The Birks Group: evolving amid sustained success

Despite the challenges of the COVID-19 global pandemic, Canada’sleading luxury jeweller has rebounded, positioning itself for furthergrowth // By Mario Toneguzzi

The Birks Group, a leading operator of luxury jewellery stores in Canada, has been a mainstay of the retail landscape since it opened its first store in 1879 on St. James Street in Montreal.

Its founder, Henry Birks, was from a British silversmith family, with a deep passion for jewellery.

Today the company operates 24 stores under the Maison Birks brand in most major metropolitan markets in Canada, one retail location in Calgary under the Brinkhaus brand, one retail location in Vancouver operated under the Graff brand and one location in Vancouver under the Patek Philippe brand.

Bijoux Birks fine jewellery collections are also available through select SAKS Fifth Avenue stores in Canada and the U.S., select Mappin & Webb and Goldsmiths locations in the United Kingdom, in Mayors stores in the United States as well as several jewellery retailers across North America and the E.U.

Impressive performance

In its most recent 2022 fiscal year, which ended March 26, Birks had year-over-year sales growth of 26.7 per cent with net sales of $181.3 million, an increase of $38.2 million, yielding gross profit of $76.2 million, an increase of $19.9 million, or 35.3 per cent, compared to fiscal 2021. Overall, the company reported a positive net income of $1.3 million, an improvement of $7.1 million, compared to a net loss of $5.8 million recorded in fiscal 2021. In short, it’s rebounded well from the pandemic and is poised for growth.

Growth despite challenges

Jean-Christophe Bédos, President and Chief Executive Officer of Birks Group, who has been with the retailer for more than 10 years, suggests that the financial results speak to the retailer’s ability to deliver sustained growth across the business under even the most challenging of circumstances.

“In fiscal 2022, Birks has shifted from recovering from the impacts of COVID-19 to growing beyond pre-pandemic levels, as our results are strong not only compared to fiscal 2021, but also compared to fiscal 2020, which was not impacted by COVID-19,” he explains. “Our return to profitability is a significant milestone that is indicative of the success of the strategies we implemented to overcome the challenges brought about by COVID-19 during the past two years, and of the turnaround phase of our strategic plan that began pre-pandemic. I believe that the company today is in a stronger position to achieve its long-term objectives, and I am confident in our potential to achieve meaningful growth as we continue to prioritize investments that we believe will drive shareholder value.”

Store focus

In 2021, the Maison Birks Calgary flagship store was renovated. The complete renovation of the 5,465-square-foot store at the CORE Shopping Centre was the first to unveil a Birks collection 1,500-square-foot shop-in-shop. The boutique highlights Birks Group’s own extensive Birks bridal and fine jewellery collections.

The CORE location also houses an assortment of international timepiece and fine jewellery brands including Rolex, Breitling, Longines, Marco Bicego, Montblanc, Roberto Coin, TAG, Tudor, and Wolf. The renovations unveil a new design concept for the Rolex shop-in-shop at 1,210 square feet.

“We’re working at the moment on a few things,” says Bédos. “We see the evolution of the business going more urban in the big urban areas - the major cities like Vancouver, Calgary, Edmonton, Toronto, Ottawa, Montreal and Quebec City. These are the large pockets of growth that we see. In terms of store performance, we foresee that we might have to close some stores because either they are not performing to the level that we expect and our expectations are getting higher or simply because from a strategic point we want to focus on strong areas.”

Transfer of consumption

The first year or so of the pandemic, beginning back in 2020, was a call to action of sorts for Birks to essentially operate its business behind closed doors. Canada was quite strict with the lockdowns in contrast with other parts of the world, particularly in provinces like Ontario and Quebec. However, the company’s ecommerce sales tripled during the pandemic, and curbside pickup became a staple of the business during the health crisis.

“In 2021, the lockdowns obviously weren’t as long,” he recognizes. “Our industry benefited from a transfer of consumption among consumers who were still in a position to purchase but weren’t able to travel or enjoy entertainment and luxury such as hotels, spas and restaurants. We saw a significant amount of transfers of consumption to watches and jewellery. 2021 was a good year for us.”

Increasing network?

Bédos said the company manages two brands - the Maison Birks as well as the other jewellers that are part of the company’s overall network.

“We might not consider increasing the network of stores for Maison Birks,” he admits. “In fact, we might actually consider closing some stores and work on improving the customer experience, the store contribution store by store, and focus on the development of our popular brands in order to bring luxury to Canada. We are working on developing our proprietary brand - the jewellery brand that we call Bijoux Birks. And we are making our jewellery collections available outside of our own stores with a network of jewellery partners. We started this approach in Canada, and it’s doing very well. In fact, we’re extending it to other areas such as Europe and the U.S. and will consider other parts of the world as we roll out the strategy for our jewellery brand.”

Bédos said there is also potential to expand with more dedicated stores with high-end brands such as the Brinkhaus, Graff and Patek Philippe brands.

Enhancing the experience

Part of the retailer’s strategy for the future is strengthening its e-commerce to be able to service the areas in which it does not have a presence. Throughout the pandemic, much of the company’s focus went to improving that experience, investing in it and developing it, becoming a priority.

Bédos said today’s consumer is younger and therefore more proficient online, displaying less resistance to the mode of purchasing and a greater level of comfort using technology. And, he says, there’s also less resistance to consuming luxury online.

“The pandemic has accelerated a trend that already existed pre-pandemic,” he says. “But, there is definitely much more of a tendency to purchase big ticket luxury items online today. It’s what we’re currently experiencing within the watch and jewellery industry.”

Beyond the transaction

Bédos referred to a book by retail expert Doug Stephens, saying that today’s customer is expecting the in-store retail experience to be meaningful and relevant and not just transactional. Because, he explains, if it’s just transactional, there is no need for a store because consumers can simply go online and find what they’re looking for.

“Stores are becoming more and more experiential,” he asserts. “And, in our case, we represent high end brands that all bring a higher level of experience. As we renovate our stores, the quality and connectivity of our shops-in-shops is increasing and improving. It’s a direct response to the level of service that our clients are expecting from us, which is definitely evolving more towards experiential.”

Celebrations and success

As the retail sector comes out of the pandemic, Bédos says there is some sense of prudence on the part of consumers due to rising interest rates. However, he goes on to explain that inflation does not always result in negative impacts for the luxury industry.

“Inflation is not always a bad thing,” he suggests. “There have been inflationary periods in the past when customers have purchased significant stones, meaningful pieces of jewellery or important watches to celebrate milestones. People don’t often postpone milestones, despite what’s happening around them. And we are in the business of marking celebrations.”