So why would the jeweler, now launching a retail concept focused exclusively on pearls, not tap the equity of the Tiffany brand?
For starters, growth for the $2.2 billion publicly held retailer is an imperative fraught with risk. A Tiffany store costs millions to build and demands expensive real estate. Sales must top $2,500-or a pair of platinum keshi pearl earrings-per square foot annually. And each new store represents a flirtation with saturation. There's always the possibility of diluting the brand. Ubiquity is not an option.
That's why whenever Tiffany outlines growth strategies, the caveat "without compromising the long-term value of the Tiffany & Co. trademark," always follows, as was written in the company's latest annual report.
That's not to say the move isn't risky. Tiffany last year posted a $2.9 million loss on a new retail concept so under wraps that it still won't discuss its name or product mix.
THE BLING GLUT
The move into pearls with its Iridesse concept reflects the "glut of luxury today," according to Andrew Sacks, president of Agency Sacks, a New York-based agency focused on the luxury market. "Diamonds, and big diamonds, are becoming so widespread, it makes the real luxury customer, the super-affluent, not want to have what everyone else has."
Pointing to Wal-Mart's growing clout in jewelry, Pam Danzinger, author of "Let Them Eat Cake: Marketing Luxury to the Masses-as Well as the Classes," said Tiffany has little choice but to claim a new space in gems. "If you can go to Wal-Mart and get the same quality of diamond that you get at Tiffany's," she said, upscale gem marketers have "got to continue to inflate the luxury value."
The bling glut helps to explain why upon entering the serene setting of the 1,500-square-foot Iridesse store at the Mall at Short Hills in New Jersey or Tysons Galleria in McLean, Va., you'd never know Tiffany was behind this latest in luxury. Price points range from $50 to $50,000, and shoppers splurging on a $3,390 on a cultured South Sea pearl necklace in 18-karat white gold walk away with a coral-colored bag, not pale blue.
"We want Iridesse to be a standalone brand and are marketing it in that manner," said Robert Cepek, president of Iridesse. "We do not reference Tiffany in any of the marketing or advertising materials. We want to develop a brand imagery around Iridesse as recognizable as Tiffany to the public."
Tiffany sells cultured- and natural-pearl lines at its 55 stores and department-store boutiques in the U.S., 53 in Japan and 43 in other countries. In 2004, Tiffany opened 10 stores and boutiques worldwide, but plans only eight openings this year, four of them in the U.S.
In the first quarter of this year, Tiffany posted U.S. retail sales of $243.4 million, and same-store sales grew 11% in the U.S. Michael Kowalski, chairman-CEO, said the company is aiming for U.S. comparable-store sales to grow by "mid-to-high single digits" for the full year.
This year, Tiffany plans to open four Iridesse stores, bringing the total to six; two are planned for King of Prussia, Pa., and Schaumburg, Ill.
Mr. Cepek declined to divulge details of the Iridesse marketing budget or even the name of branding agency that spent more than a year developing the name and concept, but did say advertising efforts would focus on newspaper ads and regional magazine ads.
One in a series of six print ads promoting Iridesse shows a woman in a tank top wearing a multi-strand of Tahitian black pearls. A woman in a bikini sports a multicolor rope of freshwater pearls. Messages include: "Find yourself in pearls" and "Diamonds may be a girl's best friend, but pearls are truly her soul mate."
"Most people only think of wearing pearls for formal occasions and weddings. The Iridesse campaign is to break any preconceived notions that pearls are only for formal occasions," Mr. Cepek added. Pearls are also gaining some press, with New York Magazine's May 9 issue dedicating its "The Everything Guide" to all things pearl.
Tiffany is not the first to create an all-pearl concept. Kokichi Mikimoto is widely credited with founding the first store specializing in pearl jewelry in Tokyo in 1899. In 1975, a Mikimoto store opened on Fifth Avenue in New York. Three other stores operate in the U.S. in Las Vegas, Beverly Hills and Costa Mesa, Calif.
Iridesse is also not Tiffany's first effort to find growth beyond the Tiffany brand. Tiffany now owns a 98% stake in Little Switzerland, a chain of 20 upscale stores. Although mainly focused on watches, the stores also offer Tiffany-branded jewelry.