Tiffany & Co. chief executive officer Alessandro Bogliolo was coy to reveal details on the jeweler’s takeover discussions with LVMH Moët Hennessy Louis Vuitton. When asked to address the “elephant in the room,” Bogliolo segued to the jeweler’s support for endangered species, including elephants. “We love elephants at Tiffany, we have a campaign about wildlife and are very serious about our commitment to sustainability, including wildlife,” he deflected.
Bogliolo did, however, wax poetic on Tiffany’s many opportunities for growth — offering what seemed to be a siren call to potential suitors.
He extolled the virtues of Tiffany craftsmanship, the company’s stone-cutting and polishing skills, its sustainability and traceability efforts, as well as key wins in growing its market share in China.
“We have 1,500 colleagues that cut and polish diamonds internally in our workshops. No other jeweler in the world does this; others buy diamonds on the wholesale market. This is what guarantees, for us, the opportunity for the traceability of our diamonds and a unique point of sustainability but also real internal craftsmanship,” Bogliolo said of the expertise behind Tiffany product.
Double-digit sales growth in China over the last six quarters has also provided investors with positive signs for the future.
WWD: So what’s new?
Alessandro Bogliolo: Actually I didn’t have much to do this week, so thank you for biding my time with this invitation.
WWD: So the elephant in the room, LVMH and Mr. Arnault have come calling with a $14.5 billion takeover invitation — what’s your reply?
A.B.: That’s a very good question, I would like to really reply in detail but, unfortunately, I forgot the safe harbor statement, so maybe we will try later. We love elephants at Tiffany. We have a campaign about wildlife and we are very serious about our commitment to sustainability, including also wildlife in Africa.
WWD: As you think about your future, what are some things that you have to take into account as you make this decision?
A.B.: I think, for me, it’s an honor to lead the brand that has 182 years of amazing history. What I have always been saying and repeating to my team is that we are in charge of writing the next pages of this beautiful brand and so what we have to do is not to change or reinvent the business, just move forward as [founder] Charles Lewis Tiffany was as a visionary at 24 or 25 years old in 1837, when he had this amazing idea of bringing most beautiful gemstones to New York. It’s not so much about reinvention, it’s about continuing to execute the vision of that man and to keep the brand relevant for the new generation exactly as he was doing at the time, and as all our predecessors did.
This is really a brand where, because of its legacy, it’s not so much about strategy. There is digital that disrupts — there are new markets, there is China which is a huge engine of growth — but at the end of the day, the mission at Tiffany is always the same, to make the most beautiful jewels in the world.
WWD: So, as you take that core of the brand, which started in New York in the 1830s, and reintroduce that to modern-day America, introduce it to a Chinese consumer that is learning about the brand — what does New York in the 1830s have to do with the Chinese Millennial?
A.B.: There is a lot. The fact that this brand was born in New York in the 1830s, if you think what New York was then when we talk about emerging economies, emerging cities, I mean that was the place probably even more so than Shanghai or Delhi nowadays. It was a new world at the time with young people that were trying their luck, many of them were making good fortune and wanted to celebrate those beautiful moments, they wanted to elevate their lifestyles. If you think this is something inherent to human nature, that still applies.
If you are a Chinese Millennial, at the end of the day it’s still that appeal for spending something of your savings, of your financial success, for a gemstone or a piece of beauty that will be there forever and be a reminder of the most beautiful moments in your life.
It’s something that differs from other beautiful luxury products that by definition — because it’s a handbag or a piece of apparel — will one day will be disposed. The beautiful thing of jewelry is that it will be there forever from one generation to another.
WWD: Tiffany is an American luxury brand — what does that mean, how is that different? There are not a lot of true American luxury brands, so how do you distinguish yourself?
A.B.: If you look at true luxury brands in the world in excess of 3 billion euros, pounds, dollars of sales, you have very few brands. You have three mainly leather goods brands at end of the day, being Louis Vuitton, Hermès and Gucci; two beauty, apparel brands like Chanel and Dior and two hard luxury brands and that is Tiffany and Cartier. If you look at these seven brands, six of them are European and only one is American.
There is a big difference there and it has to do with the origin, because the origin of most European brands was owing to aristocracy, and the value was exclusivity. Now if you look at Tiffany being born in New York in an ebullient city, since beginning our DNA was all about being inclusive and looking at the future rather than the past. So, exclusivity has always been a mantra for European brands but was never in the DNA of Tiffany.
If you look at the world today — if you look at Millennials all over the world, if you look at China — inclusivity is much more relevant than exclusivity, so I think these roots, the DNA of our brand, is a big competitive advantage in the world nowadays.
WWD: Inclusivity is a big trend across the industry and it seems you have been projecting a lot more of that in your marketing and advertising — can you talk about the thinking there?
