RAPAPORT... The last stop for diamonds is the retail store. Here is a behind-the-scenes look at what is happening at retail in the U.S.
WEALTHY CONSUMERS UNMOVED BY MARKET VOLATILITY
Following the few days of Wall Street jitters and fluctuations last month, investors have been bombarded by any number of economic predictions for the next several months. But, the effect of a stock market decline on wealthy consumers is likely to be more predictable, according to the latest study by the Luxury Institute in New York. Negative economic developments on the home front, for the most part, do not impact wealthy consumers’ expenditure levels. The Luxury Institute concluded that most wealthy consumers in the United States “do not plan to adjust their shopping and spending habits at all, regardless of their investment performance or any change in the value of their real estate holdings.”
However, the institute qualified this by pointing out that there is a threshold of financial pain, citing the scenario where wealthy consumers’ personal expenses grew too high. In this case, they would likely consider reducing their luxury spending, it claimed. In addition, 40 percent of survey respondents — with a minimum annual household income of $150,000 — indicated that a decrease in the value of their assets would cause them to contemplate purchasing fewer luxury goods and services. Of those in the higher income tier of $500,000 per year or more, only 30 percent felt that they would cut back on luxury spending during hard times. Of those with a net worth in excess of $5 million, 33 percent stated that they would think about spending less if a financial crisis hit their personal world.
The institute further concluded that the three main sectors that would be most affected by a drop in wealthy consumer expenditure were: luxury hotels and resorts, with almost half choosing that expense; followed by auto manufacturers, chosen by 42 percent; and the luxury jewelry category, selected by 39 percent.
The good news for luxury goods and services firms is that neither stocks nor real estate investment have yet to undergo a correction that will trigger significant numbers of wealthy consumers in the U.S. to curb spending, the institute reported.
INTERNET INTEGRAL TO BUYING HABITS OF WEALTHY
Don’t miss the opportunity to build your relationship with the luxury consumer online. That’s the take away message from another recent Luxury Institute wealthy consumer study. Providers of luxury and mainstream goods and services should be aware that wealthy consumers in the United States are avid internet users who frequently tap into web information and shopping resources, the Luxury Institute found.
The internet is no longer an adjunct for reaching and doing business with wealthy consumers, but rather has become an essential channel for the exchange of information and the conduct of commerce for the wealthy, the Luxury Institute added. These consumers also shop from multiple locations and platforms.
All except 2 percent of the wealthy who participated in the latest Luxury Institute study use the internet to purchase goods, with 55 percent making “frequent” purchases.
TRIAN FUND BECOMES LARGEST TIFFANY SHAREHOLDERTiffany & Company will consider suggestions on its business strategy from a New York investment firm that recently became the luxury retailer’s largest shareholder. Trian Fund Management, run by billionaire Nelson Peltz, now owns 5.5 percent of Tiffany’s issued capital, a United States Securities and Exchange Commission filing showed. Trian does not intend to seek board representation because of Tiffany’s willingness to discuss performance improvement measures and broadening the brand name, according to the filing. Tiffany shares trade on the New York Stock Exchange under the symbol TIF.
BULGARI REOPENS FIFTH AVENUE FLAGSHIPBulgari reopened its flagship store on Fifth Avenue and 57th Street in New York City last month. The newly designed store covers about 13,000 square feet and remains the largest Bulgari store in the United States. It features a completely renovated exterior and two entrances which are both backlit with special glass to create a warm illuminating presence during the day and night.
A glass façade standing 21 feet high will replace the formerly small display windows that were set in Italian marble. As part of this façade, 11 oversized “vitrines” paying contemporary homage to the historic Bulgari flagship store on the Via Condotti in Rome will wrap around Fifth Avenue and onto 57th Street for an ethereal atmosphere.
The new design expands the store from two to three levels. A voluminous staircase with backlit steps in glass and made of steel with a copper finish connect the various levels. The first floor will display one-of-a-kind precious jewels, contemporary jewelry collections, and an area dedicated to watches for both men and woman. The mezzanine and the second floor will be dedicated to Bulgari’s accessories business, including women’s leather and exotic handbags, small leather goods, silk and gifts, as well as men’s ties and leather goods.
POLO, RICHEMONT IN JEWELRY JOINT VENTURE
Global luxury players Compagnie Financière Richemont SA of Geneva and Polo Ralph Lauren Inc. of New York have formed The Polo Ralph Lauren Watch and Jewellery Company, S.A.R.L. The purpose of the new entity will be to design and manufacture luxury watches and fine jewelry. In a joint statement, Polo Ralph Lauren and Richemont announced that the new company’s products would be distributed through Ralph Lauren boutiques as well as through upmarket independent jewelry and luxury watch retailers.
The partners will each own 50 percent of The Polo Ralph Lauren Watch and Jewellery Company. This is Richemont’s first such joint venture with a luxury fashion designer and it is Polo Ralph Lauren’s first foray into the precious jewelry and luxury watch businesses. They indicated that they expect that The Polo Ralph Lauren Watch and Jewellery Company’s first product lines will be launched in the fall of 2008.
JOY ALUKKAS TO SELL THREE ROSY BLUE BRANDSJewelry retail chain Joy Alukkas has partnered with diamond manufacturing company Rosy Blue for the distribution of three of its brands, Ovio, Mist and Glaze, according to a press statement. Under the terms of the agreement, Joy Alukkas has exclusive retail rights to sell the brands across all its outlets in the United Arab Emirates (UAE).
The jewelry brands are available in 18-karat gold and are designed to meet the tastes of women of all age groups. Ovio is comprised of a bold range of fashion-forward designs that utilizes colored gold and combines diamonds with colored gemstones. Mist, a contemporary and individualistic group of jewels, is designed by international designer Ben Yep, and Glaze, crafted for the chic woman, is a new collection adorned with the glamour of enamel in subtle colors.
DAMAS, FLEMINGO PARTNER UP ON DUTY-FREEDubai-based Damas Jewellery has entered into a joint venture agreement with India’s Flemingo International in relation to the marketing of jewelry in duty-free shops at three international airports in India. Damas will soon begin selling gold jewelry brands such as Harmony and Legacy, as well as its diamond brands, at the Chennai, Trivandrum and Jaipur airports.
Damas will hold a 51-percent share of the joint venture vehicle, which is called Flemingo Jewellery India Pvt Ltd, and Flemingo will handle the day-to-day management of the operations. Damas operates in India through D’damas India — a partnership with the Gitanjali Digico group. Flemingo International is an established operator of duty-free shops in Dubai, India, Kenya, Tanzania and Sri Lanka.
RAJESH TO INTRODUCE ‘MADE IN INDIA’ RETAIL BRAND
Indian jewelry manufacturer Rajesh Exports is gearing up to launch its own brand of diamond jewelry for the international marketplace and is currently in talks with several retailers. This would be Rajesh Exports’ first attempt at crafting a name brand for retail, as the company typically supplies to wholesalers. About 700 designs have been created for the yet-unnamed line, expected to be unveiled some time between April and June 2007.
“In five years, we want to be present in 100 countries,” remarked Chairman Rajesh Mehta. “This is perhaps the first time any Indian brand will be sold with a ‘made in India’ tag in the world market.”
Article from the Rapaport Magazine - April 2007. To subscribe click here.