NEW YORK — Tiffany & Co. has set an ambitious agenda, highlighted by a new, smaller store format to showcase accessibly priced women's jewelry.
The 2,000-square-foot store model unveiled Wednesday to securities analysts and investors during a breakfast at the week-old Wall Street unit is called Tiffany & Co. Collections. The company plans to open 70 of the shops, which will feature women's jewelry ranging from slightly less than $100 to $15,000.
The concept will not include the engagement rings or high-priced statement jewelry for which Tiffany is famed. In the past five years, engagement jewelry in the U.S. has grown at a rate of 20 percent annually.
The first Collections location is slated to bow in fall 2008 but hasn't been identified. Three to five Collections stores are to open each year, starting in 2009, eventually reaching a total of 70.
"We believe there is a much larger Tiffany universe," Michael J. Kowalski, chairman and chief executive officer, said in an interview. "[The stores have] a more modern design that will allow us to showcase jewelry, so you can interact with it and explore. It's simply a new way of looking at Tiffany."
The luxury jeweler has been on a mission to show customers its diverse product range, from tabletop to silver jewelry. It is a luxury pioneer in lower Manhattan and also intends to develop its watch business. In 2002, Tiffany launched a 5,000-square-foot store concept that brings in sales of $1,000 per square foot. Starting in 2009, the company plans to open five to seven of these full-line stores until reaching a total of 100. There are now 68 Tiffany stores in the U.S.
Kowalski predicted that the Collections shops would bring in more than $1,000 per square foot.
"We anticipate the stores to be more profitable," he said. "The gross margin is higher, capital expenditure will be more efficient. It's a smaller inventory investment without engagement rings."
The decision by Tiffany to focus on more accessibly priced jewelry is notable because several jewelry companies are pushing high jewelry and rare pieces that sell from the hundreds of thousands of dollars to the millions. Chopard, Graff, De Grisogono, Leviev and others all claim that the consumer demand for these pieces is seemingly unquenchable, considering supply of the rare gemstones and the labor that goes into the pieces.Tiffany's statement jewelry segment has pieces that fall under this category, but it is not placing such pieces in all or even most of its stores. Statement jewelry is shown in the flagships and is brought to clients upon request.
The Collections stores will have a modern, airy sensibility, but retain a distinctly Tiffany aesthetic. Designed by an in-house architecture team, there are freestanding and wall cases made of wood, glass and metal to exhibit jewelry that will be merchandised according to trend, not simply by category as in other Tiffany stores. Jewelry will also be hung on displays so shoppers can get a feel for what it would look like when worn.
Flat screens will decorate the walls of the Collections stores and the company will hire artists to create content based on the season.
"We wanted to have some fun with this," said Beth O. Canavan, the firm's executive vice president. "We want to bring [the jewelry] to life."
Collections shops will be better able to highlight styles that often get lost in Tiffany's larger stores, executives said. The company comes out with more than 1,000 new styles a year.
"We want a consumer to go seamlessly to all our Tiffany touch points, from the stores, to the flagship to the newly redesigned Web site,'' said chief marketing officer Caroline Naggiar. "It's a store that women will love....It's about the different needs and moods of a woman."
The strategy fills a niche for Tiffany. Silver jewelry appeals to teenagers and consumers in their 20s and tabletop entices newlyweds, but the company often experiences a hiatus among customers. Those who can eventually afford statement jewelry return while those who cannot dwindle. Accessible, in-fashion jewelry helps to bridge that gap, making the brand more appealing to a broader demographic.
"This is an issue we've been dealing with, [the cross between] aspirational and accessible," Kowalski said. "It's something we've been approaching for years."
A category that the company admits is "underdeveloped" is the watch business. Now it wants to be known equally for its watches as it is for its six-prong engagement ring. Watches comprise 2 to 3 percent of sales. In the past few years, Tiffany began rebuilding its watch business by redesigning the Mark and Atlas collections and by introducing the Tiffany Grand collection."We believe we can stand up to any Swiss watch brand in the world," Kowalski said.
The company has plans to attend the watch fairs in Basel, Switzerland, in April to increase its wholesale network, going after rivals such as Cartier. Watches are the only category that the firm is looking to wholesale. Wholesale comprises 2 percent of the brand's revenues. Kowalski named the subcategory of ladies' diamond watches as an obvious area for growth considering the brand's synchronicity with diamonds.
To back up its watch push, Tiffany will beef up its marketing and advertising of timepieces.
Internationally, Tiffany has plans to expand its store count in China and Europe. It is considering increasing its presence in India, where it has a few points of sale.
The brand's European division is growing at a faster rate than the U.S., with its London store the most profitable.
"It was a long, slow road in Europe and now it's all coming together," Kowalski said. "I thought I'd be retiring before we opened another store in Europe."
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