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April, 2024

4x loyalty members in 3 years, huge SOV gains, holding the line on media, playing the long game, resisting discounting amid crunched consumer spend – how ex-McDonald’s CMO Jo Feeney is reshaping jeweller Michael Hill

What you need to know:

  • Michael Hill has been working to reset itself as a business. The ambition includes creating a portfolio of brands, led by premiumisation of the Michael Hill business.
  • In striving to achieve this shift and reset thinking, CMO, Jo Feeney, has adopted ‘looking back to look forward’ as her mantra and an approach she calls ‘contemporary nostalgia’.
  • Over the last two years, she’s been pursuing a brand refresh that will hit the market on 15 April and extend from new brandmark and design system to a fresh retail shopfront approach and new brand ambassador.
  • Behind the scenes, tech and capability investment into understanding customers and identifying growth cohorts it can then personalise engagement with has been critical to underpinning the quest to reset the Michael Hill brand.
  • A huge area of investment has also been the Brilliance customer loyalty program, which now has 2m+ members – a 4x increase in three years.
  • While economic conditions remain tough, there are other indicators the long-term business strategy is paying off, including a circa 30 per cent lift in average transaction value.

After more than seven years with McDonald’s, Jo Feeney was ready for a change. She found it in ASX-listed, 45-year-old, New Zealand-born jewellery retailer, Michael Hill, operating across the Australian, New Zealand and Canadian markets.

Under CEO Daniel Bracken, a former Myer and Apparel Group chief exec, Michael Hill has been working to reset itself as a business. The ambition includes creating a portfolio of brands, led by premiumisation of the Michael Hill business.

“It’s an aspirational journey to transform the brand and shift into a space where we could see opportunity in the market – the more premium space,” Feeney tells Mi3. “It’s only occupied by a few jewellers and independents mainly – otherwise you’re in the value end or the luxury space.”

In striving to achieve this shift, Feeney adopted ‘looking back to look forward’ as her mantra. “What I knew we needed to do was reset people’s minds about Michael Hill to say we’re a fine jeweller and we have had a history all about craft and creativity,” she says.

The challenge was Michael Hill had come into the Australian market and disrupted it through discounting, presenting a very different model to the one the retailer wants to pursue today.

Quick-fire changes to marketing were key to Feeney’s approach initially. Not being as product and price-led by immediately removing price points from advertising material was an early move. Putting higher quality product front and centre to highlight craft and creativity was another decision.

In turn, this led to the ‘jeweller’s film’, an evergreen narrative piece couched in the brand’s heritage that tells the love story of its founders, Lady Christine and Michael Hill, as well as the care and passion behind its products. Such material is designed to enhance the narrative of an aspirational, iconic and timeless jewellery brand but usefully, also provided the foundations for a campaign that drove up search traffic and consideration.

Behind the scenes work was arguably even more important. Feeney set about addressing hygiene factors to both prove marketing and brand efforts while better understanding current customers plus segments of most importance for the future. To do this, Michael Hill has rolled out brand tracking, customer segmentation, a CDP plus employee engagement platform.

Two years ago, Feeney then embarked on the brand evolution piece, partnering with brand agency, CHEP. “We did a lot of listening and research with our customers, and did a lot of work on segmentation,” she says.

“That uncovered this notion that we felt a bit too 1990s, masculine and dark in our stores, and we needed to move with the times. Hence a total brand refresh was in order.”

New brand image

The visual brand overhaul, which officially debuts on 15 April, includes switching out the hero colour from purple to a green onyx, taking its cues from the New Zealand landscape. A new brandmark combines the ‘M’ and ‘H’ into a form of window – a nod to the iconic window displays Lady Christine designed over the retailer’s more formative years.

“We redesigned the logo through the lens of what we like to call ‘contemporary nostalgia’, which is this notion of wanting to be more modern and forward looking but also holding true to the fact fine jewellery is about these special moments in people’s lives,” Feeney says.  

“When we did this work, it was also important to me it was grounded in all the truths of our history and heritage. This isn’t about Jo Feeney not liking purple, this is about the need to do things that have genuine authenticity and truth behind them. So the next CMO that comes into the business doesn’t decide they need to change the colour palette or the logo, because there’s so much truth and rationale to the things we’re doing.”

