In March 2018, shortly after being named CEO, Virginia ‘Gina’ Drosos laid out a transformational three-year strategic plan for Signet Jewelers, called “Path to Brilliance.” Its ambitious benchmarks were to be achieved at the close of 2020.
But after the pandemic year, nobody would have faulted the company in its recent fiscal 2021 earnings call if it announced it was extending its three-year transformational plan to a fourth year.
Instead, Signet announced an even more ambitious next phase of its “Path to Brilliance” plan called “Inspiring Brilliance.”
Inspired by the extraordinary results her company was able to achieve last year, when its nearly 3,000 stores were temporarily closed for months on end and 395 were closed for good, Drosos outlined a four-part plan as the next evolution its Brilliance program, “that takes us from foundational to inspirational,” she shared with me.
Its goals include building leadership in its banner brands, including Kay, Zales, Jared and Piercing Pagoda, and market leadership in diamond jewelry; expanding in ‘accessible’ luxury and value segments; growing its service offerings; and accelerating digital commerce.
Crediting her team for extraordinary performance under the worse conditions – “We have a saying in the company that ‘pressure creates diamonds’” – Drosos is confident that Signet can maintain momentum to achieve long term growth in the mid-market jewelry segment where it already is market leader under Kay Jewelers in the U.S., H. Samuel in the U.K. and Peoples in Canada.
While Signet was hammered by the pandemic, resulting in an overall 14.8% decrease in fiscal 2021 sales from $6.1 billion previous year to $5.2 billion, it bounced back strong in the fourth quarter.
Fourth-quarter sales totaled $2.2 billion, a modest increase of 1.5% over previous year, but with same-store sales up 7%, including a 10.4% rise in North America where it does about 90% of its business.
Operating income got a boost too, rising to 13.4% of sales compared with 10.4% last year (GAAP). And average transaction value rose 1.1% in North America and 6.3% internationally.
But e-commerce was the company’s shining star throughout last year and during the fourth quarter, in particular. Year-over-year e-commerce sales were up 57.9%, reaching $1.2 billion, and up 70% in the fourth quarter.
Add to that Holiday 2020 sales were the company’s strongest in nine years, Drosos is confident the company can keep the momentum going.
“The first half of last year was very challenging,” she explains. “But our team really rallied and exceeded all expectations in the back-half, with same-store sales up 9.9%. They delivered an outstanding performance and did it with a lot of new things to learn,” as she pointed to the challenges of adapting to new store cleaning protocols and buy-online-pickup-in-store (BOPIS), which only launched in the fourth quarter.
Drosos describes the Inspiring Brilliance plan as a continuation of the Path to Brilliance journey by building upon the capabilities put in place over the last three years.
The Path to Brilliance strategy focused on a customer-first strategy, omnichannel initiatives and cultural transformation toward more agility and greater efficiency.
Having achieved those goals, the company has put a transformational spin on them to reach even higher and to span more broadly.
From customer-first to a new customer acquisition strategy
Over the last three years, Signet has been focused on its current customers, delivering on their needs and creating better experiences for them. Now it is pivoting into the broader consumer market to draw them into its orbit.
“We’ve earned the right to think bigger about consumers across retail to bring innovative jewelry experiences to them that are delightful,” Drosos explains. “Covid has been a reset point across all retail. Many retailers got weaker, but Signet is emerging stronger.”
Data-driven insights will help the Signet brands reach further into the consumer market, especially in categories where it has already established a lead, including bridal and fashion jewelry.
Broaden its existing mid-market jewelry leadership up and down
Long grounded in the mid-point between low-end and high-end luxury jewelry, Drosos sees an opportunity to stretch above into accessible luxury and below into more value offerings. For example, Jared has been successful introducing $1,000+ higher-price points. And in the value segment, the plan is to grow Pagoda and its outlets into billion-dollar businesses.
“Don’t mistake this stretch up to affordable luxury as us becoming unfocused or thinking we can be all things to all people in the jewelry category,” she advises. “But we see an in-between place where we can bring great value to the affordable luxury segment with new products, new price points and real luxury experiences for our mid-market customers.”
Accessible luxury naturally leads to expansion of services, including personalized and customized jewelry. For example, she tells of a Jared customer who wanted to design a necklace out of two nickels for his wife’s 55th birthday.
A designer in Jared’s Foundry, a customization design studio currently operating in 19 Jared stores, bought two Buffalo nickels off eBay and crafted them into a lariat-style necklace. Upon seeing the final piece, he said the team made his vision even better than he ever imagined.
“That’s the kind of experience that historically was only available to luxury customers,” Drosos explains. “But we can bring the best to our mid-market customers and give them the same kind of delight.”
Improved customer experiences means more services
Defining services as the glue that binds customers to the company’s brands and increases the customers’ lifetime value, the service offerings slated for expansion include personalization and customization, care and repair and extended service plans, along with new financing and piercing offerings.
Targeting the services segment to grow from a $500 million to a $2 billion business over time, Drosos is most excited by new marketplace opportunities that are undeveloped in the category, such as jewelry subscription and rental services, or that the company’s scale can uniquely support.
She points to Zales Designer Spotlight series as an example of leveraging its scale and vendor network to give independent jewelry designers a lift. These emerging designer offerings will be introduced online first in a marketplace presentation and with time the most saleable assortments may be featured in store.
“One of the responsibilities of the market leader in any category is to help grow the category, as well as your own share of that category,” Drosos explains. “It’s good for everyone when you can help small, creative artisans get traction by exposing them to a bigger audience of customers.”
Omnichannel evolves to connected commerce
The company’s e-commerce business experienced dynamic growth over the three-year span of the Path to Brilliance plan, growing from only 5% of company sales to over 20% at the end of the year. Now Drosos believes its time to stop thinking about omnichannel retail and take it to the next level of connected commerce.
Connected commerce currently includes visual online search on Instagram or Pinterest for Zales, Kay and Jared offferings, virtual try on and virtual appointments and messaging. She notes these services added $125 million in revenue in the second half of last year and increased conversions.
“We cannot think about it as doors and e-commerce, which is what the term ‘omnichannel’ implies,” she says. “We are now talking about connected commerce, where we bring the best data insights and connect them to customer experiences delivered where needed.”
She points to the introduction of BOPIS services as an example and the successful transfer of higher-than-expected sales online, all the while reducing its store footprint by more than 20% and exiting low-performing malls.
Inspired by a purpose
Explaining that the Inspiring Brilliance title for this next phase of growth, as the Path to Brilliance before it, was chosen by her Signet team, Drosos says their dedication to the company’s mission and rising to new heights of performance has been deeply inspiring to her.
“More than ever, people are looking for purpose. They want to buy from companies that share their values and work for companies where they feel like they are making a difference in the world,” she explains. “Our team wants to drive change beyond the four walls of Signet.”
And with a core belief that “Love Inspires Love” and a corporate mission to enable all people to “Celebrate Life and Express Love,” Drosos’s inspiring vision for Signet will make the company not just a better jewelry retailer or a better place to work but she and her team believe it will make the world a better place to live.
“Every time we help someone express love, we make those we love a bit stronger. And every time we inspire love or inspire someone else to inspire love, it creates a beautiful ripple effect. Every time we stand up for love, we are making the world a better place,” she concludes.