Nearly nine months into his role as CEO at jewellery firm Tiffany & Co, Alessandro Bogliolo has laid out a series of strategic objectives for the company, central to which is a focus on development of an omni-channel platform that will “surprise” customers. He states:
While Tiffany has made progress in its e-commerce past years, our efforts are now focused on delivering a seamless omni-channel customer experience. We all know that our customers are more fluid than ever in their shopping, and we must enhance our capabilities and functionalities to match the growing and evolving expectations, whether in Tiffany stores or on our web sites.
The global jewellery and luxury industry is competitively-fragmented, and our brand strength and global reach position us very well. Our regional teams are empowered to leverage their relationships with customers, and that the power of our physical and digital network to increase the brand relevance, and thus market share in local communities.
The challenge of luxury brands adapting their business models to an omni-channel world is a subject diginomica has tracked over the past 18 months. It’s a challenge that individual brands have dealt with in their own ways, ranging from enthusiasm through reluctant acceptance to downright distaste.
For his part, Bogliolo takes a pragmatic stance based upon a worldview of the market he’s operating in:
These days, luxury is very solid, but the luxury experience is changing. Luxury is no longer equal to formality. Luxury is no longer predominantly for richer and typical traditionally, more older people. Now luxury is meaningful to a large audience, and I think in that respect, Tiffany, because of its DNA, because of its personality, is really best set to define the new cost of luxury.
Part of that is to redefine the customer experience, on which subject Bogliolo says:
Our aim is to surprise our customer…Customers nowadays have everything. They have such a huge offer in all kinds of facets of luxury and not luxury. I think Tiffany can bring a lot in terms of innovation attention through frequent, more frequent innovation, but especially meaningful and distinctive newness, in all categories.
Now together with that goes the presentation of the products in the stores. This is why we want to invest more in different merchandising. This is why we are investing, even if this will take a little bit longer, more into the omnichannel experience. Because nowadays, there are no silos anymore for a customer between the digital advertising or media that the customer sees, the tiffany.com where he or she lands [and] the physical store.
As for the firm’s digital track record, Bogliolo argues that Tiffany should be recognized as an e-commerce leader:
Tiffany has been one of the pioneers. I remember, when I was on the other side of the fence, and Tiffany was really a pioneer in e-commerce, and the proof of that is that we have a quarter of billion business in e-commerce in our own web site. So we are talking about something that is substantial, really substantial in the industry.
There remains a commitment to make that online business grow, he adds, and that could mean via Tiffany’s own digital channels or tapping into other marketplaces, such as Net-a-Porter, where the firm has a presence:
We are in Net-A-Porter. We are looking very carefully at that world, because it's a world that’s changing at a very fast pace. We don't have any prejudice towards [other] platforms, which, for example [in] the case of Net-A-Porter, among others, are platforms that are luxury platforms. We have to be consistent online, as we are [in] brick-and-mortar, when it comes to a controlled environment where our customers purchase at proper price integrity, adequate marketing communications.
Behind the scenes, there’a also going to be some serious overhauling of the IT backbone to support all this, explains Bogliolo, resulting - in theory - in a more efficient operating model
We intend to achieve that through the continuation of a major revamp of our IT systems, and their vision of selected core processes, such as procurement, all while restraining expense growth when appropriate, so that we can ultimately drive margin growth.
That’s going to mean some IT re-platforming, expands CFO Mark Erceg:
We are very excited by what we are doing in this regard. It's going to give us one global order management system, which is going to allow us to effectively run one global distribution network, which currently is a bit of a challenge for us, given the complexity of the items, where we ship around the world, and requirements for the duties, given the fact that we ship precious metals and gemstones.
We are also going to be able to consolidate our financial instances. We are currently running over two dozen financial instances all around the world. We are going to be able to consolidate that down to one. You can imagine what that will do for shared services and other types of platforms that can drive a lot of efficiencies.
There will also be indirect procurement upgrades to come, he adds:
We began our indirect procurement journey back in 2015. The team has been doing fabulous, generating a lot of savings across all aspects of the business. But they have been doing it with one hand tied behind their back, because they haven't had a global procurement system to let them aggregate suppliers, let them do electronic invoicing and receipting, let them capture discount payments.
And then really, the biggest one probably is what the omnichannel capabilities will be, that we will be able to have. We will have a seamless network from orders to shipment to fulfilment. You will be able to order online and pickup in store. This is really all kind of additional elements that will come along with it, and our digital capabilities will also be significantly enhanced, with a focus on mobile and mobile technology first, as far as that is concerned.
That’s the plan at any rate.
This is an interesting use case to keep an eye on. Traditionally you don’t get much more high-end retail than Tiffany. Bogliolo’s desire to make a more “joyful” experience for customers coming from different demographics is sound enough, but adding those elements in without ‘scaring the horses’ of the established customer base is going to be a clever balancing act to pull off.