New York--As a whole, jewelry sales continued to improve for the nation’s largest sellers of fine jewelry in 2011, continuing the trend seen last year.

National Jeweler’s 2012 list of $100 Million Supersellers includes a total of 36 companies, down one from last year. Of those companies, 28 posted sales gains while seven saw sales decline. One retailer’s fine jewelry sales were flat. 

It’s a performance comparable to last year, when 25 out of 37 companies posted sales gains and 12 saw fine jewelry sales slide.

At the same time the overall state of the industry continues to improve, it is not staid.

The 2012 list of $100 Million Supersellers has a new No. 1. Recent leadership changes show a clear willingness to reach outside of the industry, perhaps in an attempt to install new thinking.

Fine jewelry sellers also are waking up to the possibilities that social media, smartphones and tablet computers present, as the consumer’s ability to access a wide range of information at all times continues to increase.

All in all, industry analyst Ken Gassman called 2011 a “pleasant surprise” for fine jewelry sales, though this positive analysis comes with a footnote.

Fine jewelry sales increased 11 percent last year, exceeding expectations of a 6 to 8 percent gain. The increase, however, was fueled more by the increase in diamond and precious metals prices than it was consumer demand. Of that 11 percent gain, 2 percent was unit growth while the remaining 9 percent is attributable to inflation.

For 2012, Gassman forecasts that jewelry sales will continue to rise, climbing between 5 and 7 percent or more, depending on diamond and metals prices.

“Inflation is the wildcard,” he says.

Changes at the top

A reshuffling of the top five largest sellers of fine jewelry in the country was the most significant change to the $100 Million Supersellers list.

Sterling Jewelers Inc., which has posted stellar sales over the past couple of years, knocked Walmart out of the top spot. Sterling saw its sales climb 11 percent in 2011 to $3.03 billion, making it No. 1 on this year’s list.

Walmart, meanwhile, posted no change in its U.S. watch and jewelry sales, which held steady at an estimated $2.80 billion. This made Walmart the No. 2 seller of fine jewelry in the country.

Tiffany & Co. also moved up on this year’s list, knocking Zale Corp. out of the No. 3 spot with a 15 percent increase in U.S. watch and jewelry sales. Zale slipped to No. 4 despite its sales ticking up 8 percent to $1.74 billion.

Rounding out the top five was Macy’s, which held firm to its No. 5 position from last year with an estimated $1.60 billion in U.S. watch and jewelry sales, a 7 percent increase.

While Zale lost a spot on the $100 Million Supersellers list, the chain remains the largest in terms of store count in North America, with 1,792 units, nearly 500 more than second-place Sterling, with 1,318 stores. The rest of the top five on the 2012 list of the Top 50 North American Retail Jewelry Chains by store count remained unchanged as well: Fred Meyer Jewelers is a distant third with 338 units, followed by Helzberg Diamonds with 229 and Ultra Stores Inc. with 150.

All retailers in the top five reduced their store count year-over-year, except for Sterling, with 1,318 units as compared to 1,317 last year.

As major players merely switched positions at the top of the $100 Million Supersellers list, a number of other retailers posted sales increases strong enough to climb several spots.

Amazon.com, which is aiming to become a larger player in the world of fashion, moved up four spots, from No. 20 to No. 16. The Seattle-based online retailer’s U.S. watch and jewelry sales (including direct sales only) increased an estimated 17 percent, from $300.0 million to $350.0 million.

High-end retailers also did well, reflecting the current trend in the market of strong sales in sectors that cater to the country’s wealthiest consumers. Cartier moved up three spots, from No. 14 to No. 11, with its U.S. watch and jewelry sales climbing 25 percent to $450.0 million.

Bulgari Corporation of America, which is now owned by LVMH Moët Hennessy Louis Vuitton, moved up one spot from No. 26 to No. 25 with sales up 19 percent. It is tied with Van Cleef & Arpels, which ascended from the No. 27 spot with sales increasing 23 percent to $190.0 million.

Among the companies posting sales declines, there was not one type of retailer that stood out as having an exceptionally difficult year. Multimedia retailer QVC saw its U.S. watch and jewelry sales plummet 19 percent while HSN experienced a drop in sales of 2 percent.

