By  on August 3, 2007

NEW YORK — Upscale costume jewelry is not an oxymoron, at least not to Hong Kong-based Carat, which manufactures and retails a collection of simulated diamonds and other man-made stones set in 18-karat gold.

Carat, which operates 12 stores in Hong Kong, Australia and the U.K., has jumped into the U.S. market, opening a 220-square-foot unit Thursday in The Shops at Columbus Circle at the Time Warner Center here. Carat is leasing the space for about a year while it looks for a permanent location in Manhattan. The company has also signed leases at the Piers at Caesars in Atlantic City; the Mall at Short Hills in Short Hills, N.J.; the Beverly Center and Westfield Topanga in Los Angeles, and South Coast Plaza in Costa Mesa, Calif.

"We cut and polish all our own stones by hand,'' said Carat managing director Scott Thompson. "We use different types of synthetics. We go from high-grade cubic zirconium all the way up to synthetically farmed diamonds and lab-created synthetically grown sapphires and rubies."

Prices range from $140 for brilliant cut pear earrings to $6,000 for a detailed necklace.

Thompson came upon The Shops at Columbus Circle during a visit to New York last year. "I'd never seen anything quite like it," he said. "We would like to sign a lease now at Time Warner Center, but the right unit is not available."

Carat, which plans to open a 900-square-foot store on Kings Road in London, usually builds shops with 500 square feet of space. Doing business in the Columbus Circle space of less than half that size will be interesting, Thompson said.

David Froelke, general manager of Time Warner Center, came up with the idea for the freestanding luxury merchandising units, as he calls them. Not to be mistaken for typical mall kiosks, the 16-by-16-foot units have their own entrances, wood-paneled walls, stone accents, stainless fixtures and glass shelves, and are designed to blend with the marble interior of Time Warner Center. Each has two cash wraps and can accommodate seven shoppers at a time. Froelke calls them "enclosed pop-up stores with luxury finishes."The units generate $3,000 to $5,000 per square foot, compared with average sales of $1,400 in full-line stores, Froelke said. The Shops has three of the units, which cost $250,000 each to build, and has ordered a fourth.

Solstice, which operates a store on the third floor of the center, is renting a unit on the first floor for additional selling space. During the holiday season, Swarovski rented one unit and Johnny Walker Blue turned its unit into a lounge with comfortable chairs where customers could sit while their bottles were being engraved.

"We're careful to use the merchandising units for exciting, innovative products," Froelke said. "We're looking for categories we don't have. Carat is very unique. We'll be the first in the market to have it."

Thompson said that the $7 million Carat has a strong e-commerce business in the U.S. "We know our customers are here," he said. "America is a big part of our plan. It's still the land of opportunity."

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