Retailscope

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.

Four Jewelers Make Hot 100 Retailers List

The National Retail Federation’s (NRF) “2008 Hot 100 Retailers List” included four jewelers, though none made the “Hot 100 Top Ten,” with pharmaceutical, food and clothing outlets featuring strongly. The survey ranks retailers that earned over $100 million based on the highest revenue growth rates of 2007. Blue Nile, which upped its revenue 26.9 percent to $319.3 million for the year, was placed at number 13, though its net earnings fell slightly during the period.

Tiffany came in at number 42, with revenue gains of 14.8 percent to $2.9 billion, while Finlay ranked at number 50, with revenue up 13.1 percent to $835.9 million. Birks & Mayors, at number 93, saw revenue jump 7 percent to $314.8 million. Other retailers on the list who offer jewelry included Amazon.com at number 4, with 38.5 percent growth; Saks at number 57, with 11.7 percent growth; Neiman Marcus at number 75, with 8.9 percent growth; and Costco at number 92, with 7.1 percent growth. Alliance Data conducted the survey on behalf of the NRF.

Unity Marketing Says Luxury Market On The Mend

Unity Marketing’s Luxury Consumption Index sank to its lowest level ever — 51 points — since the group began tracking luxury confidence in 2003, but spokespersons concluded that signs now point to the worst being over. Unity Marketing surveyed 1,024 consumers with an average annual income of $204,800 and an average age of 45. Sixty-four percent of these respondents were women and 36 percent were men.

The results revealed that luxury consumer spending declined 5.3 percent compared to the previous quarter and 19.7 percent compared to the same period of 2007. The ultra-affluent segment, with incomes of $250,000 or more, showed the largest drop in spending. However, Unity spokespersons saw what they termed “cause for optimism” because the rate of decline from the second to the first quarter of 2008 was “substantially less” than that from the fourth quarter of 2007 to the first quarter of 2008. The firm predicted that the U.S. consumer market will begin to experience new life in retail’s critical fourth quarter, especially after the November election, and called for innovation in marketing.

Study Calls Luxury Phones an Opportunity for Jewelers

ABI Research forecasts that revenues from luxury-branded cellular handsets will exceed $11 billion in 2009 and increase to over $43 billion in 2013, which ABI claims presents an opportunity for jewelers. Kevin Burden, ABI’s research director, noted that mobile phones are a logical addition to the product portfolios of jewelry, watches and other fashion accessories. Dior recently introduced its own line of in-house-designed mobile phones. ABI found that other brands are also adding cellular handsets as these products become status symbols.

Online Jewelry Sales Drop

Online jewelry sales in the U.S. fell 10 percent in the second quarter of 2008, according to Comscore. Total online retail sales, excluding travel, rose 13 percent to $31 billion during the three months ended June 30, 2008. The strongest growth for the year so far, an increase of 15 percent, was in April. Despite government stimulus checks, which were intended to boost spending, online retail sales were up just 12 percent in May and 11 percent in June.

Tiffany Appeals eBay Ruling

Tiffany & Co. appealed a federal court ruling in favor of internet auctioneer eBay Inc. The U.S. District Court ruled on July 14 that eBay is not responsible for policing trademark infringement on its site. In a statement released by Tiffany on August 11, Patrick Dorsey, the company’s general counsel, argued that eBay “should be compelled” to proactively protect both customers and trademark holders. In June, a French court ordered eBay to pay more than $61 million to LVMH Moet Hennessy Louis Vuitton SA, which complained that it was hurt by eBay’s sale of knockoff bags, perfume and clothes. eBay is appealing that ruling.

In other Tiffany news, the Institute for Sustainable Mining (Artminers), a global nongovernmental organization (NGO), was awarded a $100,000 grant from the Tiffany & Co. Foundation to fund a scholarship program enabling Malagasy citizens to attend two gemology institutes in Madagascar. The program will allow nearly 150 students to attend the Institut de Gemmologie de Madagascar (IGM) in the capital city Antananarivo and the L’Ecole Supérieure Spécialisée de Vakinankaratra (ESSVA) in Madagascar’s gem district of Antsirabe. Madagascar’s yearly per-capita income is $280, but a skilled worker in a gem factory can earn $165 per month, according to Tom Cushman, project manager of Artminers. Fernanda Kellogg, Tiffany & Co. Foundation’s president, stated that the foundation recognized the increasing importance of Madagascar for gem sourcing in awarding the grant.

Richemont Plans Restructuring

Swiss luxury group Compagnie Financière Richemont S.A. (CFR) announced plans to spin-off its stake in British American Tobacco (BAT) as part of a restructuring initiative focused on its luxury business. Under the proposal, CFR would distribute 90 percent of Richemont’s interest in BAT, representing 17.5 percent of the total, to Reinet shareholders on November 3, 2008. The remaining 10 percent of its BAT shares will be retained in Reinet. CFR’s Geneva-based luxury goods business will continue to list on the SWX Swiss Exchange and hold all of Richemont’s luxury assets, including Cartier watches, Piaget jewelry and Mont Blanc pens. The plan still required shareholder approval at press time.

Following that announcement, Richemont acquired 60 percent of Geneva-based watchmaker Roger Dubuis SA via a private transaction with Carlos Dias, one of Roger Dubuis’ founding shareholders. Under the agreement, Roger Dubuis will continue to manufacture and distribute watches under the Roger Dubuis name, but will operate as an autonomous “Maison” within Richemont. Richemont said the transaction was not expected to have any significant impact on its overall profitability for the current year.

Macy’s Hires Consultant to Boost Sales

Macy’s inked a multiyear contract with consumer insight consultants dunnhumbyUSA, who will analyze the retailer’s customer sales data, develop customer segmentation models and apply the findings. Macy’s reported that same-store sales during the second quarter dropped 2.1 percent.

JCPenney Launches Reward Program

Jewelry sales at J. C. Penney Company stores have been weak for several quarters now, but the retailer hopes to improve sales across all categories with its new JCP Rewards program. Customers earn one reward point for every dollar they spend at JCPenney with any of three credit or debit cards. Points will double for customers that shopped at JCPenney during the previous month. JCP Rewards members can earn up to $120 in reward certificates annually.

Neiman Marcus Plans New Store

Neiman Marcus finalized a lease agreement with shopping center developer Macerich for a store at Broadway Plaza in Walnut Creek, California. The department store could open as early as the fourth quarter of 2010, joining Nordstrom, Macy’s and numerous specialty shops.

Flawless Diamond to Expand Retail

Flawless Diamond is planning to invest up to $19.5 million to expand its retail business and explore opportunities in the Persian Gulf, Europe and the U.S. The Mumbai-based diamond and jewelry manufacturer stated in a note to the Bombay Stock Exchange (BSE) that it would need $17.2 million to $19.5 million (INR 750 to 850 million) to open 75 new retail outlets in the next two years and establish more manufacturing facilities. The company also plans to step up its online presence and extend its portfolio to include lifestyle products, platinum, gold and silver jewelry lines, watches and men’s accessories.

Cash4Gold Expands

Cash4Gold expanded its online reach with a new wholly-owned subsidiary, TheEstateBuyer.com, for high-end jewelry sales. The service grew from a specialty operation that employed a small team of gemologists and fine jewelry specialists to a self-sustaining business model. The subsidiary is rapidly expanding and hiring fine jewelry, diamond, watch and estate jewelry experts, according to a statement released by the company.

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