Retail Scope

RAPAPORT... The last stop for diamonds is the retail store. Here is a behind-the-scenes look at what is happening in retail in the U.S.

Government Issues Brochure for Jewelry and Watch Shoppers
The Federal Trade Commission (FTC) published a consumer brochure titled “Puttin’ on the Glitz: What to Know When Shopping for Jewelry” to help consumers make smart decisions when buying diamonds, gemstones, gold, watches and pearls.

The FTC recommended that shoppers compare prices and quality at several retailers and verify a store’s reputation with the Better Business Bureau or their state attorney general’s office. The agency instructed consumers to note the store’s return policy and, when ordering online, keep printouts of web pages featuring transaction details.

The commission also wrote that gemstones created in the lab are practically identical — visually, physically and chemically — to stones mined from the earth, with the big difference being the cost. The brochure advises consumers to consider cut, color, clarity and weight when buying a diamond and that there is a big difference between 14-karat gold and gold-plated jewelry. The brochure is available at http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt011.shtm.

Only 24 Percent of Consumers Plan to Spend White House Payout
According to the latest research by the International Council of Shopping Centers (ICSC), most people intend to use the cash from the White House’s proposed stimulus package to pay off debt. A survey conducted between January 31 and February 3 asked 1,000 consumers what they would do with the money if the legislation was signed into law. The majority, 43 percent, said they would pay off debt, while 26 percent said they would put the money into savings and 24 percent said they would spend it.

The proposal was designed to give money to consumers to increase retail sales and jump-start the economy. It is expected to give up to $600 to individual taxpayers who earn less than $75,000, and up to $1,200 to couples who earn less than $150,000. In the end, about $25 billion will head into the spending stream, according to Michael P. Niemira, chief economist and director of research for ICSC.


Bulgari Taps ATG to Create Online Store
E-commerce provider Art Technology Group (ATG) was selected by Bulgari to launch the luxury Italian brand’s web store. The U.S. site is live and offers shoppers the opportunity to purchase jewelry, watches and accessories. The firm won the bid against IBM and SAP because it offers sophisticated, packaged functionality, according to ATG.

A software application called ATG Merchandising will help the retailer make automated recommendations to its customers, based on their behavior and the purchase affinities of others in the same market segment.


De Beers Opens in Hong Kong
De Beers Diamond Jewellery launched operations in Hong Kong by opening its first store in the island’s central district. The 2,200-square-foot store is located in luxury mall The Landmark, with neighbors that include Tiffany & Co. and Dickson Watch & Jewellery, as well as the Christian Dior, Valentino and Harvey Nichols flagships. De Beers said that it plans to expand to a total of 49 stores, with new locations in the United States, Hong Kong, Russia, the Middle East and a flagship store in Tokyo. At the end of 2007, the company had 23 stores.


Amazon Says Diamond Sales Double
Amazon.com reported that diamond sales rose more than 100 percent in the fourth quarter of 2007, albeit without citing actual figures. One year ago, Amazon reported that diamond sales rose by triple digits, as well. Popular Christmas gift items included a 14-karat white gold journey curve pendant; platinum diamond stud earrings; and a 2-carat round loose diamond.

Diamond-encrusted watches and various black diamond items also did very well, the company reported. Top-selling diamond watches in the fourth quarter included the Cartier Tank Divan 18-karat yellow gold diamond mini ladies watch; the Chopard Happy Sport ladies watch; and the Movado Kara watch. Sales across all product categories in the fourth quarter rose 42 percent to $5.7 billion and profits rose 112 percent to $207 million, according to a company statement.


Vacheron Rated Most Prestigious
Consumers with an average net worth of $15.1 million and an average income of $789,000 rated Vacheron Constantin the most prestigious luxury watch brand in the latest study by the Luxury Institute. Patek Philippe and Piaget were ranked second and third, respectively. The 513 respondents described the Vacheron brand as “one of the best in skeleton movements and finishing” and as “very dependable” and “unique.” In total, 31 brands were ranked.


Tiffany Opens Patek Phillipe
Tiffany & Co. will open the first Patek Philippe salon in the U.S. in the mezzanine of New York City’s flagship store on Fifth Avenue. The store’s mezzanine will display a collection of traveling museum watch pieces on loan from the Patek Philippe Museum in Geneva. In conjunction with the opening, Patek Philippe will host a three-day exhibition in the space, beginning April 24, which will showcase the most complete set of timepieces ever exhibited outside of Switzerland.

The company plans to open an approximately 6,200-square-foot Tiffany store in a corner location of Easton Town Center in Columbus, Ohio, in November 2008, as part of the company’s continuing expansion.

The company will also launch a new store in Madrid, Spain. The 5,400-square-foot space is slated to open in fall 2008, and will occupy two floors in the landmark No. 10 Calle Jose Ortega y Gasset building. This news came on the heels of the company’s announcement that it will unveil two men’s boutiques in the Hankyu Department Store in Osaka and in Roppongi Hills, Tokyo, this spring. Offerings will include a collection of men’s jewelry and gift items from designers Elsa Peretti, Paloma Picasso and Frank Gehry. A new-concept, smaller-format store is scheduled to open in October 2008 in Glendale, California. In Australia, Tiffany intends to open a three-level store in Perth featuring the company’s classic collections.


Movado to Close 2,600 U.S. Doors
Movado Group Inc. announced it will reduce its U.S. doors by 35 percent to approximately 2,600 by the close of its fiscal year ending January 31, 2009. The closing of these least productive doors represents approximately $10 million of Movado brand sales, or less than 5 percent of the overall brand’s revenue, and less than 2 percent of Movado Group’s consolidated revenue. The company’s strategy is to unite areas of product development and optimize its wholesale distribution network to enhance the performance of its boutiques. Movado Group predicted that fiscal 2009 net sales will be in the range of $555 million to $565 million. On a Generally Accepted Accounting Principles (GAAP) basis, diluted earnings per share for fiscal 2009 were expected to be approximately $1.65 to $1.72, based on a projected tax rate of 24 percent.


Nine New Retailers at South Coast Plaza
South Coast Plaza in Orange County, California, will open nine luxury retail stores encompassing four jewelry brands. Oscar de la Renta currently offers jewelry at a new boutique on site. ROLEX will open a flagship store in April, featuring one of the largest collections in the world. Piaget will offer watches and jewelry at its new store, beginning June 1, while Harry Winston plans to open a site in the South Coast Plaza jewel court in July.

Article from the Rapaport Magazine - March 2008. To subscribe click here.