Sales were down 7 percent for both Fred Meyer Jewelers and Ultra Stores Inc. and fell 7 percent and 3 percent, respectively, for department store chains Sears and J.C. Penney, both of which are facing difficulties overall. Tourneau’s sales slid 2 percent.

Only one company, online jewelry auction site Bidz.com, fell off the list entirely after seeing its 2011 sales fall 18 percent, from $104.8 million in 2010 to $86.4 million in 2011, putting it below the $100 million threshold.

Not the same as the old boss

Analyzing the changes in the executive ranks of the nation’s largest jewelry sellers shows that, increasingly, companies are recruiting fresh talent from outside their respective industries.

Over the past year, only one of the $100 Million Supersellers replaced their former CEO with an industry veteran, Birks & Mayors. In September, Birks & Mayors President and CEO Thomas Andruskevich announced that after 15 years on the job, he would be stepping down this spring. The company hired Jean-Christophe Bédos, the president and CEO of luxury jeweler Boucheron International whose resume includes stints at Cartier France and Richemont International, to replace him.

Meanwhile, Signet Jewelers Ltd. (parent company of Sterling Jewelers), Blue Nile, and J.C. Penney all turned to other facets of retail in selecting new leadership. Even the De Beers Group--long one of jewelry’s most traditional companies--went outside the industry when it announced the hiring of Philippe Mellier, president of Alstom Transport, as its new CEO in May.

“I think fine jewelers are trying to bring new thinking to the business,” says industry analyst Jeff Taraschi, founder of Interactive Group Ltd. “The leadership changes speak to the need to innovate the thinking in the industry. The jewelry industry changes slowly based on the cost of inventory and slow inventory turn. This reality is in conflict with the speed of change that consumers are reacting to in other product categories.”

In January 2011, former Fossil executive Mike Barnes officially took the helm at Signet, which owns Sterling Jewelers, operator of Kay Jewelers and Jared the Galleria of Jewelry. Fossil sells its eponymous watches, costume jewelry and accessories and creates accessories for other owned and licensed brands including Emporio Armani, Armani Exchange, DKNY, Michael Kors and Burberry.

His brand background was no doubt alluring to Signet and Sterling, which has built a strong business behind differentiated lines such as the über-popular “Open Hearts by Jane Seymour,” The Leo Diamond and Le Vian.

But Barnes’ first year of leadership has shown he’s interested in doing more than just building more brands.

Last June, he told Wall Street analysts that he wanted to make significant improvements to the company’s websites. That same month, Sterling Jewelers hired a vice president of e-commerce, a new position for the company.

Blue Nile, meanwhile, opted to make a leadership change late in the year after watching sales fall in its key category, bridal.

While the Seattle-based e-tailer posted sales gains throughout 2011--right up until the all--important fourth quarter, when revenues slipped 2 percent--the company said several times that higher diamond prices and unemployment have hurt diamond engagement ring sales.

In November, Blue Nile CEO Diane Irvine, who had been with the company since its inception in 1999 and served as CEO since February 2008, resigned.

The company shifted focus to fashion jewelry and female self-purchasers and, early this year, announced it had a new CEO, Harvey Kanter, the former head of Moosejaw Mountaineering and Backcountry Travel Inc., a maker of outdoor gear and apparel.

Taraschi notes that Kanter doesn’t have a background in jewelry but has broad experience in consumer products, particularly those that appeal to women. Prior to his three-year stint heading Moosejaw, Kanter spent more than five years in various executive roles for arts and crafts chain Michael Stores Inc. He also spent nearly eight years at Eddie Bauer, including a turn as vice president and managing director of the home division.

Last June, J.C. Penney announced that Ron Johnson, the man behind the success of Apple stores, was its new CEO.

Johnson worked quickly assembling a new team comprised of many former Apple executives and introduced, among a slew of other changes, “Fair and Square Pricing,” which cuts back on the number of sales and coupons the chain offers. The initiative was introduced in January, and reviews to date have been mixed.

The digital divide

Between August 2011 and January 2012, a New York-based digital think tank called L2 published three reports ranking watch and jewelry brands and specialty retailers by their digital and mobile “IQ.”

These studies didn’t get overlooked by the industry. L2 founder Scott Galloway, a professor at New York University’s business school, was an invited speaker at the Gemological Institute of America’s Symposium, held in May 2011 at GIA headquarters in Carlsbad.

