January 2008
Sale-stirring scents fume into jewelry stores
Sale-stirring scents fume into jewelry stores
January 20, 2008
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| The briefcase-like Aroscent Portable is popular among jewelry storeowners. The machine, priced at $1,600, can scent a room up to 6,000 square feet in size. |
By Michelle Graff
New York—”What’s that smell?” is not normally a question retailers want to hear when customers enter their store.
But it could be in the future, as stores increasingly turn to scenting as a way to increase browsing time and build a brand for their business.
Consider this: A 2006-2007 study conducted by United Kingdom-based market research company Millward Brown and scent manufacturers Firmenich and Symrise showed that by spraying a scent, retailers can increase sales by as much as 19 percent.
Other studies have shown that consumers are more likely to linger in a store that smells nice, and increased browsing time raises chances that consumers will make a purchase.
Other retail sectors have been using scent for years. High-end clothing retailer Thomas Pink enhances its stores with the scent of air-dried linen, while appliance and electronics store Hhgregg says they pumped up sales 33 percent by adding apple pie and sugar cookie scents to sales floors.
Even non-retailers embrace the trend: The MRI room in Florida Hospital’s Seaside Imaging Center is vanilla-scented to help curb claustrophobia and tension. This has led, the center says, to a decrease in the number of people who need sedation and a 50 percent drop in cancellations.
Now, jewelers are sticking their noses into the scenting game.
High-end retailer Leviev, which specializes in multimillion-dollar fancy-colored diamonds at its new store on Madison Avenue, and chain retailer Ross-Simons, which just renovated its Providence, R.I., outlet, both chose a signature scent for their new stores.
“The merchandising tale of the year here has been fooling around with your scent,” says store environment expert Paco Underhill, chief executive officer of Envirosell. “There is now a great deal of emphasis on stores having a particular smell to them.”
He attributes the new wave of popularity to improved technology in managing scent as well as cost: Scenting a store is much less expensive than a number of other improvements, such as replacing permanent fixtures like lighting or display cases.
But retailers, beware: If the odor is too strong or simply doesn’t smell good, it can turn into a repellent, Underhill says.
An aroma all your own Terry Molnar, executive director of the New York-based Sense of Smell Institute, suggests retailers choose a scent that matches the product.
“You’re not going to put a cinnamon bun scent in a diamond store,” she says.
Scenting has caused enough of a stir in the jewelry industry, in fact, that at the American Gem Society’s 2008 Conclave, scheduled for April 11-14 in Seattle, branding expert Martin Lindstrom is slated to speak on the topic.
His advice to retailers considering adding scent to their store? Pick something unique so the scent becomes associated with that store and that store only.
“This [scenting] is an evolution in the jewelry business, and we’ve only seen the very tip of the iceberg—as this is a tool to create customer loyalty, which is almost impossible to compete against once you’ve established a sensory relationship with your customer,” says Lindstrom, author of Brand Sense: Build Powerful Brands through Touch, Taste, Smell, Sight, and Sound.
He says retailers should avoid pre-mixed scents and instead opt for a unique aroma that reflects the store’s brand.
“You would, under normal circumstances, never visit a Web site and copy a logo and use this, right?” he asks.
During Lindstrom’s speech at the 2008 Conclave, Charlotte, N.C.-based Air Aroma America will scent the room.
Founded in Australia, Air Aroma entered the U.S. market six months ago and currently supplies fragrances and machines for five jewelry stores.
The most popular models among jewelry storeowners are the Aroscent Portable, which is the size and shape of a briefcase, and Aroscent Single, which is mounted on the wall.
The Aroscent works in rooms up to 6,000 square feet, and each machine releases scent automatically according to the setting chosen by the user, from weak to strong.
That particular company offers leases of two years at $185 per month, including oil. Buying the machine outright costs $1,600, and retailers spend about $80 per month for oil.
Marlene Levy, owner of Gold N’ Things, chose a mix of Air Aroma’s linen and lemongrass scents for her Miami jewelry store.
Because she’s only had the fragrance a short time, it’s difficult to say if the fresh scent has heightened sales yet. It hasn’t gone unnoticed among her customers, however, whom she says almost always inquire about the fragrance when they come into her store.
