Will Michael Hill Be The Next Big Chain?

The recession has apparently not stopped people from thinking big. Here is a quote from Michael Hill’s CEO, which bought 17 stores from Whitehall last year:

“It’s still early days for us in the U.S.,” he said … “We are still testing our range of jewellery items but our stores are well located, operating in some of the best malls in America.

“We knew it would be hard in the US but if our model works, then we could grow our chain of stores to about 800 in the US.”

Wow. It’s interesting people are still thinking this way.

A couple of years ago, it seemed that chains would take over the business, and drive out the independents. Now, while I wouldn’t say independents are doing well, some are proving a lot more resilient than the majors, as they can adjust their operations quickly in the face of a crisis (which is what we are dealing with.) It is harder to do that with 800 stores. And creating a large chain can mean taking on a lot of debt, which is often what gets these companies in trouble.

On the other hand, in the last year or so, we have lost hundreds of jewelry stores, and not all of them were unprofitable. So, whenever the recovery comes, there is definitely room for new names in this market. The last few years have gotten me wary about people who think too big, but Michael Hill has proven very successful in their home market, so we will wait and see …

JCK News Director