Majors
|
|
|
Foreign retailers bullish on U.S., despite slowdown
November 04, 2008
|
| Tanishq's Chicago store design is centered around a theme of nature and Zen to impart a relaxed atmosphere in which customers can shop for and buy jewelry. |
|
|
New York--The weak dollar and a series of bankruptcies among some of the country's largest jewelry retailers have opened the door to foreign-based retailers that have long sought entry into the U.S. market.
With them, these companies bring high hopes for success and, they say, a fresh mix of merchandise that will help their businesses take off where other retailers have failed.
In July, Indian jewelry retailer and manufacturer Titan Industries Ltd. opened its first U.S. store, Tanishq, in Chicago.
About a month later, Australian retailer Michael Hill announced plans to set up shop in the Midwest with the acquisition of 17 stores from bankrupt chain Whitehall Jewelers.
In the meantime, Indian retailer and manufacturer Gitanjali, the company that operates the Rogers and Samuels chains, continues to grow and remains bullish on its U.S. future.
Gitanjali USA Chief Executive Officer Nehal Modi says the U.S. economic slowdown presents a great opportunity for retailers to enter the U.S. market and establish a presence that he says is imperative for any company that wants to be a global player.
"Regardless of a bad economy or a good economy, any brand that wants to have a global footprint has to be in the United States," he says.
Gitanjali's grand ambitions Gitanjali, which entered the U.S. market with the purchase of Samuels Jewelers in December 2006 and Rogers Jewelers one year later, now operates a total of 149 stores under five store banners.
In the coming months, Modi says, Gitanjali is looking to acquire the leases for 50 to 60 Whitehall locations, targeting stores in the Midwest and California to add to the Rogers and Samuels chains.
If all 60 deals are completed, that will mean a total of 209 Gitanjali-operated stores in the United States, and the company doesn't plan to stop there.
Within three years, Gitanjali plans to have a total of 1,000 U.S. stores by way of acquisitions, though Modi would not elaborate on the record about which chains the company is eyeing.
If it operated 1,000 stores, Gitanjali would place among National Jeweler's Top 50 North American retail jewelry chains in terms of store count.
According to the list, the largest retailer, Zale Corp., has 2,167 stores, followed by Sterling Jewelers at 1,402.
A gap exists between these top two jewelers and the third-ranking retailer, Fred Meyer Jewelers, which counts 392 stores. That leaves the field open for a reshuffling among the majors.
Modi says one key benefit Gitanjali has that makes it so confident of its U.S. success is its vertical integration.
As a manufacturer, it is able to directly supply the majority of its stores' product and can change out merchandise quickly if a particular piece isn't selling.
Gitanjali's ambitions also include further developing an Internet presence, increasing the presence of proprietary brands and possibly buying an existing home-shopping television network, Modi says.
Rumble from down under Though it comes from a market that is thousands of miles removed from the United States, speciality jewelry retailer Michael Hill International is confident that it can succeed in a market that's seen a slew of bankruptcies in recent years.
The Brisbane, Australia-based company made its U.S. debut in August, when it announced the acquisition of 15 Whitehall stores in Illinois and two in Missouri.
Micheal Hill Chief Executive Officer Mike Parsell says the company, which operates 192 stores in Australia, New Zealand and Canada, felt 17 was an ideal number.
"We didn't want to take on too many," he says.
In the future, Parsell says, Michael Hill sees an opportunity to become a major player in the market, opening 600 to 800 stores nationwide within 10 to 20 years.
Prior to the announced entry in August, Parsell says, the company had been studying the retail market for 20 years, but only began actively looking for a point of entry in the last 18 months.
When the company heard about the Whitehall bankruptcy, executives saw an opening in the market.
Parsell says the company's study of the market revealed that Whitehall was the chain most similar to Michael Hill in terms of store square footage and staffing.
What Michael Hill will bring to the crowded table of mall jewelers, Parsell says, is a product mix that is less diamond-focused, with more gold, silver, fashion jewelry and its own line of watches.
Price points for diamond jewelry range from $599 to $25,000, with the bulk of the diamond ring business hovering in the $999 to $5,000 range.
Price points for gold, silver, colored gemstones and watches range from $79 to $4,000, and the store's average transaction value is $275.
"We're quietly confident we can certainly be successful here," Parsell says.
A natural approach With one store in Chicago already operating, Tanishq plans to open a second store in Paramus, N.J., in November, says Gaurav Bhuwan, head of U.S. operations for Tanishq.
Long-term plans call for an additional 25 stores in the next few years, with company executives eyeing opportunities on the West Coast and in Florida.
A total of 27 stores would place Tanishq, a middle-market retailer with an average price point of about $1,000 to $1,500, in the middle of the U.S. chain retail pack in terms of size.
Bhuwan says the plan is to get the company's Chicago and New Jersey stores up and running, learn from any mistakes and then grow from there.
And Tanishq is banking on the "zen" of U.S. consumers to do it.
In studying the market, Bhuwan says, the company found that the themes of creativity, nature and global awareness resonated most strongly with today's consumer in the United States.
So the retailer designed a unique store and created jewelry that was inspired by nature.
Bhuwan says the idea behind Tanishq's U.S. store, which features recycled wood and a proliferation of plants and water fountains, is to make customers feel as though they are in a spa. Salespeople are encouraged not to pressure customers for a sale.
"Jewelry is an emotional category and people want to make the purchase in a relaxed environment," Bhuwan says.
--E-mail: michelle.graff@nationaljeweler.com
Editor's note: This story first appeared in the October 2008 print edition of National Jeweler.
|
|
Majors
A shareholders' class-action lawsuit has been filed against Zale Corp., its chief executive officer and three former executives, claiming the Irving, Texas-based, 1,931-store chain deliberately deceived investors. Read More
|
Small multi video player located on right rail of NJN site
|
Save
E-mail
Print
Most Popular
RSS
Reprints
