The second, not likely to be openly celebrated, should come in June when Melania Trump moves to Washington. Tiffany’s flagship store is on the same street in New York as the Trump Tower where the First Lady has stayed living since her husband became US President.
That’s resulted in road closures, security barricades and checkpoints around the block - and a drop in footfall in-store for Tiffany. So it will be hoped that a move out of the Tower and into the White House for Melania will reverse that trend at a time when the firm is focusing on how to drive traffic into stores as part of its wider omni-channel strategic thinking.
Last week, we considered the question of how high-end retail brands could develop and successfully exploit online channels without compromising the luxury brand - and brands don’t come much higher-end than Tiffany jewellery, where the offline store is recognised as a critical element.
That’s not to say that there isn’t some focus on digital and online. Last year Tiffany partnered with luxury fashion retailer Net-A-Porter, deeming it to be the only authorised third party to sell Tiffany products online. This was, according to the then-CEO Frederic Cumenal, going to further the reach of the firm’s e-commerce presence.
Flash forward to today, and while the position is that the Net-A-Porter relationship is working well, e-commerce revenues have been flat year-on-year, accounting for a mere 6% of total sales. Cumenal is gone and interim-CEO Michael Kowalski doesn’t expecet that percentage to change that much:
It's certainly possible that 6% of sales could gradually move up close to 8% or 10% Some customers certainly opt more for shopping online and they will use our website more, but [it] is not going to be a very large number because it's not the nature of our business.
In fact, Kowalski makes the reasonable point that online presence for Tiffany is less about transcational e-commerce and more about marketing and brand presence. The firm runs 20 websites around the world, he explains:
Our websites serve an important dual function of generating online sales, but also delivering marketing communication that drives awareness and store traffic.
That being so, there are some notable digital successes that can be chalked up. The recent Social Influence report ranking social media engagement levels among retailers put Tiffany well ahead of rivals like Pandora, with 16.7 million likes and follows across Twitter, Facebook, Pinterest and Instagram.
In the store
But omni-channel thinking of a more online/offline balance nature is also a priority, says Kowalski:
We are also working proactively to make sure that Tiffany is relevant and acceptable wherever shoppers happen to be…to make sure that we are evolving with the current times.
What that means in practical terms is something that has been thought-through, argues Philippe Galtie, Tiffany SVP, International Retail:
Omni-channel is about creating a free and frictionless expressions and cross channel like looking up the availability of an item at the physical store, online or buy online and pick up in stores. This is the first part.
And the second is to develop some digitalization of the store to elevate the brand experience. Developing omni-channel capability and in-store digitalization is an investment and we present result-intensive effort. However, at the same time, it has to be approached with nimbleness. It comes down to which aspects of omni-channel and digitalization will enable Tiffany to enhance the brand experience.
So we are building gradually, it's a journey, the convergence between physical and digital is a necessity imposed by the an evolution of the client journey and the omni-channel ecosystem in to which retail is moving.
Our vision is really to use the combination of our 300-plus Tiffany-owned stores with our 20 country level websites throughout the world, some of them are e-commerce enabled, and it is upon our already strong digital foundation to deliver more personalized and relevant omni-channel experience to our customers.
The digitisation effort also involve a lot of backroom IT investment to upgrade systems. There have been some unexpected developments here, explains CFO Mark Erceg, noting that Tiffany had been planning install a new inventory management and merchandising system, this has been supplanted by an unspecified add-on solution:
By further leveraging our existing ERP system and the order management system we are in the process of implementing, we expect to be able to access the full range of capabilities we are originally seeking but at a lower cost. This project, now that it has been [recast] along with the rest of the investments we are making in information systems, will we believe make our supply-chain more efficient, improve the customers’ in-store experience and generate incremental sales by expanding and leveraging both our CRM and omni-channel capabilities.
Clearly the systems that we have available to us today are going to be optimized in the years ahead and that's going to allow us do better assortment planning and with better assortment planning we will able to do more high level analytic that go along with that we will be able to get pricing in a lot more discrete ways we are going to be able to make sure that in each store we have the right product at the right time or is as much as practical versus what we have today in several pretty exciting initiatives all year marked in that regard.
IT spending is a major area of focus, affirms Kowalski:
We are confident that we are going to bringing forward a lot of additional capabilities that the consumers are going to be the direct beneficiary of as far as what we are focusing on right now. A lot of it has to do with client selling and I mean a lot of it has to do with our digital capabilities and the shopping experience more seamless for the customers all around the world.
There is an awful lot going on around here in terms of improving the store experience, such as the Tiffany Touch customer service program that are goal-setting in measurement around the Tiffany experience index which measures client's satisfaction.
Erceg concurs, adding:
I think I am not surprised by it, but certainly impressed by the number of initiatives underway both in terms of improved customer service, the work that it's been doing around inventory productivity and efficiency and IT development.
I think most importantly what hasn't changed is that this culture remains very strong and resilient and everyone at Tiffany, despite the obvious challenges in terms of the changes, continues to be passionate about the brand and confident in our future.
Tiffany most certainly is one of the world's great luxury brands. It's not broken and everyone here is simply committed to making it greater.
Erceg’s comment about his expecations for the New York flagship store in 2017 is telling:
We're not going to share our assumptions...on that store.
Probably wise - Melania moving out isn’t going to result in a significant lowering of security levels around the Trump Tower. Tiffany is going to carry on having issues with the neighbours.
The IT upgrades going on behind the scenes are an important omni-channel investment and to be applauded. I’m not a regular shopper at Tiffany (!!!) but whenever I have looked into the store in New York, it looks old-fashioned and over-bearing. Some updating of the customer experience is long overdue.