Tiffany

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Tiffany Co.BU107

• Kirsten Hardigg 97

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• How Tiffany has positioned themselves for success
  over the last decade?
• Product to Market Process
• The Current Retail Environment
• Challenges
• Strengths

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What makes a Retail Brand a Luxury Retail
Brand?

• Strong Brand Identity
• Desired attainability and exclusivity
• High Quality
• Know-How
• Innovation
• Tradition
• Customized Services
• Exceptional Customer Service
• Staying Power and longevity
• Price Elasticity

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Past Tiffany Strategic Initiatives

• 1998 Implemented Supply Chain Operations
• 1997 2005 Opened 4 new jewelry manufacturing
  facilities in New York and Rhode Island
• 2003 Opened Diamond Cutting Facility
• 2003 Opened Diamond sorting and polishing
  facility in Belgium
• 2004 Secured 50M of quality diamonds per year
  from Aber
• 2004 Took ownership of all Diamond production
  from Taheras Jericho Diamond Project in Nuvant,
  Canada
• 2004/2005 - 10M investment in a South African
  diamond polishing facility to gain quality
  diamonds
• 2007 Launch of Sunglasses thru partnership with
  Luxottica
• 2007 Announce Partnership with Swatch to
  manufacture watches

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Retail Supply Chain
Raw Marerials
Transportation
Manufacturing
Central Warehouse
Production Plan
Demand
Replenishment
Sales Trends
Optimized Store Inventory Sales
Shortages
Replenishment
Demand
Shortages
Regional Warehouse
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Strategic Diamond PartnershipsHedging the
Diamond MarketExamples LVMH Tiffany Co.
Harry Winston
At Retail, Diamond Jewelry Market 60 Billion
Demand for rough diamonds now exceeds supply, and
this imbalance is expected to continue and to
result in further price increases.
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Company controlled Supply ChainImpact on Margin
Control
Two most profitable segments of the business
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Other Benefits

• Ethics Kimberley Process. The system, which
  commenced in 2002, certifies the origins of gems
  and exports them in tamper-resistant packs
  accompanied by a certificate validated by the
  government of origin. The certificate gets passed
  to the processing plants that polish the rough
  diamonds, then to the retailers that set the
  polished stones, and ultimately to the customers
  who purchase the finished rings, brooches, or
  necklaces.
• Quality Access and process control secures a
  reliable supply of the largest, rarest and
  highest-quality polished diamonds

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Bringing Luxury Product to Market
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New Product Introduction Plan
W-22 to W- 19
W-18 to W-13
W-24 to W-23
??? To W-24
W0
W-12 to W-1
W1 to W??
Quality Approved
Design
Product Approved
Production Distribution
Fabrication Planned
Raw Material Procured
Assortment Planning
Rolling Forecast
Forecast
Confirmed Total Plan
Inventory Planning
Allocation Planning
Prelim- Launch Planned
Launch Planned
Launch
Sales
5 month minimum from Show to Store
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Competitors Product Mix Discretionary Spending
Jewelry
Watches
Perfume
Silk
Tableware
Eyewear
Writing Instruments
Other
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Current Luxury Retail Environment
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The Current Times Challenges

• Uncertain economy Wealthy consumers are more
  likely to continue buying high-priced goods--but
  in fewer quantities. Middle class consumers are
  likely to continue buying near-luxury items
  though are affected by lower-priced substitutions
• Upper Middle Class Entry Price Point Customer
  decrease from 500 1000 to 1-500
• Wall Street Bonuses and future discretionary
  spending?
• Decreased Store Traffic Conversion Rate
• Commodity Prices Price of gold, platinum, and
  diamonds have been volatile and currently at all
  time high (until the last 5 days) impacting the
  company's margins. Increases in costs cannot be
  immediately and efficiently be passed on to
  customers who expect certain price stability.
• Tough Competition Bulgaris aggressive growth,
  Semi-precious costume jewelry

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Strengths of Tiffanys

• Strong Supply Chain and Operational Logistics
  Organizations Minimal inventory overstock
  exposure
• Strong Vendor Relationships (TQM implementation)
  The negative economy also impacts external
  vendors.
• Robust product offerings at all price points
• Strong international sales results and
  opportunities
• International retail sales, which make up 41 of
  Tiffany's total, now account for half of profits.
  When all those other currencies are translated
  into dollars, there's a big boost for Tiffany!
• International Manufacturing in key growing
  markets
• E-commerce experts first e-commerce website of
  a kind started in 1999.

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What is next?

• Are there short-term opportunities to maintain
  market share? Improve conversation rates?
• How can Tiffany Co. position themselves in the
  coming years to continue to grow in this ever
  growing competitive market place?

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• Jewelry Industry How is it segmented?
• Diamonds From Raw Materials to Retail
• International and Domestic Competitive Standing
  of Firms
• Market Segments in the Jewelry Industry
• Strategies of the top firms in the industry
• Major External Opportunities and Threats
  (technology, demographics, social changes,
  globalization etc.) to Industry Players
• Substitute Products other luxury items
• Customer Profiles
• Financial Analysis Prognosis Industry, Major
  Players
• Importance of Advertising and Branding in the
  Industry