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Twelve years on the periphery of the jewellery industry and my association with SaferGems taught me that security is never far from a jewellers’ mind – or shouldn’t be – but I also learned to my horror that they occasionally skimp on spending when it really matters. Sometimes taking the lowest quote rather than getting the right solution, accepting the lowest common denominator so they can ‘tick the right boxes’,  and get the cheapest insurance quote. There are lots of examples in physical security – not least when it comes to glass – where under investment is shortsighted, but with the increasing use of private security operatives, contracted in guards are one area where jewellers really can’t afford to take a short cut.

I was reminded of this when, at a recent conference, Ian Kirke, director at Training for Success (TFS), asked delegates to consider if the cheapest is always the best. Ian writes:

In terms of price there has to be a tipping point below which the patrolling guard is either on the minimum wage or dangerously close to going under. And remember they need to turn up in some form of clothing and must have a back of house administrative function. Being SIA trained, to use the words of Shania Twain, “That don’t impress me much”! That’s the law, so get over it! And is that baseline status enough? Surely if procurement can buy an SIA qualified guard at the cheapest rate then surely that has to be happy days for the business concerned? According to George Gershwin and recent case-law I would suggest that, “It ain’t necessarily so”.’

You can read the rest of his thoughts in his accompanying article in Professional Security magazine: http://www.professionalsecurity.co.uk/news/case-studies/dont-be-led-by-price-only/

Michael Hoare

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Should be a must-read for the jewellery sector and anyone who wants to make the world a better place.

It’s not often that you read a book that is so absorbing that you feel compelled to finish it in a single sitting. But then it helps if you yourself witnessed many of the events described within its pages! Subtitled Fighting for Fair Trade Jewellery, Making Trouble traces Greg Valerio’s progress from bolshie youth to campaigner and activist. His fight for a transparent supply chain in the jewellery industry isn’t over yet, but his tireless work has led an industry driven by luxury and romance to the realisation that not all in their garden was lovely. And it has spurred others to try to redress the balance of inequalities heaped on the many by the few in the pursuit of riches.

As a fellow traveller for more than a decade, I have often felt frustrated and wearied by glacial progress and the continual need to restate an argument that appears so obvious. But Greg’s book is a timely reminder of just how far the jewellery trade has come in that time. Not that trace-ability and transparency in the jewellery supply chain is a done deal yet, but at least the dam has been breached!

Michael Hoare
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The repeal of the Trucks Act in the mid 1980’s changed workers’ relationship with their wages for ever. A series of Acts in force since the 15th Century were designed to protect workers from bondage to company stores. With the abolition of the Act workers lost the right to request the payment of their wages in cash, and thus began our bondage to the banks. Suddenly, people who had been accustomed to budgeting by the simple expedient of putting their rent in one draw and their housekeeping money in another, were faced with dealing with money as a concept rather than a tangible object. Of course, the change rid employers of the burden of carrying cash and saved many a man from the temptation of handing his weekly wages over the bar on pay day, but it has also inextricably linked the individual to his bank through his deposit account.

For decades, having no bank account meant effective marginalisation within society. But now banks are set to take an even more intrusive role in everyone’s lives. Not only do the banks decline to give a worthwhile return on deposits, they are also mining depositors’ data and selling it to add to the profits they make on lending their money. And the big news is that UK retailers such as Morrison’s, Argos and Pets at Home are signing up to buy consumer data in an effort to predict future spending.

According to reports in Retail Week, ‘US data analytics firm Cardlytics has partnered with Lloyds Banking Group to provide Halifax customers with targeted deals. The service, called Halifax Cashback Extras, will launch in September with offers from retailers including Homebase, New Look, Ocado, The Body Shop, Urban Outfitters and Oasis. The service is the first in the UK to use customers’ banking data to provide targeted retail offers’.