A.B.: Inclusivity is a tricky word, because typically with European luxury brands it is used as a synonym of cheap, which is missing the point. Inclusivity is really the opposite of exclusivity. At Tiffany, it’s really entrenched in the company culture that you cross that door and you are welcome and in a place where the mission of all of us to give you a moment of joy
Our slogan internally is, “Makers of beauty and creators of joy,” because really the objective is that you have a beautiful moment. And it’s not just a sentence; In the 1961 famous movie “Breakfast at Tiffany’s,” there is Audrey Hepburn and she is trying to convince the guy to let her in to Tiffany because the argument is that nothing wrong can happen to you here. This is really one of those sentences that summarizes the spirit and culture of brand. There are 14,000 people that are either craftspeople, diamond artisans, sales professionals or executives — it’s part of the DNA and culture of the company.
WWD: In making a broader appeal, how do you balance your high jewelry business — which is very expensive and special — and you also have a sterling silver business. How do those two work together and how do you keep a coherent message by operating two pretty distinct businesses?
A.B.: As world-premier jeweler, Tiffany offers products in more segments than any other luxury jeweler. The bulk of our business is in gold and platinum jewelry with and without diamonds, priced from $1,000 to $400,000. And in this we compete with all the Cartiers and Van Cleefs in the world. We also compete in high jewelry, pieces that are typically one-of-a-kind, priced at $100,000 and above, but typically in the $1 million to $5 million range but sometimes also $10 million, $12 million, $15 million per piece. But then Tiffany has a leadership in diamond rings and wedding bands, where we have approximately a $1 billion-dollar business.
As an Anglo-Saxon jeweler — it is not the most important business, it’s the smallest but it’s relevant — it’s the silver. Sterling silver is a precious metal and it’s a huge tradition in jewelry in the Anglo-Saxon world. It has been very big in since the Middle Ages in the U.K. and became a big thing in the U.S., as well as Australia, etc.
It’s absolutely part of the values of the company but also the craftsmanship of company. You can buy a “Return to Tiffany” bracelet in sterling silver or 18k gold, but it’s made by exactly the same hands with the same craftsmanship in both cases. Silver is less expensive than gold but it’s not a meter of discounting — it’s a meter of a material. It’s like going to Hermès to buy a scarf or a tie or buy a crocodile bag, there is an obvious difference in price but that does not mean it’s less noble.
We are very proud of our silver business, because like our gold business or diamond business, it’s a really elevated business and by that I mean craftsmanship.
In our company we actually have 1,500 colleagues that cut and polish diamonds internally in our workshops and there is no other jeweler in the world that does this. Others buy on the wholesale market. This is what guarantees, for us, the opportunity for the traceability of our diamonds. This is a unique point in terms of sustainability but also a meter of real internal craftsmanship and skills. It means that as a jeweler that sells diamonds, we also have the skills to cut and polish diamonds.
WWD: While we talk about the product, Reed Krakoff is a big part of that. You are ceo leading the business and he’s got the creative side. How do the two of you work together to keep the machine running?
Bogliolo: Reed is in charge of all creative aspects of the brand, so the product creativity, marketing creativity and store design creativity. We work well together, we have a regular meeting together every Friday where we casually review progress on different projects. We have a very good understanding of each other because he has about 80 percent creative skills and then 20 percent business skills, which is exactly opposite of my characteristics. He has immensely good taste and is such a New Yorker that he couldn’t be better as a creative for Tiffany in New York.
WWD: So New York, an American brand, but you very much have a global outlook right now. I know you have been doing more in China. Tell us the process of projecting the Tiffany story globally.
A.B.: Tiffany, of course, it’s a New York brand with the U.S. representing over 40 percent of our business until now. It was one of the first luxury brands that started venturing outside of its own country. It was in Japan in the Sixties when European luxury brands were still not there. This is a way Tiffany established its market leadership, not only in U.S. but also in Japan and the U.K., etc.
When it comes to China, which is the biggest engine of growth in the luxury market, Tiffany entered the market late in 2001 but also took several years to open other stores while our competitors in jewelry or luxury brands were already having 10, 15, 20, 25 stores and we only had one store. This is one strategic decision I took right at beginning when I joined two years ago. I said we have to affirm our leadership in China, we cannot be leaders in other markets and not in China.
This is why I called for investment here to our shareholders in 2018 and actually in 2018 we had a record year in sales, we had $4.4 billion. I said, ‘Let’s reinvest our profits of additional sales into a strategic investment spending,’ which was a polite way of saying ‘Let’s increase our marketing in China.’ Why? Because, due to our late entry in China we were behind our competitors.
It has been a lot of work from our teams, but it’s one of the clearest results we have achieved. We moved from low single-digit growth to consistent double-digit, over 25 percent growth in the Chinese mainland consistently in at least the last six quarters.
This is not by chance; it’s because of more investment in marketing but also because the creative team in marketing working together in China with our New York colleagues. There was an upgrade of the network, we have about 34 stores in China but have opened and upgraded stores to real flagship status in a way that if you are in Beijing, and at the end of this year Shanghai, you can have the total Tiffany experience in China without having to fly to New York.
Most recently we opened a retrospective with 500 archival pieces in China. I tell you myself, I have seen quite a bit of beautiful jewelry in my life, and I was impressed when I saw it, and proud. The strategy is crucial, and has proven to the market that this is a very relevant brand for China and numbers are supporting that, it’s not just a claim.
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