Earlier this month Wall Street Journal published a front-page story on Tiffany, entitled “Tiffany Hunts For A Way Back to ‘Cool’” which largely attributed its current crisis to one of leadership.
Much of the blame was laid at the feet of past-CEO Frederic Cumenal, who joined the company in 2011 from LVMH Moët Hennessey where he ran the wine and spirits business. Temporarily the company is guided by Chairman Michael Kowalski, a 34-year veteran of the business, who largely seems focused on defending Cumenal’s executive decisions, based on my read.
Certainly organizational dysfunction takes some of the blame, as it shifted to a “new hierarchical structure,” under Cumenal from a “collegial tone” that characterized it in the past. But putting a more formal structure into place, from what Kowalski described as a “process light” company, isn’t necessarily a bad thing in such a big company with an international footprint.
The WSJ went wrong by not going deep enough into the very apparent branding and customer service issues Tiffany faces. Instead it focused on Tiffany’s board room and corner office.
“Tiffany,” the brand and the word, used to mean something. The “Tiffany Network,” “Tiffany Diamond” and “Breakfast at Tiffany’s” all used to signify something of immeasurable quality, sophistication and style. Now, at least according the WSJ, Tiffany is relegated to how it uses its trademarked robin’s-egg blue color, “an issue the company has wrestled with over the years,” the article described.
That then is the rub. “Tiffany” has been relegated to a brand asset, a shade of blue, and the brand’s authentic heritage, jewelry making craftsmanship and rigorous attention to quality from the jeweler’s bench to the customer at the counter have largely been overlooked. It’s a company that has lost its balance, heavy on marketing but light on authenticity.
Then, of course, there’s the thorny issue of price point. The WSJ calls out the fact that some 45% of the company’s sales are attributed to lower-priced lines, as if price point, and price point alone, can stand in for luxury. But that too is a hollow shell, like the Tiffany Blue color.
Why can’t the same level of authentic Tiffany luxury be presented in less-expensive sterling silver? Rather than disdain the lower-cost offerings, the company should embrace them for what they authentically represent: the pathway to the next generation of luxury consumers who today can’t necessarily afford “fine jewelry” but tomorrow may be able to.
And finally the WSJ failed to investigate the connection, or lack thereof, between the front line staff in the 310 Tiffany stores and its customers. E-commerce represents only about 6% of sales, according to the WSJ, so Tiffany depends largely on its in-store personal to make the sale and deliver the authentic Tiffany brand experience to the customer.
It isn’t just the slow pace of new Tiffany product line introductions, as WSJ suggests, that is causing its sales to languish. No matter how great the product, shoppers today won’t venture into a store where they anticipate mediocre or indifferent service.
A consultant colleague of mine recently conducted a business case analysis of Tiffany, the results of which are proprietary, but he did share a key finding, “The actual shopping experience greatly disappoints,” he said. “We found that their employees are frustrated and do not feel valued. Customer engagement training is inadequate and processes to improve these major problems are not in place brand-wide, but only in a handful of stores.” As research for my new book Shops that POP! found, success in retail today is less about what you sell, and more about how you sell it and that is where Tiffany gets failing marks.
The Wall Street Journal article closes by looking forward to the next CEO expected to be appointed soon and its efforts to recruit younger members to the Tiffany board who are more in tuned with younger customers the brand must attract. And these changes, we hope, can bring new vitality to the company’s balance sheet and renewed enthusiasm to its staff.
But I think the place the new CEO needs to start is with understanding that the authentic Tiffany brand experience is not just reflected in the color of the box the product is delivered in. The Tiffany Blue is only a symbol of the brand, not the essence of it.
The next CEO must make peace with the lower-priced offerings and recognize that they are the path that will lead to the next generation of Tiffany enthusiasts.
And most importantly, the authentic luxury Tiffany experience must be felt by the customers as soon as they walk in the door. Tiffany must bring back the feeling that Audrey Hepburn as Holly Golightly felt in the movie, “Nothing very bad could happen to you there,” which unfortunately too few feel today.