Michael Hill: a history in diamonds
“Part of that change is the move from a purely bricks and mortar enterprise to embracing online sales and commerce. The company has effectively combined its digital business and physical businesses.”
Many businesses evolve over time – expand into new geographies or product lines or move from family ownership to a more corporate structure.
It’s not always an easy transition and corporate history is littered with companies which have not managed the expansion and evolution as effectively as they might.
I recently had the opportunity to visit some of our customers in Queensland and I’m always struck by the excitement and potential in the Sunshine State at the moment. Net migration is booming, economic development too, and new infrastructure is constantly emerging.
On this trip I had the pleasure of visiting a true trans-Tasman success story – the jewellery company Michael Hill International. It’s a perfect example of a company embracing its expansion and today it is an iconic global jewellery brand that exudes luxury. But it has an even more fascinating back story.
The founder Michael Hill – a man with great vision and creativity – started the company in New Zealand in the late 1970s. Through ambition, tremendous determination and hard work he built the company into the global brand it is today, says Daniel Bracken, Chief Executive Officer and Managing Director of Michael Hill International.
“Lots of businesses talk about heritage. But we have the heritage of the founding couple, Sir Michael and Lady Christine, who founded the business,” Daniel says during our meeting at Michael Hill’s new Brisbane headquarters. “It's a wonderful story. Michael, at the age of 40, was working as a salesman in his uncle's jewellery store before deciding to go out on his own.”
“He opened the first store in Whangarei on the north island of New Zealand and had this vision to have seven stores in seven years. After listing on the New Zealand Stock Exchange, Michael and the team decided to try and conquer Australia. The team moved to Australia and opened three stores in Queensland.”
That was the start of the company’s international expansion and today it has 147 stores in Australia, 48 in New Zealand and 85 in Canada. And ANZ was there at the beginning. Daniel told me Michael went to the local ANZ branch in Whangarei to ask for a $20,000 loan.
From those humble beginnings the company has taken the necessary steps to grow while remaining close to its principles of quality and service.
“We were always a house of diamonds. And we focus on diamonds as our heritage - 75 per cent of what we sell has a diamond in it,” Daniel says. “We're diamond experts. Our artisans in Brisbane produce all Michael Hill solitaires by hand here in Australia.”
Every business owner has a story of the unexpected event that turns their strategy and business model upside down. For Michael Hill, this came with the advent of the COVID-19 pandemic.
All retail businesses were affected but Daniel explains the pandemic was particularly difficult for jewellery retailers. Michael Hill was facing an existential crisis that challenged its very survival.
“I very clearly remember March 20, 2020, where we made the call as an executive team to close every single one of our stores. We shut down every single cost operation in the business. We stood down our entire workforce effectively,” Daniel says.
“The challenge of COVID rendered our business model completely dysfunctional. Because of what we sell and how we sell, it's what is referred to as `close quarter selling’. Everything you buy in fine jewellery is an interaction with a salesperson at close proximity. Without ANZ’s support I'm not sure we would have got through that period.
“But to our surprise we came out of it quicker than expected. We took COVID as an opportunity to push harder on our transformation of the business and of the brand.”
Trade and capital flows
A key part of ANZ’s strategy is to help our customers start, run and grow a sustainable business and Michael Hill is a perfect example. As the business expanded, its funding requirements changed too and the bank was there to support that evolution.
Part of that change is the move from a purely bricks and mortar enterprise to one embracing online sales and commerce. The company has effectively combined its digital business and physical businesses. And as it moved into different countries, ANZ was able to use our experience at intermediating the flow of goods and capital.
“If you went back ten years, all the money invested in the business would have been in stores – rolling out more stores and refurbishing them. And while we still do that, the needs of the business have changed in we've had to invest heavily into technology,” Daniel says.
“The consumer now lives and breathes online and 75 per cent to 80 per cent of what we sell, the customer starts that process online. We've got three websites across those three countries and we’re now on digital marketplaces in all three countries.”
Despite all this change, Michael Hill still feels like the company the eponymous founder started back in New Zealand’s north island. What stayed with me after my visit was the culture. The new headquarters has a real family feel and a very strong sense of purpose.
“Michael's still on the board and retains a significant ownership stake. He’s just got incredible energy and appetite and is always pushing for change. His spirit, his entrepreneurialism lives and breathes in the way we operate, says Daniel”
Shayne Elliott is CEO of ANZ