NEW YORK — Tiffany & Co. plans to zero in on the burgeoning pearl market by opening at least 20 stores in the next five years under the Iridesse name.
Iridesse will operate as an indirect, wholly owned subsidiary of Tiffany with a focus on pearls and pearl jewelry. The first Iridesse store, a 1,300-square-foot unit, will open at the Tysons Galleria Mall in McLean, Va., this fall.
To oversee the venture, the company promoted Robert L. Cepek to president of Iridesse. Cepek was most recently vice president and general manager of Tiffany’s Fifth Avenue flagship.
“The vision of Iridesse is to develop a fine jewelry brand with an eye of becoming the retail authority on cultured pearls and pearl jewelry design,” Cepek told WWD. “Iridesse retail jewelry stores will launch a wide range of new jewelry collections, and the breadth of diversity in our jewelry assortment will make a choice of design aesthetics available for every woman and every occasion.”
Tiffany initially disclosed plans to introduce a retail concept capitalizing on pearl jewelry last November, as reported. According to the Cultured Pearl Information Center, estimated U.S. retail sales of cultured pearls and cultured pearl jewelry were $1.01 billion in 2003.
Iridesse offers the parent company a way to continue expanding beyond the diamond trade. Tiffany has expressed concerns about the increasingly crowded engagement jewelry market, which it believes has created a perception in customers’ minds that diamonds are a commodity, not a luxury purchase.
In addition, Tiffany recently alerted investors about the growing push by nongovernmental organizations to increase public awareness about conflict diamonds, which are traded and support violence in such countries as Sierra Leone, Angola and Liberia. Tiffany said it aggressively works to exclude conflict diamonds from its assortment.
For the three months ended April 30, Tiffany reported that income rose 12.4 percent to $40.3 million, from $35.9 million, while sales increased 15.4 percent to $457 million against the same year-ago quarter. In 2003, Tiffany had total sales of $2 billion.
The Iridesse stores will not carry Tiffany jewelry from the likes of Jean Schlumberger, Paloma Picasso and Elsa Peretti, and designs will be exclusive to Iridesse. The new retail concept has a separate design team from Tiffany, and Cepek explained the plan also is to collaborate with well-recognized designers for exclusive pearl designs. “At this time we are still negotiating agreements with them,” he noted. Tiffany will continue to carry pearl jewelry.Retail prices at Iridesse are expected to range from under $100 to $40,000.
Iridesse comes at a time when pearls are again gathering momentum. Unlike in previous revivals, the trend this time is not about grandmother’s pearls but new interpretations using an array of colored cultured pearls.
The pearl market is largely untapped from a retail perspective. Pearl retailers are few and far between, and it’s virtually impossible to find a retailer that addresses all tiers of the pearl business. Carolee, for instance, focuses on more moderate pearl jewelry, while Mikimoto hones in on high-quality pearls. That said, many companies have stepped up their pearl offerings in recent seasons, including Honora and David Yurman.
Iridesse’s name draws from the iridescence of the pearl surface, and the boutique interior is likely to play with subtle sea colors and translucent and iridescent details to underscore the pearl theme. Created by interior designer Randall Ridless, it will feature a pearl bar for customer consultations, with apothecary-style drawers that are filled with pearl strands in different sizes, shapes and colors to allow consumers to see the breadth of cultured pearls available, from South Sea to Tahitian, Akoya and freshwater pearls. Customers are as likely to stumble across classic pearl strands as they are more unusual designs.
In addition to the store in the Tysons Galleria Mall, a second one, the lease of which has not been finalized, will open this fall in an undisclosed location. Tiffany plans to open four Iridesse stores next year. Cepek declined to disclose sales projections.
“Through Iridesse, we hope to establish a position of authority and merchandising leadership in this fragmented, underdeveloped jewelry category,” said Michael J. Kowalski, Tiffany’s chairman and chief executive officer, in a statement.
Kowalski added Iridesse offers an opportunity to use and leverage Tiffany’s operational infrastructure to maximize the potential of the pearl market.
In a research note by Goldman Sachs, equity analyst Adrianne Shapira noted: “The new venture should leverage share gains across [Tiffany’s] increasingly efficient infrastructure to drive enhanced margins. Tiffany has demonstrated its ability to brand jewelry; we would expect pearls to be no different.”The new venture is in line with Tiffany’s strategy to look for growth opportunities outside its core retail brand. For instance, Tiffany took a stakein New York-based jewelry firm Temple St. Clair last year to help that company launch its retail business. Temple St. Clair has since opened a 750-square-foot boutique at South Coast Plaza in Costa Mesa, Calif., and a 1,475-square-foot unit at the Mall at Short Hills in Short Hills, N.J.
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