Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Tiffany's 'old-world luxury' fails to charm millennials

Published 05/26/2016, 04:25 PM
Updated 05/26/2016, 04:50 PM
© Reuters. The Tiffany & Co. logo is seen on an awning of their store in Manhasset, New York,

© Reuters. The Tiffany & Co. logo is seen on an awning of their store in Manhasset, New York,

By Subrat Patnaik and Siddharth Cavale

(Reuters) - For Alan Feid, a 28-year-old looking to buy an engagement ring for his fiancée, the rings he found in the diamond district in Manhattan were just as good as the ones he saw at Tiffany & Co's (N:TIF) flagship store on Fifth Avenue. And they cost less than half the price.

"At the end of the day, I don't think there's much of a difference when it comes to the style or the quality," said Feid, a resident of Jersey City, New Jersey.

Tiffany's jewelry, long considered a status symbol, has been patronized by Hollywood A-listers and the political elite, and coveted by well-to-do baby boomers who made the brand synonymous with weddings and anniversaries.

But for millennials, increasingly unmoved by brand names and seeking more bang for their buck, Tiffany's "old-world luxury" charm isn't working, said Neil Saunders, chief executive of retail research firm Conlumino.

The company's problems are shared by department-store operators such as Macy's Inc (N:M), whose customers are switching to off-price retailers like TJX Cos Inc (N:TJX), where they get similar apparel for much less.

This growing demographic of high-earning but not-yet-rich millennials - with annual salaries of $100,000-$250,000 - are spending more on brands that offer them a more contemporary look or on jewelry made by niche designers.

The rise of online shopping has also exposed these tech-savvy shoppers to a broader array of smaller brands, and conditioned them to wait for deals.

The effect of these trends are being reflected in the century-old retailer's sales, which have fallen for six straight quarters. The company reported on Wednesday its biggest drop in quarterly sales since 2009.

"The brand is not seen very negatively but it is seen as being somewhat tired and traditional," Saunders said.

"Younger consumers especially see it as a place that is for the older generation and for a different era."

It isn't that Tiffany isn't trying.

The company has launched new silver products priced below $500 under its "Return to Tiffany" and "Infinity" collections, and aggressively marketed its iconic diamond engagement rings in the "Tiffany setting" - a 130-year-old design, where a diamond is secured by a set of prongs.

And it continues to have considerable pull in the luxury jewelry market with annual sales of more than $4 billion.

Mark Aaron, a spokesman for Tiffany, said the company saw significant opportunity to expand customer awareness of the Tiffany brand and its "very strong product offerings."

But analysts say this isn't enough.

The company's stores need to be redesigned to attract the younger generation and its products have to be hipper and more modern, without losing the Tiffany luxury appeal, they say.

So where are these millennials shopping?

Two jewelry brands making inroads into Tiffany's dominance are Danish jewelry maker Pandora A/S (CO:PNDORA) and Cranston, Rhode Island-based Alex and Ani, said Pamela Danziger, an analyst at research firm Unity Marketing.

Both brands, while not luxury names, offer cutting-edge designs and allow customers to customize jewelry, a big draw for the young affluent demographic.

Pandora's rising popularity is evident in the 34 percent jump in sales of its charms and bracelets in the January-March period.

At the higher end, brands like Roberto Cavalli and Lanvin have also lured away shoppers from Tiffany, as have more niche players such as Elizabeth Locke.

Tiffany's Aaron declined to comment specifically on competitors.

© Reuters. The Tiffany & Co. logo is seen on an awning of their store in Manhasset, New York,

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.