Why Michael Hill chose Chadstone to sell $1m diamond earrings
Jeweller Michael Hill believes the country’s resurgent shopping malls can generate the foot traffic and visitation needed to drive up future sales and profits – and sell a $1 million pair of diamond earrings – after opening its first global flagship store in Melbourne’s giant Chadstone Shopping Centre.
The 150 square metre store is nearly twice the size of a standard Michael Hill boutique and the luxurious fitout is designed to immerse customers in the ASX and NZX-listed company’s range of engagement rings, wedding bands, watches and other fine jewellery.
It’s also the only store in the country where those with very deep pockets can get their hands on a $1 million pair of 15-carat yellow diamond drop earrings or a $250,000 diamond necklace modelled by Michael Hill’s new brand ambassador, supermodel Miranda Kerr.
“To try on these items you’ll need an appointment,” Michael Hill CEO Daniel Bracken told The Australian Financial Review.
Mr Bracken said it made sense to open its first new concept flagship store in the country’s biggest mall, which is already home to a huge collection of luxury and premium brands.
“Based on the information I have, luxury brands in Chadstone do better than in stores in the city. It’s a phenomenal shopping centre,” he said.
The Chadstone boutique is one of eight to 10 larger format flagship stores that the 45-year-old retailer (founded by New Zealander Sir Michael Hill) plans to roll out in key locations across Australia, New Zealand and Canada as it shifts its offering to the more premium end of the jewellery market.
In August, the company will open a multi-level store in the Gothic-style former Francis & Co building next to Zara on Melbourne’s Bourke Street mall. It has also secured a site in Toronto’s Yorkdale Shopping Centre for another flagship store and is on the hunt for locations in Sydney, Auckland and other cities.
“Because these stores are bigger, they allow us to display our product range in way that encourages exploration. There are pullout drawers to look at products and the shop is light and bright,” Mr Bracken said.
With diamonds at the core of Michael Hill’s jewellery offering (more than 75 per cent of the items it sells have diamonds in them), the new flagship store has private selling booths at the back where customers can try on wedding bands and engagement rings.
“This is something we could not do in our older, smaller stores,” Mr Bracken said.
Michael Hill’s expansion into a new flagship store in Chadstone comes as mall landlord Vicinity Centres (which co-owns Chadstone with Rich Lister John Gandel) and Westfield owner Scentre Group delivered better-than-expected financial results in February on the back of a resurgence in bricks-and-mortar retailing.
Chadstone, a 231,000 square metre mall in Melbourne’s south-east, generates $2.7 billion in annual sales. It is currently undergoing a $685 million revamp, which includes a new office tower and an upgraded fresh food precinct where the new Michael Hill store is located.
Opposite Michael Hill, new premises for Swarovski, Kookai and Lululemon are under construction, Mr Bracken said.
After the new lease was signed for Chadstone 12 months ago, Mr Bracken said the pendulum on rents had swung back in favour of landlords. “Rents are back on the increase,” he said.
“When you get into the top shopping centres in Australia, New Zealand and Canada, rents are comparable and high.”
However, being in the best malls and retail strips is key for a business where only about 8 per cent of sales come from its online store.
This Mr Bracken said, was simply due to the type of product Michael Hill sold and the fact that it was selling “milestone moments in people’s lives”.
“Our average selling price is $700 to $800. It’s not like buying jeans or crockery. It’s a very considered purchase. People may come into the store three or four times before purchasing. It’s something you can’t recreate in [a] digital environment,” he said.