Chris Sink of Hi-Ho Silver in Virginia says he gets a similar reaction from customers when they enter any of his three locations, in Newport News, Norfolk and Virginia Beach.
“The intention is, over time, that the scent they recognize will help remind them of Hi-Ho Silver,” says Sink, who installed his machines this fall.
His fragrance of choice is bergamot orange, which he selected after hearing tests showed this particular fragrance helped increase sales.
And while it is too early to tell if this is working for Hi-Ho Silver, Sink says the monthly scent bill is well worth it.
“I’m looking at it in terms of marketing dollars,” he says. “I’m trying to create a unique shopping experience for my folks. I look at things like music and scent as being intangibles.”
Scent of a store
Here are the feelings evoked by some of the more common scents:
Cinnamon: Promotes alertness and focus, gives those smelling it a sense of purpose.
Floral fragrances: Prompt both men and women to linger longer.
Lavender: Calming, creates a relaxed state of mind.
Rose meroc: Increases sales among men.
Sandalwood: Improves mood, stimulates and increases confidence.
Spicy fragrances: Cause men to linger longer.
Vanilla: Increases trust, prompts sales among women.
Ylang-ylang: Reduces stress and nervousness.
Source: Air Aroma
Making sense of scent
A few interesting facts about our sense of smell:
* People recall smells with about 65 percent accuracy after a year, compared with 50 percent for visual recall of pictures after about three months.
* A woman’s sense of smell is keener than a man’s.
* Your sense of smell is least acute in the morning; ability to perceive odors increases as the day wears on.
* The average human being is able to detect about 10,000 different odors.
* No two people smell the same odor the same way.
Source: Sense of Smell Institute
DTC sightholder cuts run deep, but no major impact for U.S. retailers
DTC sightholder cuts run deep, but no major impact for U.S. retailers
January 20, 2008
By Michelle Graff
London—The Diamond Trading Co. (DTC) says the recent sightholder reshuffling, which slashed the number of companies receiving its loose diamonds by 15 percent, will not impact U.S. retailers.
The list of sightholders for London and South Africa for the 2008 through 2011 contract period, released on Dec. 17, included 75 companies, down from the previous 93, with six new applicants added and 24 companies ousted. Counting sightholders in Namibia and Botswana, there are 79 names total.
Losers included New York-based diamond dealers Hasenfeld-Stein, which lost its sight, and sightholder applicant Sterling Jewelers, which was rejected.
Notable companies retaining their sightholder status include New York-based Lazare Kaplan International, which also has a Botswana sight, and Rand Precision Cut Diamonds Ltd., which supplies Tiffany and Co.
DTC Managing Director Varda Shine would not tell National Jeweler which diamond centers were hit hardest by cuts.
Out of nine U.S. sightholders, at least one—Hasenfeld-Stein—was cut, but six companies confirmed that they retained their sights—Julius Klein Diamonds LLC, Lazare Kaplan International, Louis Glick Diamond Corp., Michael Werdiger Inc., Premier Gem Group and Stuller Inc. Meanwhile, the fates of Almod Diamonds Ltd. and Dynamic Diamond Corp. remained unclear at press time.
“There hasn’t been one center that has done better or worse than another,” Shine says.
The only exception is southern Africa, where De Beers has been concentrating its beneficiation efforts, siphoning off supply from traditional diamond centers to develop and sustain diamond-polishing industries in Botswana, Namibia and South Africa, she adds.
Shine also says she “really can’t see” that the trimmed-down list will have an impact on U.S. retailers, pointing out that many of the same companies that have been suppliers for years remain on the list.
Ben Janowski of Janos Consultants agrees, adding that U.S. retailers won’t have problems buying diamonds, whether they come from a De Beers sightholder or another source. He also points out that retailers are no longer impressed by the prestige associated with being a De Beers sightholder.
In fact, between the negative publicity the company received over the Blood Diamond movie controversy and the opening of its eponymous retail stores, displaying the De Beers name might be something retailers are working to avoid.
“It certainly doesn’t have the impact it used to,” Janowski says.
