In mid-October, TIFFANY & CO. announced the launch of new-format stores in the American market starting from 2008 under the working name TIFFANY & CO. COLLECTIONS. Those will be smaller sized stores occupying not more than 2,000 gross square feet each (approximately 186 square meters). They will carry a traditional range of Tiffany wares except engagement jewelry. Company President Michael Kowalski said that the addition of this new format would bring the total number of company stores in the U.S. to as many as 170. According to Mr. Kowalski, the company is not abandoning its plan to open five to seven regular Tiffany stores per year. Presently, there are 68 such stores in the U.S.A. Company Vice-President Beth Canavan says Tiffany plans to open 8-12 mini-stores per year.
The concept of new-format Tiffany stores was explained by Mark Aaron, the company’s investor relations executive:
- the stores will sell commodities within the price range from $100 to $15,000;
- as has already been noted, there will be no engagement jewelry in these stores;
- their product range will be prevailed by gold, silver and platinum items and will also feature diamond-emphasized articles;
- the stores will be opened in those localities where so far there are no company outlets (for instance, in university campuses), as well as in those places where the company is already operating its regular stores;
- the advertising strategy for such stores will be similar to usual, taking into account the absence of engagement items.
The company is sure that this concept will not result in depreciation of the Tiffany brand. It is of interest that the new concept envisages active female involvement as buyers despite the general policy of the jewelry industry, which leaves a much less prominent role to women in jewelry purchases.
Financial experts gave a positive assessment of the company’s new venture. Thus, David Schick of Stifel Nicolaus & Co. points out that new-format stores promise higher return on capital since they will offer jewelry, which guarantees a high profit rate, featuring in particular traditional Tiffany articles made of .925 silver. This range of products will exclude all engagement jewelry noted for their low profit rate.
Analyst Barbara Wyckoff of Buckingham Research Group believes that the new-format stores will be marked by higher sales efficiency due to reduced organizational costs and absence of large stocks.
Promoting this new concept, the company continues to develop its traditional format stores.
As it had been promised earlier, Tiffany sold the building of its flagship store in London for $149 million and immediately leased it back for 15 years with two ten-year renewal options. The company has five stores in London and plans to open one more next year.
In May 2008, Tiffany is going to open a store in Westfarms (Connecticut), which will be three times larger than a “mini-Tiffany.” Westfarms is ideally situated to serve the company’s growing customer base in New England, said its executive vice president Beth Canavan.
In the Chinese market, Tiffany plans to open 3 to 6 new stores every year. Since it has become popular among Chinese bridegrooms to buy diamond wedding rings, Tiffany & Co. declares its intention not only to keep abreast of these trends, but also to be ahead offering its products for other memorable occasions.
In addition to its four stores in Beijing and Shanghai, the company is soon going to open new stores - one in Tianjin in December followed by another one in Shenyang in January.
