By Neil Saunders
Saunders believes Tiffany’s remodel program can boost sales as it addresses the needs of today’s shoppers. “The Union Square shop in San Francisco, which was redesigned earlier in the year, has been well received and is delivering results. The design feels youthful and modern but maintains an air of exclusivity and luxury. If this thinking can be rolled out to other stores, including non-flagship locations, Tiffany can make real progress in driving up same-store numbers.”
A more positive set of results from Tiffany show the early promise of progress at a company that has often struggled to remain relevant in the modern era of retail. That said, there are still some areas of residual softness, especially in terms of same-store sales and particularly across the Americas. As Tiffany management recognizes, there is a lot more work to do before the company is back on the ground of firm, sustainable growth.
One of the more promising areas of progress is the company’s attempts to better connect with younger consumers – a constituency with which it had lost traction. Some of this is down to improved product – with the more contemporary, fashion-focused “Return to Tiffany” collection of silver jewelry having been well received. Collections by designers like Elsa Peretti and Paloma Picasso have also stimulated interest and have added a much-needed contemporary edge to Tiffany’s product mix.
With improvements to the assortment, Tiffany also understands that it needs to communicate to younger shoppers to increase the resonance of the brand. Here we are encouraged by marketing campaigns, including fall advertising featuring Janelle Monáe, Zoë Kravitz, & St. Vincent (Annie Clarke). These campaigns have a much more modern feel and successfully highlight the changes that are being made on the product front.
All this said, it will take time for the changes to percolate through to customers and to drive sales – not least because jewelry is an infrequent purchase. However, we are pleased that Tiffany has made the changes in time for the important holiday season and believe the chain will reap some rewards over the final half of its fiscal year.
One of the areas where we have long been critical is store design. While they are neat and well maintained, many of Tiffany’s stores look old fashioned and, for the younger consumer, can be intimidating. In essence, they convey a message of old-world luxury which is increasingly at odds with what consumers want and with what many competitors are delivering. The company now seems to have recognized this with the ongoing remodeling of some of its main stores.
The Union Square shop in San Francisco, which was redesigned earlier in the year, has been well received and is delivering results. In our view, the design strikes exactly the right balance between something that feels youthful and modern but which maintains an air of exclusivity and luxury. If this thinking can be rolled out to other stores, including non-flagship locations, we believe Tiffany can make real progress in terms of driving up same-store numbers.
For all of the advancements, there is much more to be done, and Tiffany remains a work in progress. However, we believe that there is now a sense of momentum and energy at the company that was simply not there a few years ago. The new management team is responsible for this, and the recent appointment of Alessandro Bogliolo as CEO should ensure that change continues at pace.
Neil Saunders is managing director of GlobalData Retail.