While Shine says that the revised sightholder list won’t impact supply, she did admit the DTC would have “a little bit” less supply in the future due to a court-mandated phase-out of DeBeers’ purchases of Alrosa rough in an effort to create more competition in the diamond market. Though the ruling is being appealed, DeBeers is set to get its last batch of Alrosa diamonds, $400 million worth, in 2008.
Editor’s note: For earlier developments in this story, see Majority of U.S. companies retain sightholder status
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Swatch Group, Tiffany alliance expected to pay off—in time
Swatch Group, Tiffany alliance expected to pay off—in time
January 20, 2008
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| Current plans call for only Tiffany and Co. to sell its branded watches from its own U.S. stores. |
By Joseph Dobrian
New York—Luxury watch market analysts are applauding a new deal that will have Swatch Group manufacturing Tiffany and Co. watches and distributing them outside the United States, but they also warn that the luxury retailer will have to earn its timepiece credentials.
“Swatch should be able to establish the Tiffany name as a watch brand to the degree that it’s already established in jewelry—but it’ll be a long road because watches are like cars: You don’t become a premium brand overnight,” says Pam Danziger, president of Unity Marketing in Stevens, Pa. “You have to earn your stripes.”
Under the partnership, a wholly owned affiliate of Swiss-based Swatch Group will take over the manufacture, brand management and non-U.S. distribution of Tiffany watches as part of an extendable 20-year agreement. Tiffany formally announced the strategic alliance at a Dec. 5 press conference at its flagship retail store in New York.
“We needed a partner with expertise and capabilities in supply, execution and brand management,” Tiffany Chairman and Chief Executive Officer Michael J. Kowalski told reporters. “We chose to go with the wholly owned affiliate model because we wanted to form a partnership that went deeper than a traditional licensing agreement. Swatch will be involved in design and distribution. It will be an intimate relationship.”
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| Tiffany and Co.’s collection currently includes the “Diamond Cocktail” watch in 18-karat white gold. |
Nayla Hayek, daughter of Swatch founder Nicholas Hayek Sr., will head the new subsidiary company, and Tiffany will sit on its board of directors, give input on design and marketing, and get an undisclosed percentage of pre-tax profit from Swatch.
Rewinding the Tiffany watch The Tiffany watch assortment is also being redefined, Kowalski said. The new watches will continue to retail in the $1,500 to $10,000 range (comparable to Bulgari and Cartier), but the collection will be pared down, and Tiffany will take a markdown of some $20 million on existing product.
“This is a fine-tuning, the idea being to streamline the assortment,” Kowalski said.
Most SKUs will be continued, including the “Atlas,” “Grand” and “Mark” lines, and other lines may be added, he said.
The first new Tiffany collection, though, has yet to be finalized, and U.S. distribution outside of Tiffany stores is yet to be decided. The first full-fledged new collection will likely debut in 2009, said Nick Hayek Jr., CEO and president of the group management board of Swatch Group.
Nor has any decision been made, apparently, about the production-run size for the new Tiffany watches. Some observers have expressed concern about industry-wide production capacity, citing shortages of both top-flight watchmakers and watch parts. Hayek Sr., while acknowledging the problem, reported that Swatch has been investing in the means to increase production of all of its brands.
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| The “Tiffany Mark” mechanical watch in 18-karat gold. |
“In some areas, we’ll double production next year,” Hayek Sr. told reporters. “It’s too soon to tell whether we’ll introduce new movements and complications—but we can eliminate no possibility.”
Asked whether or not Tiffany entered the agreement to forestall a hostile takeover, which has been rumored in the press, Kowalski said long-term strategy was at play.
“This decision was driven by a tremendous opportunity,” Kowalski said. “It’s about the long-term health of the brand.”
A high-low combination? Industry observers point out that the Tiffany and Swatch brands have different connotations, so the partnership is sure to be interesting.
“When you think of Tiffany, you think of the blue box and jewelry, as opposed to Cartier, a jeweler that’s very well known for its watches,” Danziger says. “Meanwhile, the Swatch brand is associated with the disposable watch concept and has not lost that perception despite the fact that the Swatch Group produces so many luxury brands.”
Paul DiModica, president of Value Forward Group, a management consulting company based in Atlanta, agrees that the Swatch name is still identified with the lower end of the watch market despite the company’s upstream efforts.