In addition, Michael Hill has hired its first brand ambassador, who will be revealed on 15 April. Feeney notes it’s a proven strategy tying into the notion of premiumisation and will help elevate and foster brand trust.

In concert, a new-look website goes live next week. More holistically, product has had to shift, driven again by what Michael Hill’s ‘growth customer’ is looking for and inspired by. The transformation culminates in the relaunch of its Chadstone flagship store as a new global retail flagship space in April, designed to elevate in-store experience with semi-private selling spaces. The retail design was created in partnership with The General Store and rolls out over the 170-plus network over coming years.

Sustainability is another piece, and the Michael Hill Foundation launched in February, a people, planet and product manifesto. Two key focus areas were identified: Empowering Women and Nature Restoration.

“We want to be one of the most sustainable jewellers in the world, and encourage all jewellers to get onto this focus on sustainability, because it’s about doing the right things, especially in an industry where we do take from the earth,” Feeney says.

When we did this work, it was also important to me it was grounded in all the truths of our history and heritage. This isn’t about Jo Feeney not liking purple, this is about the need to do things that have genuine authenticity and truth behind them.

Jo Feeney, CMO, Michael Hill

Getting to know the now and future customer

Like any marketer, Feeney has worked hard to unlock data sets uncovering customer and brand insights, investing in tech and staff capability to drive an insights-based approach. A formative piece of work with RetailOasis helped unpick who the growth customer is, as well as those it still needs to nurture. More recently, it’s brought on Experian to round out data across all three markets it operates in.

Michael Hill has three core growth segments as a result. “We don’t want to lose customers, but we knew we wanted to see a bigger shift in the customers who were shopping with us less, and/or weren’t necessarily considering us as a brand,” Feeney says.

“We’re now able to see we have seen shifts in those customers: They do shop with us, and they have a higher propensity to spend on jewellery, so they punch above their weight in our category. We need to just get more of their dollars coming into Michael Hill.”

A key commercial marker has been shifting up average transaction value. Since FY19, AVT has gone up about 30 per cent. “That has been part of our growth journey – to see a shift in customers, but to actually see an increase in what they’re spending,” Feeney says.

It’s also led to putting particular products into certain stores because the team now knows more of those customers are leaning into those locations.

Loyalty is another huge component. Using customer insight to personalise engagement has been redefining the Michael Hill ‘Brilliance’ loyalty program. This is achieved through predictive analytics, understanding the right message, right product, right customer and right time to deliver more targeted communications.

As a result, loyalty customers have a higher basket spend, and visit more often with a higher profit margin. Sales from loyalty sit at 75 – 85 per cent, making it a big portion of Michael Hill’s overall revenue. Since Feeney joined, membership has grown by 1.5 million to over 2 million customers. Program insights have identified further opportunities to target the self-purchasing customer.

Backing these efforts is the CDP, which brought in at least 130 attributes to enable greater personalised communications and better CX at the shopfront. In addition, Michael Hill partnered with US-based Loyalty Builders to build out propensity modelling, including who’s most likely to be in market and when to talk to them based on different stages of their lifecycle.

“Buyer versus wearer is a big opportunity we are working on currently to uncover,” Feeney continues. “We have data included at point-of-sale to understand if it’s a self-gift, gift for Christmas or for a birthday. Often the first purchase is a gift; the second is a self-gift. That can inform all the things we’re doing around customer journeys, which we are doing a lot of work on right now. It’s those things that take time, humans and money but are very important.”

A milestone has been launching the ‘digital vault’ to store customer information. “We can provide reminders they need to get their diamond warranty checked. We can keep all their family birthdays, and send reminders on that, can we propose a few ideas for you, or even just provide a beautiful reminder,” Feeney says.

“We are constantly testing, looking at how we view certain customers and present an offer really relevant to them – that may be very different to another set of customers. We definitely don’t look at everyone the same and know there are distinct differences in behaviours – even down to what we think they’re likely to want to purchase next.”

More partnerships to reward customers are now on the cards for Feeney. “We want to be that brand that, even if you only come one or two times per year, can help you, remind you of the important things and reward you.”

If I can tip more money into media any day of the week I will … I changed to OMD when we started … and we’ve been able to get more bang for our buck because of changes there, plus being selective on channel choice. We used to spend a huge amount of money on catalogues, for example. I put that money straight back into media.

