Retail Scope

RAPAPORT... 
Luxury Goods Consumption Index Drops
Unity Marketing’s Luxury Consumption Index (LCI) dropped 9.1 points to 54.4 in the first quarter of 2008, a historic low. Consumers in the high-end range reportedly expect the luxury marketplace to continue to stall for at least six more months. Approximately 41 percent of luxury consumers expect to spend less on luxury in the next twelve months, compared with only 13 percent who expect to spend more. In addition, 71 percent say the overall financial health of the country is worse now than it was three months ago. Unity Marketing surveyed 1,258 consumers with incomes of $100,000 or more from April 7 to 11. The average income of the participants was $173,400, and the average age was 45.9 years.

Survey Says Online Sales To Grow 17 Percent
“The State of Retailing Online 2008” survey predicted that internet retail sales would grow 17 percent to $204 billion this year. However, the rate would represent a slowdown from 2007, when e-commerce sales grew by approximately 20 percent, according to online trend analysts ComScore. Forrester Research conducted the survey on behalf of Shop.org, interviewing 125 retailers. According to the report, online retailers allocate 53 percent of their marketing budgets to online customer acquisition and 21 percent to online customer retention. Retailers found that search engine marketing, which comprises 35 percent of total online sales, continues to be the most effective way to reach new customers. Approximately 90 percent of online retailers surveyed use pay-for-performance search placement and 79 percent said they will make this tactic an even greater priority this year.

Whitehall Buys 78 Friedman’s
Whitehall Jewelers Holdings, Inc. acquired 78 Friedman’s Inc. and Crescent Jewelers stores for about $14.3 million through its subsidiary, Whitehall Jewelers Inc. The final sale price, however, is subject to adjustments after inventory is completed by a third party. Whitehall Jewelers plans to continue operating most of the retail locations as either Whitehall or Lundstrom stores. Friedman’s began a liquidation sale of assets on April 5, and Whitehall may also acquire some consignment goods currently for sale by the chain. Whitehall paid 67 percent of the purchase price at closing and delivered an irrevocable standby letter of credit to Friedman’s to secure its obligation. Whitehall is financing the acquisition by borrowing from its revolving credit facility, which was amended to permit this financing. The company will borrow an additional $5 million from PWJ Lending II LLC, an affiliate of Prentice Capital Management.

Leading Jewelers Guild Focuses on Strategy
The Leading Jewelers Guild held its semiannual meeting at the Radisson Ft. McDowell Resort & Casino, east of Scottsdale, Arizona, from March 5 to 9. Martin Hurwitz, chief executive officer (CEO) of both the Jewelry Consumer Opinion Council (JCOC) and MVI Marketing, gave the keynote address. Meetings were conducted to help jewelers develop strategies for tough economic times, while other sessions were devoted to merchandising the group’s catalog program, sharing promotional ideas, utilizing third-party credit plans and orienting new members. The Leading Jewelers Guild was founded in 1958 and is owned by its member jewelers.

GIA Offers Free Support Kit
The Gemological Institute of America (GIA) is offering a new Retailer Support Kit to jewelry retailers. The kit is part of GIA’s public outreach campaign to build awareness of the GIA International Diamond Grading System. It contains a crystal display for the jewelry case, a GIA window decal, brochures defining the 4Cs, give-away cards providing carat weight information and GIA color, clarity and cut grading scales, the new DVD “How GIA Grades Diamonds” and a counter pad that explains GIA grading reports to consumers. The kit is free to retailers, who pay only shipping and handling. To order, visit www.retailer.gia.edu.

InPoint to Launch Active RFID Tags
InPoint Systems invited a group of jewelry industry executives to preview the company’s new radio frequency identification (RFID) system, Roll-Call. The inventory management system tracks items at each location within the supply chain. The significant difference between Roll-Call and other RFID systems is that Roll-Call’s active tags have an internal power source and communicate with networked readers, so there is no need for tags to be scanned or pass through a portal. The information is read by software on dedicated servers, which feed data to existing inventory, point-of-sale (POS) and alarm systems. Dr. Eitan Fenson, InPoint’s chief executive officer (CEO), told meeting attendees that a Roll-Call development kit was delivered to the U.S. Army’s Communications-Electronics Research, Development and Engineering Center (CERDEC) and that more orders from CERDEC and other Army groups were anticipated.

WhiteFlash Unveils AWEAR Youth Line
Online diamond retailer WhiteFlash.com launched a new line of diamond charms called “AWEAR: Jewelry for Conscious Kids.” The target market is 15- to 24-year-olds and the charms retail for $250 to $1,500. Twenty-five percent of the proceeds from AWEAR will go to the nonprofit group World Centers of Compassion for Children International (WCCCI) to provide educational opportunities for young victims of the illegal diamond trade.

De Beers Opens Dallas Store
De Beers Diamond Jewellers opened a store in Dallas’s NorthPark Center, its sixth in North America. The 1,878-square-foot boutique features new jewelry collections designed by Raphaele Canot, De Beers creative director, as well as bridal and signature collections. De Beers Diamond Jewellers, originally called De Beers LV, was established in 2001 by De Beers and LVMH Moët Hennessy Louis Vuitton as an independently managed and operated company.

Leviev Expands in Dubai
Leviev unveiled plans to open two new stores in Dubai this year. Leviev’s 2,000-square-foot Dubai flagship boutique will be located in Burj Dubai Mall, billed as the world’s biggest mall. Leviev stated that construction of the store will begin in the fourth quarter of 2008. A Leviev mini-boutique, measuring 300 square feet, will be situated in the lobby of the new Atlantis Hotel resort on Jumeirah Palm Island. The store is scheduled to open in September 2008, with the two sites bringing the number of Leviev locations in Dubai to three — the third being an existing Leviev shop-in-shop at Levant Jewelers in the lobby of the Al-Qasr Hotel. Leviev has partnered with Levant Jewelers for all of its Dubai retail operations.

Former Neiman Marcus Security Guard Sentenced
The U.S. Department of Justice (DOJ) sentenced Manuel Alvarez, 37, a former security guard for Neiman Marcus in Dallas, to 27 months in prison and ordered him to pay $323,195 in restitution for transporting stolen jewelry across state lines. The court found that losses to Neiman Marcus from his scheme exceeded $400,000. Alvarez pleaded guilty in December 2007 to using his security key to steal at least 400 pieces of jewelry in 2004, so accomplices could sell the goods on eBay.

RITANI LAUNCHES AD CAMPAIGN
Ritani unveiled a marketing campaign focused on the range of emotions experienced by consumers when they give or receive Ritani jewelry. The ads, shot by celebrity portrait photographer Stewart Shining, will appear in Elegant Bride, Martha Stewart Weddings, W, Harper’s Bazaar, Elle and Marie Claire, as well as on theknot.com. The company also launched its website, www.ritani.com, and new point-of-sale (POS) materials for retailers. Ritani has created hand-finished jewelry since 1999.

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