Michael Hill International premium brand strategy sets itself up for growth

Brisbane-based jewellery brand Michael Hill has successfully negotiated the Covid-19 pandemic and re-set itself as a premium brand with plans to expand.

FOR more than four decades Michael Hill International has played a role in the most significant events in the lives of many Australians.

From engagements to weddings and birthdays to anniversaries the jeweller has been a leading port of call for people seeking to mark their big occasions.

Daniel Bracken, who became chief executive of the ASX-listed $600m company almost four years ago, said their philosophy was simple: “There’s something unique about jewellery and our underlying mantra is helping people to celebrate their key milestones.”

And since he became CEO the company, which has a 15 per cent share of the Australian market, has emerged in a healthy state after the challenges of Covid-19 lockdowns with a plans to expand after resetting itself as a premium brand.

Mr Bracken said Michael Hill saw itself on a different path than the mass market jewellery brands focused on price promotion and through the premium brand strategy sought to “elevate the customer’s experience and emotional connection.”

“Seventy-five per cent of what we sell has a diamond in it. We’re very much a fine diamond jeweller. That means we focus on celebrating the moments that matter in people’s lives. They are highly emotional moments which is why it’s important to engage with our customers emotionally not transactionally,” he said.

Michael Hill CEO Daniel Bracken with his master jewellers at their new Cannon Hill head office in Brisbane.

Despite its retail stores in Australia, New Zealand and Canada losing an aggregate total of 10,000 trading days due to lockdowns and other restrictions in 2021-22, Michael Hill, achieved a record year.

The Group’s operating revenue was up 7 per cent year-on-year $595.2m and its statutory net profit after tax soared 13.9 per cent to $46.7m, compared to 2020-21. Importantly the group’s gross margin increased by 200 basis points to 64.7 per cent driven by strategic initiatives across product, stores, digital and loyalty.

Over the 12 months Michael Hill’s digital sales also soared to $42m, comprising 7.1 per cent of the company’s total revenues.

Michael Hill, which opened its first store in New Zealand in 1979, has about 2500 staff in Australia, New Zealand and Canada and 280 stores. It’s kicked off its holiday season recruitment drive seeking 1000 casual workers and about 600 in Australia.

They recently moved into a purpose-built three-floor 3520sq m global head office, manufacturing and distribution facility at Cannon Hill in Brisbane's south east where Michael Hill’s master jewellers create a range of new products.

To cap off a stellar year the jeweller was also a finalist in the Lord Mayor’s Business Awards and is up for the HSBC Award for Excellence In International Business.

Michael Hill CEO Daniel Bracken at the company’s new Cannon Hill headquarters.

A 25-year retail veteran Mr Bracken moved from Britain to Australia more than a decade ago to take up the CEO role at Apparel Group in Sydney. He later joined the Myer management team and then was CEO and managing director at Specialty Fashion Group before electing to head north.

“I was ready from my last role in Sydney for something new and challenging. I wanted to stay in retail and wanted to go into a business ready for a transformation and also wanted to stay in the listed company environment. It was also a chance for me to learn and immerse myself into a new product category and I love every minute of it,” he said.

“Jewellery is amazing. Everything we make is natural, it comes out of the ground. Every single product we sell is handmade and our master jewellers create amazing pieces”.

The company was founded by Sir Michael Hill, 83, and his story is currently being told in an advertising campaign promoting the jeweller’s bridal range by celebrating the love story at the heart of the business.

The campaign leads with a film that explores the story of Sir Michael and Lady Hill, from their first meeting in 1964 through to their wedding, and the opening of the very first Michael Hill store. Mr Hill retired as the company’s chairman in 2015 but was appointed founder president and remains on the board of Michael Hill International.

“The ads are a good example of the journey that we are on to move from the price and promotion area towards creating a connection with our customers,” Mr Bracken said.

He said despite the growth in online sales they remained committed to bricks and mortar which is complimented by their investment in the intensive training and development of its in-store staff.

“We still maintain that in our existing store network there’s significant growth still to come as we elevate the brand, the product offering and experiences in our stores,” he said.

“Online will continue to grow in double digit rates. We launched an online jewellery brand called Medley which we as another growth area for the business. We are only in three markets globally and we’re certainly looking at a broader international strategy.”