Forum Archive Index - September 2002

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

OK, someone, lets call her 'Jay', has replied to me off 
forum, but indicated they had no objection to the 
information being put on the forum, so...


>
>
>>My impression is, MHI tends to attract discretionary 
>>spending unlike many of the other retailers listed 
>>on the sharemarket. 
>>Jewellery doesn't wear out (or does it, am I 
>>showing my ignorance here?).  So why would someone 
>>buy a fine piece of jewellery only to  shove it in a 
>>drawer and not wear it?   And if they were wearing it, 
>>why would they need to go back to MHI and buy another 
>>piece?  
>>There is my question for followers of human nature 
>>to answer.
>
>
>I presume that you are not serious in asking why we need
>more than one piece of jewellery so I won't address that
>except to say that I, for one, can never have enough
>earrings but anything can break or get lost. 
>


I was only being semi-silly about saying that a person only needs one
item of jewellery.  I take the point about earrings.  But what I meant
was that, barring accident, most jewellery doesn't 'wear out' like
clothes and shoes do.  Also, I think that most jewellery is more
'fashion proof' than clothes and shoes.  In other words you could walk
down the street wearing a 30 year old pair of earrings and no-one
would batt an eyelid.  But try doing the same in a 30 year old dress
and you might get a few stares.  Also if you buy a 'neutral' item of
jewellery it can go with any outfit.  So the average person doesn't
*need* as many earrings as tops, for instance.

But how many pairs of earrings would be excessive?  I presume, Jay,
that you are not serious when you say you can never have enough.  Is a
dozen enough?  Would 30 pairs be excessive?  50 pairs?  I'm not trying
to get personal here.  I'm just trying to pin down what would be a
reasonable market size per person, to get a handle on the overall
market.  I'm curious how much repeat business Michael Hill does.

>
>
>Although some people might see jewellery as a security hedge I
>doubt if  MHI would be the source.  MHI caters to the low
>end of the jewellery market, it is affordable by most
>people but those who want "serious " jewellery would look
>elsewhere. 
>
>

'Low end' it may be, but it is still possible to buy a $6,000 ring at
Michael Hill.  I remember the days when the Bentley was sold as the
low end of the Rolls Royce market.  But even then, you wouldn't
exactly call a Bentley a poor man's car.

To carry this analogy one step further, many new Fords are very fine
cars indeed.   So how low end is Michael Hill jewellery?  Could you
take a Michael Hill ring to an exclusive jewellery store in London,
whereupon inspection of the item the shop assistant would say
something like:

"That is not at all a topping ring my girl.  But we'll buy it to melt
it down for the material if you must leave that "thing ring" with us"

>
>
>To make their wares  more affordable to the
>poor  they also run a hire purchase scheme. I think that
>MHI has a lot in common with The Warehouse.
>
>

I think you may be onto something with the hire purchase scheme being
a money spinner.  I remember that someone once posted on this forum
was that one of the biggest money spinners for THL was the insurance
scheme they ran on their campervans.  Financial items can be 'money
for nothing' if the seller gets them right.

>
>
>I can't really comment about the shoes but I  seem to
>remember that the shoes were more upmarket than the
>jewellery and it was a business that they were not really
>familiar with.
>
>


I guess with hindsight it is obvious that shoes was not a business MHI
were familiar with.   In making my comment about shoes I was more
interested in what was the business that MHI perceived themselves to
be in.  By identifying the synergies between shoes and jewellery,
perhaps that might be helpful in identifying the strengths of MHI,
that made them believe they should go into shoes in the first place.

SNOOPY




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