PRINT THIS STORY:

CHANGE TEXT SIZE:

AUSSIE JEWELER TESTS U.S. WATERS

BY GLEN A. BERES

The jewelry chain from Down Under targets its baubles at the youth market.

It’s not quite an Australian invasion yet, but U.S. mall jewelry chains might want to keep an eye on a new competitor from Down Under with its sights set on American expansion.

Angus & Coote (Holdings), Australia’s largest jewelry retailer, dipped its toe into the U.S. retail market by opening four of its youth-oriented Goldmark fine jewelry stores here late last year, in a 50-50 joint venture with Too, a New Albany, Ohio-based specialty retailer of fashion apparel and related products for girls and young women.

Three of the stores are based in regional malls in New Jersey: Rockaway Mall, Deptford Mall and Freehold Raceway Mall. The other is in Easton Town Center, Columbus, Ohio.

“The feedback we’ve gotten from customers so far is that they love the appearance of the stores, said Robert Atkinson, Too’s director of investor relations, who is acting as U.S. spokesman for Sydney-based Goldmark. Customers also appreciate that “we’re offering them more-sophisticated jewelry than the typical costume styles available to the younger crowd.”

The company says it also plans to open another four U.S. stores by the end of this year, targeting regional malls only.

Angus & Coote called the initiative a “low-investment, low-risk” entry into the lucrative U.S. market, with an initial investment of only $1.4 million. But the company’s slow, methodical approach to U.S. expansion could lead to a much wider rollout here if it is successful, executives say. Goldmark Executive Chairman Tony Coote has identified the United States as the “first target” for further overseas expansion, according to a Nov. 26 article in the Melbourne, Australia-based Herald Sun, though the company has also been approached about entering China and might also consider Europe and other regions.

Angus & Coote operates 258 fine jewelry and giftware stores — 143 throughout Australia within the classic A & C division (which targets the family market under the trade names Amies, Angus & Coote, Dunklings and Edments) and 115 Goldmark units, which focus on mid-teens to 29-year-olds. The company also operates duty-free shops at the Melbourne and Sydney airports.

In its year-end financial report, Angus & Coote said that the United States was chosen for Goldmark’s first foray overseas because of the country’s highly fragmented jewelry market and a perceived gap in fine jewelry geared specifically to youth.

“We saw an opportunity in the United States where there was a gap in the market,” Coote said in a Sept. 18 article on TheAge.com.au, one of Australia’s leading Internet news sites.

Independent jewelry stores account for at least half of the $40 billion U.S. jewelry market. The seven largest chains account for less than 25 percent of that market, according to National Jeweler, a leading jewelry industry trade magazine. The largest of these is Wal-Mart, whose $2 billion-plus in jewelry sales accounts for only about 5 percent of the market.

Too, meanwhile, got tapped as the company’s U.S. retail partner because it has “strengths in real estate, operations management and brand development which complement Angus & Coote’s strengths in product development, product sourcing and brand management,” according to the year-end report.

“We would not go in unless we had a local partner, and it had to be 50-50,” Coote told the online news site. “That partner had to be big and strong, but not so much bigger than us that it would swallow us up.”

Goldmark is considered a growth vehicle for Angus & Coote, both in Australia and overseas. The company says it will roll out 15 new Goldmark stores in Australia this year. The division is already Australia’s largest jewelry brand, and Angus & Coote is continuing to build brand awareness through heavy television and catalog marketing.

Unlike most fine jewelry stores that focus on the pricey bridal diamond category and other “lifetime” jewelry items, Goldmark offers young female shoppers affordably priced, contemporary fashion pieces. Goldmark customers typically buy multiple pieces and look for cutting-edge styles they can use to accessorize particular outfits or for certain occasions. Goldmark sells a full line of jewelry in karat gold or sterling silver, diamonds and colored stones, and watches. But its bread and butter are affordably priced fashions in gold and silver. The company also sells a lot of body jewelry.

The Freehold Raceway Mall store offers young people a chance to buy real jewelry at prices they can afford, said Debra E. Panzarella, the mall’s marketing director.

“This store is much more personal and less intimidating for first-time jewelry buyers than other jewelry stores we’ve seen,” she said. “It’s an open format where they can look around without feeling pressured.”

The store is helping to entice more teens and 20-somethings into the mall, she added.

“They can get real gold, real silver and real diamonds and colored stones here,” Panzarella said. “We have fashion in this mall, and Goldmark is a very fashion-forward store, which makes it a great match for us.”

Goldmark’s main competition in the United States may be Piercing Pagoda, a national chain of more than 850 jewelry kiosks and stores that sells moderately priced gold and silver jewelry to the same teen and young-adult customer that Goldmark is targeting, observers say. There are distinctions between the two, however. Piercing Pagoda, as its name suggests, does a lot of piercing, which Goldmark does not emphasize. And while Piercing Pagoda carries only a small range of diamond and gemstone jewelry, Goldmark offers a broad array of product. Goldmark is also much more focused on the latest styles, while Piercing Pagoda puts more stress on providing the staples, such as gold studs and hoop earrings.

Financially, Angus & Coote says it is sound, though sales have slowed and profits have decreased because of a decline in international tourism amid ongoing terrorism fears. Increased purchase cost caused by a depreciating Australian dollar has played a part, as has margin erosion from the lower prices the company has implemented to counter strong discounting by its competitors. For its most recent fiscal year, which ended July 28, Angus & Coote saw sales rise a modest 1.4 percent to A$215.6 million ($127 million), while profits plummeted 15.9 percent to A$5.6 million. The company does not publish quarterly results.

For Too, Goldmark is “a logical extension of a category we’re already serving,” said Atkinson. Too (spun off from The Limited as an independent public company in 1999) operates about 500 Limited Too stores and 11 Mishmash stores. It appears to be strong, having benefited from expansion and cost-control and gross-margin improvements.

For its financial year ended Feb. 1, Too posted a net sales increase of 7 percent to $647.5 million, from $602.7 million for the year before. Net income, meanwhile, was up 19 percent to $47.3 million, compared with $39.6 million for the previous year. Same-store sales, however, fell 3 percent. Like other retailers, the company was hurt by lackluster sales during the holiday season.

Although Too is known mainly for its successful Limited Too brand (which targets “tweens” — those 8 to 12 years old), it plans an aggressive rollout of its relatively new Mishmash format (which caters to teens) this year.

Initial feedback on the Goldmark stores has been “very positive,” with sales meeting or exceeding expectations, said Goldmark spokesman David Ole, declining to give specific figures. Ole also said that the company is experimenting with a different “footprint” at each store to see what works and what doesn’t.

 

 

© 2008 ICSC. All rights reserved. | Terms and Conditions | Privacy Policy | Contact ICSC | ICSC Home |