“So what!”, you might say, “I’ve got nothing to hide”; and personally I’m not too worried about privacy either. It is so far eroded already as to be almost irrelevant to this debate. I’m more concerned about the rising tide of predictable drivel coming our way as a result of their efforts.

Anyone who ever made the mistake of handing over their details is accustomed to the never-ending stream of rubbish littering their inbox. I once gave my email address and mobile number to Dwell in exchange for a catalogue and thereafter had the  Sisyphean task of deleting enticements to buy their furniture. What they, and many others, can’t grasp is that just because I once made a vague inquiry about their products I didn’t  fall in love with them, and their persistence makes me less likely to do so! Many other retailers – including ones I like – top up my inbox on a daily basis, and on an equally regular basis I throw their electronic rubbish away! It’s become part of my computer hygiene regime; a bit like cleaning my teeth!

I suppose the major difference with offers generated from analysis of my spending patterns is that they will focus on things I’ve already bought rather than just idly inquired about. So, unless they use their intelligence and creativity, am I going to be bombarded with offers for stuff I’ve already got? Much depends on the way they interpret the data. For instance, I recently went to Peru. If the data miners use that information in the usual way, am I going to get endless offers of woolly hats, Pisco sours, and meals in Lima?

Spending data inevitably reflects what has already happened – history – yesterday! Aren’t shoppers more interested in today, tomorrow, future possibilities, and serendipity? If we’ve got to endure this stuff from our banks, let’s hope they use their imagination. Personally, I’d rather my bank forgot all this nonsense and concentrated on giving me a decent return on my deposits! Thankfully it’s now a whole lot easier to switch!

Michael Hoare

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A couple of column inches on the front page of today’s Daily Telegraph suggest that payment for carrier bags may be back on government’s agenda. Christopher Hope writes: ‘PLANS to force shoppers to pay for plastic carrier bags could be introduced across Britain after David Cameron praised the way it was working in Wales. Use of plastic bags in Wales has fallen by 80 per cent since a 5 p charge per bag was introduced in October 2011. England remains the only home nation not to have announced a charge for them.. …Zac Goldsmith, MP, who attended the event, described Mr Cameron’s comments as “reassuring”.’

It’s hardly surprising that Goldsmith could muster only a lukewarm response, because we’ve been here before. The issue has been floating around since about 2006, and in February 2010 I wrote a comment piece for Jewellery Focus magazine under the title Taxes in the Bin. I’ve reproduced the text below, and although I correctly predicted the subsequent increase in VAT imposed by this government, I held out little hope that environmental concerns would hold sway. But maybe, three years on, carrier bags will have their day!

Here’s what I wrote at the time:

Before Christmas a little note in Retail Week magazine caught my attention . Apparently shoppers in Wales are to be charged for plastic bags before 2011. The compulsory charge is likely to be between 5 – 15 pence and the British Retail Consortium (BRC) has, according to the report, ‘slammed the move’, saying that ‘the best way to achieve lasting change is to educate customers, not punish them’.

Sadly, I must admit to being interested in plastic bags, and have been trying to wean myself off them for a year or so.  I am one of those irritating people who decline a store bag wherever possible; tries to take his own shopping bag with him; and considers it a personal failure to have to accept one on rare occasions in the supermarket. I know I’m not alone in this, but in my position I feel a little ambivalent about my stance because of the retail sector’s reliance on these handy pieces of plastic. After all they are the ultimate disposable convenience; a jolly handy way of promoting a brand; and make for useful bin liners too. But, I ask myself, does society as a whole pay too big a price for this throw-away convenience?

Jewellers are not particularly guilty of producing unnecessary waste packaging, their goods being small; and generally encased in a quality reusable container, but I’m sure we’ve all asked ourselves why the supermarkets feel it necessary to encase four baking spuds in a rigid plastic sarcophagus when a paper bag would do the job perfectly well, or give us yet another variety of individual dessert in an almost indestructible pot. However the plastic bag issue rages on, either because they are believed to be a waste of scarce petrochemicals; because some aren’t biodegradable in landfill; or because too many end their lives littering our highways and bye-ways. INCPEN, the Industry Council for Packaging and the Environment, dispute all of the above it has to be said, and in the Irish Republic, where a 15 cents tax was levied from 2002, a lively debate has broken out about the pros and cons.