Analyzing the results of these studies, as well as the news developments of 2011, yields unsurprising results: specialty jewelers are behind department stores and multi-media retailers when it comes to e-commerce, social media and mobile innovation. “What we have observed is vis-à-vis their peer groups in the luxury space, they (specialty jewelers) do appear to be lagging,” L2 research lead Colin Gilbert says. “Collectively this signals a great deal of caution in the industry as they approach digital and debate internally if moving in this direction dilutes their brand and if it represents their brand image.”

Recent developments, however, indicate that jewelers are making some strides toward closing the digital gap.

Macy’s, which L2 ranked No. 1 out of the 64 specialty retailers it analyzed and No. 3 out of 100 in its mobile study, announced in January 2011 it would be hiring more than 700 people for its online team over the next two years, and in March 2011, the company launched Backstage Pass, a mobile app that gives customers a behind-the-scenes look at designers and brands.

Sears announced the addition of free WiFi and the installation of iPads in all of its stores last year, and Walmart released an iPhone and iPad app.

Among the multi-media retailers, HSN launched its “More to Like” campaign last August, designed to create a customer favorites section of its website, and generate more Facebook fans, by culling together the best liked products from its Facebook page, HSN.com and HSN mobile.

For 2011, HSN’s digital sales were up 9 percent, with HSN Inc. CEO Mindy Grossman remarking that the company’s positive performance for the year was due in part to maintaining focus on expanding the retailer’s digital presence.

HSN’s main competitor, QVC, also stayed aggressive online, with e-commerce sales climbing 15 percent to $2 billion in 2011, increasing from 33 to 37 percent of total U.S. revenue.

“We gained new customers at a record pace by engaging people who love to shop across all our platforms,” QVC President and CEO Mike George said when releasing the company’s 2011 results in February. “We sustained our 10-quarter track record of double digit e-commerce growth and established ourselves as a global leader in mobile retail.”

Among specialty jewelers, one company stands apart from the rest when it comes to embracing the online space: Tiffany & Co. In the L2 reports, Tiffany was ranked No. 1 in the watches and jewelry report, No. 6 out of 100 in the mobile report and No. 19 out of 64 among specialty retailers, making it the highest-ranking jeweler on the list.

Last June, Tiffany launched What Makes Love True, a soft-sell site that earned high praise from both those in and outside the industry. The site allows users to upload videos, photos and stories describing how they met their significant other and fell in love, offers guides to romantic sites and restaurants around New York City and includes an interactive map where people can mark locations around the five boroughs where they have had a romantic encounter.

“I think Tiffany embraces their relationship with their customer as emotion,” Taraschi says. “I think they are doing a very, very good job.”

Other high-volume specialty jewelers did not fare as well in the L2 studies. Zales ranked No. 52 out of 64 specialty retailers while De Beers Diamond Jewellers ranked 18 out of 35 in the watches and jewelry report. Even Blue Nile, which operates exclusively in the digital space, didn’t score big, ranking No. 38 in the specialty retail report, with L2 remarking, “Dated site for child of the medium.”

Sterling’s stores, Kay Jewelers and Jared the Galleria of Jewelry, were not analyzed in any of the L2 reports. However, events of the past year signal that Sterling is focusing more energy on its online presence.

In announcing its results for the just-past fiscal year in March, parent company Signet broke out e-commerce sales for the first time. They were up 47 percent year-over-year, the company reported, an improvement attributed to upgrades to the websites for both Kay Jewelers and Jared the Galleria of Jewelers, including the addition of product ratings and reviews, simplified navigation and the launch of mobile versions of both sites.

Kay Jewelers, however, still lags behind its main competitor, Zales, in the social networking sphere. As of mid-May, Zales had more than 11,000 followers on Twitter and nearly 700,000 fans on Facebook, compared to Kay’s more than 8,000 Twitter followers and more than 200,000 Facebook fans.

“I think Zale has embraced the social media part of it. The weakness in the Zale platform is they just don’t have the brands,” Taraschi says, noting the failure of the short-lived line of diamond fashion jewelry by celebrity Jessica Simpson that Zale introduced in August 2011 and dropped early this year.

