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NEW YORK — Top-tier jewelry companies aren’t flinching in the face of the U.S. economic slowdown — and are proceeding full-speed ahead with their store expansion programs.
This story first appeared in the May 19, 2008 issue of WWD. Subscribe Today.
Chanel is the latest brand to open a well-appointed jewelry flagship to service its ultrawealthy clientele, joining the likes of De Beers, Graff, Cartier, Leviev and Bulgari in creating Manhattan showcases to opulence. And, despite seesawing stock markets, the weak dollar and the subprime mortgage crisis, the well-heeled show no signs of cutting back on jewelry purchases. In fact, they see the products as an investment, especially in a era of skyrocketing precious metals and gems prices.
Chanel will open a 1,838-square-foot expanded Madison Avenue fine jewelry and watch boutique on Tuesday offering pieces starting at $1,450, but much of the focus is on the rare, exclusive and expensive. The store will house a collection of high jewelry that starts at $150,000 and climbs to $2.3 million for the La Pluie Diamant necklace set with a 10.16-carat diamond.
To mark the opening, the store will offer a 12-piece special ring collection with prices over the million-dollar mark. The company also recently partnered with Swiss watchmaker Audemars Piguet to create complicated movements for its successful J12 ceramic watch. One such watch is set with sapphire baguettes and costs $195,000.
“Business is performing very well around the world and in the U.S.,” said John Galantic, Chanel Inc.’s president and chief operating officer, referring to the jewelry and watch operation. “The business is particularly growing at the level of high jewelry. The ultraluxe shopper is looking for special, one-of-a-kind pieces.”
Chanel’s Madison Avenue boutique itself is a luxury experience. Peter Marino, who also is working on Graff’s new, expanded digs across the street, modeled the store after Coco Chanel’s legendary 31 Rue Cambon apartment, replete with a paneled library, a fireplace with a selenite crystal centerpiece, Garouste and Bonetti lamps and Coromandel screens. A bronze stag sculpture by François-Xavier Lalanne, a Joseph Stashkevetch photograph and a Yto Barrada piece of art punctuate the space.
The VIP room has hand-stitched, silk-tufted walls for an exclusive feel.
“When we open these very special boutiques, we’re creating exclusive, limited edition pieces for them,” said Galantic. “We want [customers] to feel the experience of buying something exclusive.”
Chanel introduced its first fine jewelry collection in 1932. In 1993, the collection was relaunched with the opening of a boutique at 18 Place Vendôme in Paris. There are eight Chanel fine jewelry boutiques in the U.S., including Beverly Hills, and there are 41 such stores worldwide. Fine jewelry is sold exclusively in these shops and in select traditional Chanel fashion stores.
Although he declined to provide sales projections, Galantic anticipated that the store would do well among local shoppers and tourists, and he doesn’t see the business waning.
“When you talk about those consumers who can afford that price range, you can’t really talk about recession,” said retail consultant Dana Telsey. “They are looking for exquisite pieces all the time. There’s not enough quantity at this quality.”
Graff, which focuses exclusively on rare diamonds and large gemstones, has plans to open a 5,600-square-foot store at 710 Madison Avenue at East 63rd Street, down the block from its current 800-square-foot store on Madison Avenue.
“Our important sales have grown tremendously since the beginning of the year,” said Henri Barguirdjian, president and chief executive officer of Graff, America. “Fine stones are extremely rare and have increased in value steadily over the years. It is a well-known fact that when the general environment is very challenging for investing in the stock market and real estate, people that have cash available tend to acquire very rare items. I have clients that want to invest a few million in diamonds. It is a safe haven.”
Barguirdjian said the company welcomes new clients from emerging markets all the time. Those from Russia, China and India are buying important pieces. The average sale at Graff is $400,000. This year, the London-based firm will open stores in Geneva and Moscow, and next year there are plans for a boutique in Shanghai.
De Beer’s 2008 plan is to open 25 stores, including six in the U.S. By the end of this year, the diamond jewelry brand plans to have a total of 50 stores across the globe.
“Europe and the U.S. are expected to be more challenging in the months to come, particularly on the entry price [below $5,000],” said De Beers ceo Guy Leymarie. “But the upper market is very dynamic and is expected to continue to be, as diamond supply above 5 to 10 carats is increasingly short compared to a strong unsustained demand. The market volatility plays in favor of diamond jewelry more and more as it is seen as a safe investment.”
Van Cleef & Arpels is opening its 10th U.S. store next month in Naples, Fla. This year, the exclusive jeweler has opened a store in Las Vegas.
Other jewelry brands, such as Bulgari and Cartier, have multiple categories in addition to high jewelry. Both brands are respectively pushing their handbags, eyewear and entry-price jewelry. Cartier is placing emphasis on its Marcello handbag, while Bulgari’s range of handbag styles is large and growing. Either way, both Bulgari and Cartier are continuing to be aggressive with store expansion.
In the past few months, Bulgari — which last week reported that profits slipped 4.6 percent in the first quarter because of weakness in Italy and the U.K. — opened stores in Panama and Costa Mesa, Calif. There are plans to open units in Atlanta and Short Hills, N.J.; to expand the San Francisco store, and the firm is in negotiations to open a shop in Boston.
“We will basically continue to implement our strategy, especially in jewelry and watches,” said Bulgari ceo Francesco Trapani, who admitted the U.S. has flailed in the first quarter. “On the one side, there is a mood that is not pushing toward high consumption. On the other side, you have a real sect that’s suffering. I don’t know if the clients of high jewelry are really suffering. We always say in the end that when you have an economy suffering, all people are suffering.”
Bulgari has recently increased its high jewelry and diamond assortment. Leviev is one if its suppliers for large and colored diamonds.
“Traditionally, diamonds have not been the most important segment for Bulgari,” said Trapani. “But we have grown our diamond business pretty aggressively.”
Bernard Fornas, ceo of Cartier International, said that since Cartier has multiple categories, including handbags, eyewear, watches, jewelry and gifts, its growth is infallible.
“It’s a high-end business, but it’s better protected,” said Fornas. “For the moment, we don’t feel anything in the U.S. We will continue to develop as we are used to doing.”
Cartier has 34 North American boutiques and has plans to open another Las Vegas store, is renovating three stores and is opening boutiques in two Neiman Marcus locations.
“A lot of these stores aren’t just opening for today, they’re opening years from now,” added Telsey. “The locations help extend brand awareness.”