A chain reporting an 18.5 per cent rise in one country and a decline in another is telling you something about both markets. In 2015, Michael Hill Canada was the good news.
Michael Hill stores announced that revenue increased by 3.9 per cent year on year to reach $227 million for the six months that ended on December 31. On a same-store basis, sales rose 0.8 per cent.
In Canada, Michael Hill sales jumped 18.5 per cent to $38 million (or $44.9 million CAD) while in Australia, the retailer’s largest market, sales fell 0.7 per cent to $137 million.
In New Zealand, revenues jumped by 3.8 per cent to $50 million and reached $6 million in the U.S. CJ
What the numbers were really saying
Growth of 18.5 per cent sounds dramatic until the base is taken into account. Canada contributed thirty eight million against a hundred and thirty seven million in Australia, so the Canadian business was growing fast because it was still small and still opening stores. Same store sales across the group rose 0.8 per cent, and that is the figure describing how the existing shops were actually trading. The two numbers tell opposite stories and both are true.
What the company did next
The United States was the weak link. Michael Hill had entered the American market in August 2008 and never built scale there, and it later moved to close its nine remaining US stores after failing to find a buyer. Canada, by contrast, stayed in the plan. For a chain deciding where to put capital, this market read as the better bet, and it has gone on reading that way.
What an independent should take from it
A national chain expanding in Canada is not purely a threat. It validates the category, it spends money teaching consumers to buy jewellery at retail rather than from a marketplace, and it concentrates on the mall. The independent advantage sits precisely where a chain cannot follow, which is custom work, service, repair and knowing a customer by name. Competing on price and on mall footfall is a losing position. Competing on the things that require a bench is not.
Watch the same store line
When a competitor reports, skip the headline revenue and find the same store figure. That is the number that says whether the business is winning customers or simply opening doors. More market reporting is in our business news coverage.
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Author: Canadian Jeweller Magazine Staff
Canadian Jeweller Magazine Staff is the shared byline for reporting filed by the magazine's editorial desk. Founded in 1879, Canadian Jeweller is the longest running jewellery business publication in Canada, covering market reporting, retail strategy, watches, diamonds, coloured gemstones and the commerce of the Canadian jewellery trade. Work published under this byline is edited and verified by the Canadian Jeweller editorial team in Toronto.
