Tiffany & Company recently delivered some happy news to its stakeholders. Following a strong two-month holiday season, when net sales increased 8%, the company posted a full year sales increase of 4% to reach $4,2170m worldwide.
Each of Tiffany’s global reporting markets grew, with the exception of Japan (-1%), though in both Asia-Pacific and Europe comparable store sales declined ( -2% in each), but other factors helped to overcame these shortfalls.
As a corporation, Tiffany is heavily dependent upon its global markets, which account for 55% of total sales. Because of that, its relative weakness overseas in 2017 should be cause for concern, though not alarm as of yet.
With a new CEO, Alessandro Bogliolo, just appointed in July 2017, the company should be encouraged by the performance so far, as 2017’s growth reversed two years of declines. Yet, he and his team have more work cut out for them, as the company’s sales still trail 2014 levels of $4,250m.
On Tiffany’s agenda for the coming year are six strategic priorities, the company reports, including, “Amplifying an evolved brand message; Renewing our product offerings and enhancing in-store presentation; Delivering an exciting omnichannel customer experience; Strengthening our competitive position and leading in key markets; Cultivating a more efficient operating model; and Inspiring an aligned and agile organization to win.”
In a statement explaining the many tasks ahead, Bogliolo said, “We will only be truly satisfied when we create greater excitement for our customers and also generate growth that reflects the full potential of our brand. We are committed to nurturing the exceptional legacy we have been entrusted.”
To get back into growth mode, Tiffany needs to get customers excited about its brand again. And that seems to be the sticking point. Tiffany’ brand legacy doesn’t shine as bright as it used to.
In business, the consumers’ perception is the company’s reality
From 2016 to 2017, Tiffany & Company’s brand stature took a major hit , according to data compiled by the Reputation Institute, which measures the reputation of 7,000 brands across the globe based upon surveys with over 230,000 individuals in 15 countries. Among US brands, Tiffany’s rating dropped from #18 in 2016 to #98 in 2017.
Even more troubling is that Tiffany doesn’t even rank among the most reputable brands worldwide. On that score Rolex takes the lead, being the #1 most reputable brand worldwide and in the US for three consecutive years.
To help me understand the challenges Tiffany faces in the US and globally, I talked with Stephen Hahn-Griffiths, executive partner and chief research officer at Reputation Institute. The company is busy now preparing its USA RepTrak report for 2018, which will be released mid-April, but he hinted that Tiffany’s reputation slide isn’t over yet. “We expect based on the macroeconomic factors that are at play in the world economy today, that Tiffany’s reputation will continue to be under pressure – it will be interesting to see as to whether it can turn things around,” he shares.
From his perspective overseeing 7,000 global brands, Hahn-Griffiths feels that Rolex’s success at holding onto the lead as the world’s most reputable brand provides a valuable contrast to that of Tiffany, both being luxury brands playing on a world stage. “Everything that Tiffany isn’t doing, Rolex is,” he calls out.
In looking at the data for Tiffany, he stresses that Tiffany still has a strong reputation, but Tiffany is experiencing a decline in emotional connection and an erosion in the overall positive perception of what the Tiffany brand represents in the modern world today.
“Tiffany is a decade or two behind the curve in terms of its evolution,” Hahn-Griffiths shares. “It is a highly prestigious brand, however its luster is less bright than it was. Its cache is lower than it used to be and that is reflected in its reputational erosion.”
Tiffany ratings are declining in three of the seven dimensions of reputation it measures: Innovation, Workplace and Citizenship. He unpacked these for me.
Innovation challenges: Tiffany has yet to translate its analog experience to the digital
“Tiffany suffers the paradox of being a legacy brand that is grounded in heritage. The more you hearken to the past, the less credit you get for innovation,” Hahn-Griffiths says. He sees Tiffany lagging in meaningful product innovation, but more significantly in its failure to successfully launch into the digital world. It has yet to translate the “analog blue-box experience into a digital one.”
Its 5th Avenue flagship store continues to reflect the 1960s “Breakfast at Tiffany’s” legacy, but today’s consumers expect to engage the brand and experience it digitally also. “If that is the essence of your story, you are falling short in today’s world when people are searching you out through the digital ecosystem,” he says.
Rolex, by contrast, has successfully evolved into the digital world. “Rolex has successfully built a narrative outside the Rolex brand experience. It has transcended in its innovative use of the digital landscape and used digital assets to expand and enhance its story,” he explains.
The challenge and the opportunity for Tiffany is to capture the allure of its physical blue box through an exciting and engaging digital experience.
Workplace issues: Tiffany is too stiff under the collar
Another contributing factor in Tiffany’s reputation decline is how it is perceived as a company to work for. It isn’t believed to be a great place to work, being too aloof, too polished, too perfect, and not real or personable.
“It’s too stiff under the collar,” says Hahn-Griffiths. “It needs to loosen up and add a little humanity and bring that into the workplace culture where it seems to be absent today.”