“This agreement is a matter of brand communication and of marketing distribution,” DiModica says. “Swatch will bring a larger market to the Tiffany brand. Whether or not the Tiffany name will suffer or be enhanced by this relationship will depend on Swatch’s ego.”
DiModica notes that at least historically, Swatch has used its financial resources, distribution channels and marketing clout to promote the prestigious brands that it has acquired, while keeping the Swatch name in the background. This strategy, he says, must be maintained.
“Watches in general, in the past few years, have taken a more up- scale move, so this could lead to a very strong extension of the Tiffany name,” he says. “The brand is important, since the average person can’t tell a $50,000 watch from a $1,000 watch.”
DiModica says Swatch could dilute the prestige of the Tiffany name by over-producing, but this, too, is unlikely.
“When Swatch has made other acquisitions of high-end brands, distribution of those brands has increased by 10 percent to 20 percent, but Swatch has maintained a restricted distribution model,” he says. “Limited supply is a key element for the success of prestige-brand watches. Swatch is a smart marketing company, and their success with Tiffany will depend on how they use the brand.”
DiModica says he doesn’t expect any economic slowdown to harm watch sales at the upper levels.
“People used to drive their net worth; now, because of the influences of Hollywood and hip-hop, they wear their net worth,” he says. “A recession may hurt people who have ordinary jobs and mortgages, but there’s no recession for people who have money. Sales of high-end goods actually tend to go up.”
Ram Mudambi, professor of strategic management at the Fox School of Business at Temple University in Philadelphia, suspects that the Swatch-Tiffany alliance might lead to growth in emerging markets such as China, India and Japan.
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| The “Tiffany Grand” mechanical watch in 18-karat gold. |
“Swatch makes almost all of its profit from its luxury brands, and this alliance is very much of a piece with the company’s general strategy,” Mudambi says. “What Swatch has done with Omega in China and India is a perfect example of how they position a brand. They establish the brand early in an emerging market, where brand recognition is important. The Tiffany brand is sure to strengthen Swatch’s stable.”
What the retooled Tiffany watches will look like, how they’ll fit into the overall market and how they’ll be promoted, all remain to be seen. Tiffany and Swatch executives were both coy about any firm plans, and some observers suspected that the details were a long way from finalized.
“They’re still trying to figure everything out,” says Bertram Kalisher, director of the American Watch Guild. “Under this agreement, Swatch won’t sell Tiffany watches in the U.S.—that’ll be saved for Tiffany stores—unless Tiffany and Swatch can find other retailers who will protect the brand. That remains to be worked out.”
Still, the Tiffany name will be combined with the manufacturing skills of brand such as Breguet, Glashütte and Blancpain, and that will retain quality levels and ensure some interesting watches, Kalisher says.
Plus, the agreement indicates the mechanical-watch business is getting stronger.
“Overall, this will probably have a positive effect on the industry,” Kalisher says.
Dropped by major players, will blue topaz fade away?
Dropped by major players, will blue topaz fade away?
January 20, 2008
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| Blue topaz, as seen here in a ring by Stuller, is one of the most popular gemstones, generating about $1 billion in annual sales, says the American Gem Trade Association. |
By Michelle Graff
New York—Two major department stores and QVC have halted irradiated blue topaz sales for the foreseeable future amid licensing-issue questions, leaving some industry insiders to wonder about the future of the widely sold gemstone.
Sterling Jewelers, parent company of Kay Jewelers and Jared The Galleria Of Jewelry, and J.C. Penney Co. both pulled the popular gem off store shelves last summer and have not restocked it since.
Penney spokeswoman Darcie Brossart says the store has “no plans to offer [blue topaz] at this time” and is now selling diffused blue topaz.
“It’s trouble-free,” Brossart says of the substitute stone. “The color’s permanent and the stone is just as hard as the original blue topaz.”
Similarly, Sterling spokesman David Bouffard says the company enacted a policy against selling irradiated gemstones of any type.
Sterling is now selling a cobalt-diffused/heat-treated blue topaz, while home shopping giant QVC stated “QVC does not sell neutron-irradiated blue topaz at this time.”
