now. But recently we have also added a ‘Business Health Check’ service to our portfolio, which allows businesses to assess their fitness as we emerge from the recession.
Q: How do you see gold jewellery sales in 2010, compared with 2009? How was the sales performance in the first quarter of 2010?
A: Traditional gold jewellery sales have been in trouble for some while with consumers’ tastes having settled on white gold, platinum, silver, and most recently palladium. However, I was at a meeting with someone from QVC recently who assured me that the trend is moving back towards yellow gold. Add to that the customers’ loss of interest in 9ct and 14ct gold and I think the prospects for 18ct gold jewellery are very good, but starting from a relatively low base.
Q: What should N.A.G. members do in the coming years to remain competitive?
A: I think N.A.G. members should concentrate on the new four ‘Cs’. They stand for Cash, Customers, Costs, and Confidence. This may be a handy piece of alliteration but actually it epitomises what we need to concentrate on for at least the next year or so. Whenever there is a recession those with cash – and the ones managing their cash tightly – have a certain amount of power which can be used to advantage. If a business has a good cash flow then it has negotiating power with those who supply its products and services. In a nutshell the focus should be on: continuous cash flow measurement; liquidating excess and old stock; negotiating hard with suppliers of products and services; and reducing debtors.
Most jewellery businesses have a loyal customer base, and Perito’s Law suggests that about 80% of sales come from 20% of customers, so maybe it’s time to recognise their loyalty with frequent contact and promotions specific to them. But don’t forget to clean your customer database first because nothing irritates people more than unwanted mailings.
Costs are probably the first thing that businesses look at cutting when a downturn occurs. And this is sometimes done by reducing the easy ones but not necessarily the right ones. For example advertising and training & development costs! By all means look at the largest areas of expenditure but don’t just take the easy option. Occupancy costs in the form of rent, rates, heat and light, repairs and insurance are all difficult to reduce but rental savings made now, for instance, will bring benefits over the life of the lease. Don’t put off repairs or routine replacements of fixtures – tradesmen are likely to do a better deal as they too need cash.
Employment costs are the other big challenge, and redundancy may not be the best option as you may be throwing away years of experience and investment that will be difficult to replace when an upturn comes. There are loads of administrative and other costs that should go under the microscope, but resist the temptation to cut promotion until you have explored all options for better effectiveness as you need to keep contact with the market.
During the last year we have been technically, financially and emotionally in recession, but now is the time to give good news and associate your business with success, and that comes down to confidence in large measure.
Q: Is the association planning any new initiatives to raise professional standards even further?
A: Over the last couple of years the Association has completely overhauled the standards for valuers, in response to calls for greater professionalism. With an increasing litigious population and more demanding insurance companies the twenty-year-old registered valuers scheme was revolutionised with the advent of the N.A.G. Institute of Registered Valuers. In exchange for the benefits that accrue from being a member of a professional institute, Members and Fellows of the Institute have pledged to submit their work for peer review, stay abreast of latest developments, and submit to a system of Continuing Professional Development. A new exam and syllabus is in development and progress will be announced at the Loughborough Conference at Loughborough University in September.
Oxford Congress 2009
Concerns about the rising tide of crime against jewellers spurred N.A.G. and its partners T H March to set up the SaferGems initiative as a way of collecting and collating intelligence which can be accessed by police and regional intelligence units. In the eight months of operation, SaferGems has logged over 170 attacks and 35 suspicious incidents involving jewellers, and the regular alerts sent regionally and nationally to participating companies. So far, we haven’t cracked crime, but we are making inroads with arrests already attributed to SaferGems intelligence, and Members are using it to prevent credit card fraud. We’re getting there.
The N.A.G. are founder members of the Responsible Jewellery Council (RJC) and know that many jewellers want to demonstrate their ethical credentials to consumers but are confused and fearful of the pitfalls that they fear may lay in their paths. The RJC audit system offers a method of certifying products from mine to retail; meanwhile the N.A.G. is working with advisors to develop credible guidance materials that should demystify the subject.
Q: Does the association intend to run programmes to improve business skills of its members and to help them embrace modern technology?
A: Some years ago we identified a gap in the business skills of independent members or knowledge of the levers of business. Our response was to establish the Executive Development Forum (EDF) which is just entering its fifth year and establishing its fifth group. The idea was to gather groups of business proprietors into supportive and completely confidential cells under the guidance of an experienced mentor who acts as confidante, guide and occasional irritant. Members meet regularly to explore business issues and receive continuous support by email and telephone. EDF Members’ businesses have consistently outperformed the average, and last year we held our first Oxford Congress and the second is scheduled for 24th June this year.
Now we are extending our reach into the new generation of jewellers. With jobs in short supply; new graduates finding it hard to get appropriate posts; and some commentators suggesting that degrees have been devalued by their abundance, some young people are concluding that a degree is not a ticket to instant success. Add in the fact that getting a degree these days leaves you at least twelve grand in debt, and many youngsters are deciding to forgo university and take up opportunities in the family jewellery firm.
Michael Hoare and Michael Ferraro of T H March
giving a presentation on SaferGems
We believe that this trend is to be encouraged, not least for the health of our sector, and we have already logged an increase in enquiries about training. Adding to our existing portfolio of programmes, we’ve fashioned an Executive Development Forum (EDF) designed especially for the needs of the next generation of business leaders.
Q: How much emphasis does the association place on education, seminars, tutorials etc?
A: Almost forty percent of our turnover comes from training and education, and we are celebrating our sixty fifth year as training providers this year, so I guess you could say we think education is pretty much at the core of our existence. JET I and JET II are the bedrock of our provision and are soon to be joined by a newly developed JET III (JetPro) course which we hope to launch in September 2010. And it is truly inspirational to attend our annual Education Awards Ceremony at the Goldsmiths’ Hall, when family and friends gather to congratulate graduates of our courses. With many hundreds of students every year the Association can be said to have touched the lives of literally thousands of young, and not so young, jewellers.
However, we don’t think learning is just the preserve of the young. I’ve already mentioned the EDF but we also like to offer our Council members the opportunity to get their minds around a range of subjects. We run seminars on a range of subjects from diamond grading to visual merchandising, and later this year we have plans to get at least some of our programmes online.
Q: Does the association provide legal and technical advice?
A: You may be aware that we publish a monthly full colour magazine called The Jeweller, which focuses on people and professionalism, but we also publish an online newsletter called n:gauge that deals concisely with legal and technical issues affecting the jeweller. The style is succinct but informative and signposts readers either to detailed factsheets prepared by us on a plethora of technical subjects, our comprehensive website www.jewellers-online.org or other sources of information. We don’t have lawyers on our staff but we do give members free access to a legal helpline that covers all except the most ticklish of problems. In our experience that mostly means problems with contract terms, sale of goods, or employment law.