FOCUSING ON BEST FACETS
Byline: Marc Karimzadeh
NEW YORK — With a gloomy year coming to a close, fine jewelry and watch executives are looking for some sparkle in 2002.
The luxury sector has suffered setbacks from the sharp downturn in the economy, which intensified after the Sept. 11 attacks. The aftermath brought travel paranoia, drastically reducing a voluminous tourist business, and little demand for anything luxe, since extravagance suddenly seemed distasteful in these more humbling times.
Unlike many other retail categories, upscale fine jewelry and watches have longevity and are rarely marked down, which in slow-selling times usually results in higher inventory levels for retailers and less demand for replenishment.
“The current climate is quite difficult for our business,” said Francesco Trapani, president and chief executive officer at Bulgari. “Certainly, the market is extremely weak in the U.S., where things have been difficult after Sept. 11.”
Many admitted that business in September had taken a sharp decline, but October showed some signs of a pickup, as did last month.
“It is looking brighter every day,” said Van Cleef & Arpels president and ceo Natalie Guedj. “The traffic in our five stores across the country has uniformly increased much more than we expected.”
Looking for an upswing in sales after a down cycle, Jim Haag, marketing and sales director at Harry Winston, said, “People needed a year or two to digest their purchases before jumping back into the marketplace.”
Overall, executives said they would be content with low-single-digit increases.
“All the fundamentals of the economy, such as interest rates and the stock market, have held up pretty well,” said Thierry Chaunu, president of Chopard USA.
“The market has been conditioned to appreciate and buy luxury items and it will be difficult to change,” said Colleen Caslin, senior vice president of marketing for Asprey & Garrard.
Rather than heavily venturing into new lines, campaigns and acquisitions, many will be reexamining their existing businesses. Among the plans:
Narrowing the number of stockkeeping units with fewer launches, while strengthening existing groups that perform well.
Placing more emphasis on inventory analysis to project more accurately.
Slashing the marketing and advertising budgets, with more targeted ad placement and marketing events.
“All you need is a good psychological environment to make consumers confident,” said Henri Barguirdjian, president and ceo of U.S. operations for London-based Graff Jewelers.
Andrea Hansen, marketing director at H. Stern, said: “It is important for the new security measures to work because we get a lot of tourist business.”
David Yurman, ceo and designer of his namesake firm, said 25 percent of its doors were still growing. As a result, the company examined its strong points and is trying to improve the slower areas by stepping up its merchandising training, moving some employees “to maximize on their talents” and adding more in-store events.
The company also reinvested and upgraded its IT systems, which reports inventory analysis and forecasting, and will help save up to 25 percent by tightening up on production where necessary.
At Roberto Coin, more emphasis will be placed on better inventory management, and “we try and get forecasts from our bigger customers three months in advance, so that we can be more prepared to fulfill their immediate need,” said Peter Webster, the firm’s U.S. president.
“There is a very challenging economic climate, where you need to do things a little different,” said Robert Filotei, president at Piaget North America. Next year, Piaget will refocus its events and pick specific targets “to maximize available funds, to get into a niche we may not have been in in the past in a bigger way.”