Retail Scope

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.


Tiffany to Invest in Target Resources

Tiffany & Co., the luxury retailer, will invest $5 million in Target Resources PLC, an alluvial diamond and gold mining company operating in Sierra Leone, a country with extensive reserves of high-quality rough diamonds.

According to Target spokespersons, this investment will be in the form of a five-year subordinated debt, fulfilled in conjunction with an exclusive marketing agreement. Under this deal, Tiffany will have right of first refusal on Target’s output at market price. Tiffany will then sell the unused diamonds on Target’s behalf. James Fernandez, Tiffany’s chief financial officer, commented that this new investment is consistent with Tiffany’s policy of selectively investing in diamond miners that mine high-quality stones and adhere to ethical practices in their work.


Men’s Jewelry, Watches Come Out Ahead in Survey

Research company Unity Marketing reports that consumer spending on fine watches in the United States rose 39 percent in 2006, while spending on fine jewelry rose by 10 percent. Sales of costume watches did not keep pace with fine watches, plummeting 20 percent.

According to Unity Marketing’s president, Pam Danziger, much of the strong showing for fine watches and fine jewelry is attributable to the growth of the men’s jewelry market, even though it is still very common for men to buy jewelry items as gifts for women, as opposed to products marketed specifically as men’s jewelry. In Danziger’s analysis, 2006 will be known as the year that the jewelry industry really discovered the men’s market and acted accordingly.

Entitled “The Jewelry and Market Watch Report,” the study from Unity Marketing expresses uncertainty as to whether the market for watches will move forward, regardless of the 39 percent growth in this category in 2006.
The results cited by Unity Marketing in this study are based upon the answers given by jewelry consumers with an average income of $74,400, and who were younger than 65. The male/female breakdown of respondents was 40/60.


Gordon’s Launches “Urban Style” Online

Stainless steel bracelets, titanium dog tags and gold railroad link necklaces are part of Gordon’s Jewelers’ vision of the modern man’s attire.

All of these products are now available though a new section of the Gordon’s Jewelers website, entitled “Urban Style: Jewelry for the Modern Man.” Part of the idea behind “Urban Style” is to give men ways to express their personal style through jewelry in various settings including cafés, nightclubs, golf clubs and the workplace, according to Steven Larkin, a spokesman for GordonsJewelers.com. The items run a wide gamut of prices, from $50 to over $1,000.

Also included in the merchandise mix are hip-hop tycoon Russell Simmons’ designs and items from his Green Initiative jewelry collection, which helps finance the Diamond Empowerment Fund established in December 2006.


Generation Y Supports Eco-Friendly Retailers

Retailers had better pay attention to ecological concerns, according to a poll that Maritz Inc., a consulting firm based in St. Louis, Missouri, conducted of consumers representing Generation Y (ages 18-30). Although the poll results show Generation Y as being divided 50/50 on the question of “eco-friendly” products, a substantial number of respondents — 46 percent — said that they would spend more money at a retailer they deemed friendly to the environment.

Exactly half of the respondents said that the policies of retailers influenced their decisions about where and how often to spend their money, while 47 percent said that they would be willing to pay more for services, goods or brands whose production does not harm the environment. Out of that number, 77 percent cited their proclivity to “care about the environment” as a factor encouraging them to pay more. The Maritz poll involved more than 1,000 members of Generation Y, selected at random.


Eco-Friendly Lighting

Argyle Jewelers has reopened its store at the Garden City shopping center in Brisbane, Australia, but it’s not business as usual. The store now features a first for jewelry outlets in Australia – an environmentally friendly lighting system, requiring low energy and producing relatively little heat, while bathing the precious stones below it in an intense light. Additionally, the store is bringing in a computerized manufacturing process this month. “We will be able to make jewelry direct from the computer using a very sophisticated milling machine,” said John Jurgs, the store’s owner. Qualified jewelers will oversee the design, manufacture and repair of jewelry on the premises.


Hearts On Fire to Open Macau Store

The new Venetian Macau-Resort-Hotel will be the site of the seventh Hearts On Fire retail outlet in Asia, and its first store outside of Taiwan. This outlet will offer the entire Jewelry by Hearts On Fire line, including the Bridal collection, Fashion and Couture.


Boucheron to Enter E-Commerce Market

Boucheron, a subsidiary of the Paris-based retailer PPR, has reported that a new e-commerce version of boucheron.com is available to select customers. This site is designed to handle purchases up to $14,000; customers buying more expensive products, like the rose diamond ring that sold at Boucheron’s Moscow store for $13 million earlier in the year, will be given a special telephone hotline.

Boucheron’s chief executive officer (CEO), Jean-Christophe Bedos, told the newspaper Le Figaro that the potential revenue generated by the website is open to speculation, but that the website will drive foot traffic to the stores. The e-commerce site is only one part of the active expansion of Boucheron, which plans to open stores in Doha, Bahrain, Macao, St. Petersburg, Shanghai and Bordeaux.


Luxury Retail Property Sells for $275 Million

Two Rodeo Drive, one of the most prestigious properties in Beverly Hills, has sold for $275 million, to Ireland-based Sloane Capital. Two Rodeo Drive is the street address of many top jewelry brands, including Tiffany & Co., Buccellati, Garrard, Lalique, Breguet, Georg Jensen, Judith Ripka and Gucci Fine Jewelry.

After its completion in 1990, Two Rodeo Drive caught the attention of investors from Japan, who bought the property for approximately $200 million. They subsequently sold Two Rodeo Drive to a family trust based in Europe and represented by Pierre Rolin, chairman of Strategic Real Estate Advisors of London.

The property’s fortunes have fluctuated over the years, from 2001, when occupancy fell to 60 percent and rent cost about $125 per square foot, to the present, with all of the property booked and rent going for more than $500 per square foot.


NRF Expects Slower Holiday Sales

Difficult economic conditions during the upcoming holiday season will force U.S. consumers into a period of adjustment in which they will spend their earnings at a slower rate than before, the National Retail Federation (NRF) predicted. The organization’s chief economist, Rosalind Wells, pointed to a weak housing market and “credit crunch” as factors that will make consumers exercise greater prudence than usual in their spending during the season.
 
During November and December, NRF spokespersons stated that they expect retail sales to rise 4 percent to $474.6 million, the slowest holiday sales growth since 2002. Over the last decade, the average figure for the season has been 4.8 percent. But given that low- to middle-income consumers will feel the brunt of such a downturn more than others, the luxury sector could experience the strongest growth of all segments of the market. The NRF spokespersons noted that customers of luxury retail stores have historically demonstrated an ability to keep up high levels of spending.

Article from the Rapaport Magazine - October 2007. To subscribe click here.