Continued consolidation can be expected

A possible response to rising consumer expectations, and the increased investment required to support them, could be retailer consolidation. In fact, given the recent weakness in the world’s economy and the number of underperforming retailers, consolidation might already have been expected to happen.

In reality, deal numbers and volumes in the industry have grown slowly, at only two per cent CAGR from 2003 to 2013.

The recent transaction announced between Zale Corporation and Signet Jewelers in the US may signal a change in the US jewellery retail space. The new combined Signet/Zale entity could have as much as 10 per cent of total diamond jewellery sales in the US. The US$100 million of annual savings estimated to be achieved by fiscal year-end 2018, which the new entity hopes to generate through store rationalisation and increasing buying power, are meant to support its profitability and allow it to invest in responding to the changing consumer landscape.