Jo Feeney, CMO, Michael Hill

The long and short of trading conditions

All this is going on in the midst of a cost-of-living crisis and economic uncertainty. In its latest half-yearly financial report, Michael Hill reported basically flat year-on-year sales of $363 million, as well as a 43 per cent comparable EBIT drop to $31.3m. Within this, Australian revenue was up +10.2 per cent to $202m, buoyed by the acquisition of Bevilles 12 months ago for $45m.

The business axed several senior management roles and closed six underperforming stores in January, five in Australia. Marketing spend was reduced, down $6m year-on-year to $22.5m according to the financials. This was after experiencing an 11 per cent increase in accounts to the end of 2022, and chalking up the second-highest profit year in the company’s history.

Yet there is a glimmer of positivity in the first seven weeks of the second half of FY24, with group sales up 9.5 per cent year-on-year, driven by Australian segment sales of +19.6 per cent. The business also claimed external transactional sales data demonstrates Michael Hill continues to take market share. Within this, it’s seen a +22 per cent increase in online ATV since FY21.

IBIS figures suggest the size of Australia’s watch and jewellery retailing market is $5.9bn annually, and estimates growth at an annualised 3.8 per cent over five years to 2023-2024 with a dip of 1.3 per cent in 2023-24.

“We know from third-party transactional data we are performing better than the broader market right now, and that is what you have to look at when things are tough,” Feeney says in response. “We’ve got to keep true to the longer-term strategies so when the world recovers – and it will – we haven’t lost sight of our long-term vision.

“I’m a firm believer the best marketers can manage the short and the long. I’m tasked with looking at trade… I’m looking at numbers sometimes for hours every day. It’s critical to keep that heartbeat going and your stores motivated. But we have to be able to look beyond this. If we’re not setting ourselves up for that period and only think about how we drive sales tomorrow and don’t look at what is going to help us in the future, we’re always going to be in this vicious cycle of looking at the day-to-day.”

To discount or not to discount

One of the hardest battlegrounds for any retailer is discounting, something Feeney admits the business had to rethink somewhat in the current climate.

“We’ve certainly done it less than our competitors more recently. One of the things we want to be smarter about as well is looking at our loyalty program and data we have around our customer to position an offer I know is going to be relevant to a certain customer cohort,” she says. “Not everyone is looking for a deep discount; we are giving member previews around some products because we know that’s what motivates that cohort.

“People are usually buying fine jewellery for an occasion; or if it’s a self-purchase, it’s for a personal occasion. With our Brilliance program members, we’ve tried to unlock more opportunity to use a special birthday reward or discount when it’s a moment that’s helpful for them. We have been trying to be smart about those things to keep the heartbeat of sales going, while being unrelenting in terms of our longer-term strategy.”

The business strategy shift continues. Michael Hill soft launched the TenSevenSeven brand in the first half of FY24, a play in the luxury space. Michael Hill product evolution continues with a focus on quality, innovation and sustainability. At the value end, Bevilles provides the platform for disrupting the market further.

Marketing spend

Smarter marketing spend has unsurprisingly been a huge focal point for Feeney. “When I started, I think people thought I was given more money because of what we are able to do, but no, I’ve just spent it differently,” she says.

“We’ve produced things for longevity – the jeweller’s film is something we will have forever… We stopped changing details on our windows every month because people aren’t shopping every month, so we said, let’s be smart about how we engage and what the rhythm is. We are better at spending money in the right places and we’re focused on what’s going to drive impact and growth.”

In 2022, Feeney’s realignment of media strategy saw share of voice lifts of +27 per cent plus a +19 per cent lift in top-of-mind awareness with no change in budget year-on-year.

“If I can tip more money into media any day of the week I will. I’ve been passionate about holding the line with that,” she says. “I changed to OMD when we started as our agency across the three markets, and we’ve been able to get more bang for our buck because of changes there, plus being selective on channel choice. We used to spend a huge amount of money on catalogues, for example. I put that money straight back into media.”

With growth customers, TV remains important, but data also points to out-of-home, and partnerships, such as a recent one with Vogue, as critical to ensure the brand “appears where our audiences are”, Feeney adds.