Blue topaz began getting the cold shoulder last summer when the Nuclear Regulatory Commission (NRC) informed the U.S. jewelry industry that only NRC-licensed companies could import and initially distribute irradiated blue topaz.
At that time, no domestic companies were licensed to do so, prompting blue topaz sellers such as Sterling and Stuller to voluntarily suspend sales of the stone, even though the NRC did not require them to.
The NRC has since announced three companies—Ideal Source Quality Assurance, HBM Virginia and International Isotopes of Idaho—as blue topaz licensees.
NRC spokesman David McIntyre says two more companies, PAJ Inc. and GemClear LP, have applied for a license.
McIntyre also says the NRC’s policy of “enforcement discretion” regarding blue topaz means the agency will remain hands-off about supplies of the stone already in stock.
As the dust settles surrounding the blue topaz debate, new NRC regulations have taken effect regarding accelerator-irradiated stones.
As of Nov. 30, all accelerator-irradiated stones, including beryl, tourmaline, kunzite and diamonds, will be subject to the same NRC testing regulations as blue topaz.
McIntyre says two of the three labs licensed to test irradiated blue topaz, Ideal Source Quality Assurance and International Isotopes of Idaho, also have a license to test accelerator-irradiated gemstones, and a third, HBM Virginia, is in the process of getting licensed.
What effect these new regulations will have on the industry is debatable. Joe Orlando, vice president of gemstones at Stuller, says the new regulations will raise blue topaz prices and extend the time it takes to get the stones into retailers’ hands.
This may prompt some to wonder if blue topaz is worth it.
“Margins are not at a point where they can support that,” Orlando says. “You’re going to see it passed along in increased prices.”
Orlando says a number of alternatives to irradiated blue topaz, such as coated, diffused and mystic topaz, exist.
He also says that due to the new regulations, the trend could extend to affect all irradiated gems.
But Rick Krementz, a past president of the American Gem Trade Association and now president of sales and marketing at licensee applicant GemClear, says he doesn’t think the new regulations will have a huge, long-term impact.
“It’s just part of doing business today. It really doesn’t add much cost,” he says.
Going forward, McIntyre says, retailers need to follow NRC guidelines regarding irradiated stones. Retailers should make sure the stones they are getting have been tested by one of the three NRC-licensed facilities, and they should have the paperwork on hand to prove it.
Cecilia Gardner, president and chief executive officer of the Jewelers Vigilance Committee, says that the committee also recommends retailers selling blue topaz provide warranties to consumers stating that the gems were imported and distributed by an NRC licensee.
Editor’s note: For earlier developments in this story, see NRC hands-off on blue topaz stock.
Diamond fashion on the upswing in China and India
A new set of customers are emerging in China and India with a taste for diamond jewelry. This is especially true for middle class professionals and millionaires.
For example, the German jewelry maker OE Fine Jewellery Sdn Bhd has found that consumers in these countries are attracted to diamond jewelry to add flair to an evening dress, and also for investments and collections.
The 100-year-old German jewellery maker established its Penang factory in 1974 and sells diamond jewelry through its five showrooms - three in Penang and one each in Kuala Lumpur and Johor Baru.
The firm also has worked with hotels in Penang to invite their guests to visit its jewelry factor. The factory receives about 1,200 visitors per month. The company intends to have more jewelry outlets in Kuala Lumpur because the jewelry market is growing quickly in recent years.
More tourists from Europe and America are buying jewelry from shops in Kuala Lumpur.
One of the major trends this year in fashion in the jewelry market in the far East is white and red gold, as well as white and yellow gold jewelry, pastel-colored gemstones, and chocolate pearls.
Chanel precious jewels on display at Plaza Hotel Grand Ballroom
The jewelry division of Chanel hosted a private dinner at the Plaza Hotel Grand Ballroom in New York City Jan. 16 to honor the U.S. debut of 20 unique jewelry pieces from the Chanel archives and the Vendome collection.
The Night of Diamonds was a formal affair with precious gems worth millions of dollars U.S. being worn on the necks, ears and fingers of wealthy guests.
The Plaza Hotel has a newly renovated Grand Ballroom that in the past hosted Truman Capotes Black and White Ball, as well as Sarah Jessica Parkers 40th birthday party.