Having brands to use as points of engagement to reach people online is key to keeping up in today’s business environment, particularly as larger online players begin to put more emphasis on fashion.

In May 2011, Amazon.com--which was greatest gainer in this year’s $100 Million Supersellers list--plunged further into the fine jewelry fray with the launch of “private” sale site MyHabit.com, adding an app for the site a few months later. This year, Amazon.com was a sponsor of the fashion-centric Met Gala in New York and CEO Jeff Bezos was interviewed on red carpet about the company’s commitment to fashion.

“It’s time to up your game,” Taraschi says.

Television, with a twist

While digital is an increasingly important part of marketing, retailers aren’t just concerned with simply being the first to launch an innovative app or garnering the largest social media following.

Certain facets of traditional advertising remain relevant, particularly television. In February, Reuters cited a report from forecasting company Magnaglobal predicting that overall television advertising spending would increase 7 percent this year. The CEO of a major cosmetics company told the news service that television remains the best way to reach the masses.

“TV advertising still has good impact to bring traffic to stores around key gift-giving periods,” Taraschi says.

However, marketers at the country’s largest sellers know that TV spots can no longer stand alone.

Azusa, Calif.-based Robbins Brothers Jewelry, which has made a comeback after filing for bankruptcy in 2009, has found innovative ways of co-mingling traditional means of communication with digital advertising.

In February 2011, the company partnered with a Los Angeles television station to air five Robbins Brothers-sponsored surprise marriage proposals, and then uploaded the news segments to its YouTube channel and put a montage of proposal clips on RobbinsBrothers.com.

In July of last year, the retailer announced a “Share the Love” video contest asking men and women to submit videos of them popping the question for a chance to star in an upcoming TV commercial.

Robbins Brothers also mixed another traditional form of advertising--billboard--with digital components when it launched the Share the Love Facebook app. The app allowed the chain’s Facebook fans to share personalized messages that later appeared on a digital billboard along a major California highway.

This year, both Zale and Sterling added Facebook and Twitter references to their television commercials. Zales encouraged consumers to Tweet and visit its Facebook page in their Mother’s Day campaign while Sterling added the Facebook icon to its Valentine’s Day commercials for Kay and the Twitter icon for Mother’s Day. For Jared, icons for both social media sites first appeared on Mother’s Day commercials.

Perhaps one of the most successful combination advertising campaigns of late, however, came in early 2012 from high-end jeweler Cartier when it aired “L’Odysée de Cartier,” a three-and-half-minute TV commercial that AdvertisingAge reported as taking two years to produce and costing $5.3 million.

The visually stunning spot features a panther, the company’s signature animal, traversing the globe, pacing through iconic sites such as the Great Wall of China and the Taj Mahal before ending his journey in Paris. Cartier jewelry is present throughout the commercial.

L2’s Gilbert says though the ad didn’t feature any direct instruction to visit Cartier online, it was so intriguing that it created a ripple effect through Cartier’s digital properties, upping their Facebook fan base by 61 percent, their YouTube subscribers by 150 percent and increasing unique visitors traffic to Cartier.com by 18 percent.

“People went online because they were intrigued and interested,” he says.

And in today’s day and age, this type of cross-platform engagement is really the key to success for retailers, say both Gilbert and Taraschi. Companies need to know how to engage consumers across all platforms, whether they are browsing Facebook on their home computer, checking out a retailer’s website on their iPad, watching TV or shopping in an actual, physical store.

“The more relevant you are across these various points of engagement, the more likely you are to stimulate your customer to buy,” Taraschi says. “The key to momentum, the key to growth, the key to market domination is going to be to embrace the importance of multi-channel.”

Top 50 North American Retail Jewelry Chains

Specialty jewelers ranked by numbers of stores

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Since 1906, National Jeweler has been the must-read news source for smart jewelry professionals--jewelry retailers, designers, buyers, manufacturers, and suppliers. From market analysis to emerging jewelry trends, we cover the important industry topics vital to the everyday success of jewelry professionals worldwide. National Jeweler delivers the most urgent jewelry news necessary for running your day-to-day jewelry business here, and via our daily e-newsletter, website and other specialty publications, such as "The State of the Majors." National Jeweler is published by Jewelers of America, the leading nonprofit jewelry association in the United States.