Naturally, the subject of so-called ‘green’ taxes is a hot topic of bar room deliberation, and few among us are not now experts on the theory of ‘hypothecation’ whereby tax revenues are earmarked for a particular purpose? But I suspect it’s not the environmental issues that are vexing the BRC in this case, nor whether carrot is more effective than stick when it comes to influencing public behaviour, but why retailers have to double up as tax collectors once again. I don’t know enough about the proposed tax on plastic bags to comment on the who what and where of its collection, and I don’t want to confuse measures that

Bins

are designed to modify behaviour with ones that benefit the public purse, but it did start me thinking about indirect taxation.

Taxes on income are always unpopular, and few politicians want to be identified with them, but indirect taxation is another story. Jewellers are familiar, not to say happy, with their role as unpaid collectors of VAT on behalf of the Treasury. But if my instinct is correct it’s a job that is set to grow in the future, as government looks for fresh sources of money to fund the financial crisis. Not that I predict an increase in the rate of VAT, although I wouldn’t rule it out. What I expect is an expanding catchment area, with more goods and services gradually coming within scope. And I suspect in the first instance we will be sold the idea as a logical ‘tidying up’ of the system. (Why should chocolate covered biscuits attract VAT and not custard creams after all, or printed matter escape the tax?) But as time goes by, more and more commodities will come into scope, until finally it will be the turn of the ‘sacred cows’ such as children’s clothing and groceries. I’d like to be around to see which politician tackles that one!

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Reports in daily newspapers (Daily Telegraph 05-08-13) that the planning minister Nick Boles is to grant local authorities greater freedom to convert stores into private housing may be exaggerated but they have resulted in some commentators expressing concerns that High Streets are to be sacrificed. I share concerns that High Streets, especially historic ones, should be treated sympathetically, but I don’t think we should preserve them in aspic. Neither should we jump to the conclusion that traditional town centres will be the only ones to come under pressure to adapt. Let’s look out of town too!

In a previous post – Better Shops not More Shops  – I made the case for a more strategic approach to planning our retail landscape. I also cited some examples of shopping areas in Oxford which would benefit from conversion to housing rather than expansion for retail. And I still maintain, as many others do, that we have too many shops that were built in the last decade or so to satisfy an overheated property market or the expansionist ambitions of the retail titans. The internet, the economy, and increased focus on localism means that we no longer need out of town ‘super stores’ – the very term sounds old fashioned – and far too much speculatively built space is struggling to find tenants and pay its way.

An admission that the days of the retail behemoth are numbered comes from Tesco in an interview last month with The Grocer magazine  in which the company sets out its plans to re-invigorate the tired ‘hypermarket’ formula. Its first attempt comes in the form of its refurbished Tesco Extra store in Watford which wants to re-create a ‘community’ feel. But, notwithstanding Tesco’s efforts, if the old model is failing, doesn’t it make more sense for society to put this land to better use? Why not convert these sites – already tainted by development – to housing rather than let speculative developers rip up more countryside to build the houses we are said to need. And while we’re at it let’s turn our attention to unwanted offices too!

Michael Hoare

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Show-rooming, the act of checking a product in store then buying cheaper online: we all do it, so it’s acceptable, right?

That was the headline on a recent online discussion in which I played a very minor part. The heated debate that ensued was based around a recent survey of 2,045 book buyers by The Booksellers Association. It found that 63.5% of shoppers browse in a bookshop and then buy online. Of that number, 75.9% were unsurprisingly 16-24 year olds and 51.7% were aged 55 and older. More surprising was their attitude towards show-rooming: the younger group (60%) felt more guilty than the older group (39.6%) about the practice.

The discussion that followed got me thinking. Is show-rooming a really a problem for retailers? If so, how should they combat it, and are there any fundamental changes that they must embrace to stay in business? Isn’t the real challenge with show-rooming the fact that technology is empowering both the customer and the manufacturer – at the expense of the retailer? As a customer, I can find the product I want, go and see it in a shop to check that it matches my expectations, and then find the right price and delivery offer for me! For some that means the internet is less an economic engine of growth, more a rush to the lowest common denominator. Its super efficiency results in low prices, low asset values, low employment and low tax. It may be inevitable but is it ultimately positive or negative for retail? And how do we level the playing field?

On one side of the debate stand those who believe it is down to retailers to develop better outlets, better technology, and enriched content. Be this by taking a ‘curatorial’ approach to stock; editing choice and enhancing brand values; or enriching the offer by offering expertise and service above and beyond the call of duty. However, some think that helpful and knowledgeable staff are actually part of the problem and have already hastened the demise of some traditional retailers. As evidence they quote the case of HMV and Jessop’s – the two best trained, most passionate workforces on the high-street – who spent ages helping customers identify their perfect product, only to see them buy it cheaper on Amazon.

Then there are those that want to level the financial playing field by forcing landlords to charge less for retail space; by imposing an online sales tax; or even – as in one Australian example – charging customers to cross the threshold! There are problems with each approach. First, you’ve got to be über cool and confident to levy casual browsers. Secondly, landlords are engaged in a struggle to the death with their financiers over asset to loan values and both would rather have space stand empty than reduce rents. And lastly, the offer by certain retailers to pay an online sales tax on their own businesses isn’t a ‘generous’ offer to pay more, but a tactic to secure a relaxation of tax on the high street! But isn’t this just worrying about the symptoms without trying to diagnose the underlying illness?

So what’s to be done? First things first, why differentiate between online and traditional retail – it’s all just shopping – so why can’t we utilise both to enrich the customer experience and make profit? It’s not that much of a paradigm shift is it? Can’t we revise the old business model, look at its component parts, eliminating the unnecessary, and invest in the rest? As you know from previous articles, I’m a fan of click and collect and think that under certain circumstances – when goods are needed in a hurry, or like jewellery, where customers want the reassurance of bricks and mortar before they part with their money – it can be a godsend. I also see the value in offering things that competitors simply can’t? Just like the jewellers I’ve described in previous articles, whose brand is all about designing and personalising individual products.

Apple wouldn’t be investing so heavily in Apple stores if there wasn’t something in this model. Without the link to customers – and the chance to build and reinforce the brand by imparting knowledge and expertise – would the iPhone, iPad, and iPod be so big. So, while manufacturers think they don’t need retailers to get their goods to market anymore, isn’t it really the case that retailers often add the magic to some pretty indifferent products? Why should retailers warehouse them for ungrateful manufacturers? Isn’t it time both sides realised that they are locked in a symbiotic relationship where both feed off each other. The retail environment builds the excitement, glamour, and electricity around what are otherwise inanimate boxes; for the internet to force shop closures would be a Pyrrhic victory.

Take another example. It would appear counter intuitive for Amazon to partner with Waterstone’s, but they are canny enough to realise that physical bookshops fuel the desire for books – electronic or otherwise – offer the possibility of serendipitous discovery, scholarship, whatever,  in a way that a website can’t – and so they need bookshops to stimulate an interest in books! The challenge for the bookseller / retailer is to monetise that relationship.

And as if to prove my point, last month the online diamond jewellery and loose stone retailer 77 Diamonds  was promoting the demise of Hatton Garden with headlines including ‘Jewellers shut as buyers prefer online links.’ This month it is reported that they have relocated their head office and showroom to a 1000 sq ft space in London’s Mayfair to seamlessly merge its online and showroom shopping experience! Not so much a revolution – more a continuous evolution!

Michael Hoare

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