Zale sticking by product-centric strategy

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Zale sticking by product-centric strategy

By Michelle Graff

May 18, 2009

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Editor's note: This Web-only exclusive accompanies the print-edition release of National Jeweler's State of the Majors 2009 and is the second in a three-part series in which NationalJeweler.com profiles some of the largest jewelry chains in North America. Look for our Ross-Simons profile on Tuesday, May 19.

Irving, Texas--Same-store sales fell 18.1 percent for Zale Corp. in the second quarter of 2009, but that mean doesn't Chief Executive Officer Neal Goldberg is straying from the strategy he outlined when he joined the company in December 2007.

The company continues to emphasize offering distinctive products, presented in a compelling manner and in the price range of its core customers.

And though Goldberg admits that, right now, retail traffic is less than robust, he is convinced that Zale's plan is one that will work in the long run.

"I'm more positive than I've been in a while that once the customer comes back, we'll have a great offering for them," he says.

One benefit the company didn't initially bargain for: Its stores will be left standing in a thinned-out crowd of chain jewelers.

Zale could be poised to gain market share following the exit of other chains from the business, including Friedman's and Whitehall Jewelers and, more recently, Fortunoff Fine Jewelry and Silverware, and Christian Bernard Stores Corp.

Irving, Texas-based Zale Corp. operates 1,386 stores and 701 kiosks in the United States, Puerto Rico and Canada, most notably under the Zales Jewelers and Piercing Pagoda banners, but also via a number of other regional brands.

Goldberg is banking on the fact that Zale's spruced-up display and improved merchandise offerings will catch the eye of consumers strolling past shuttered Friedman's and Whitehall stores.

"As customers are walking through the mall, they're going to see our presentation," he says. "The most important thing you can do is make sure the product offering is compelling and priced right and you're presenting it in a compelling environment."

Goldberg credits competitor Sterling Jewelers for the job it has done in launching exclusive lines, such as the "Open Hearts by Jane Seymour" collection, which made its holiday season debut in 2008.

In an attempt to pull itself out of the Journey diamond jewelry abyss, Zale too has injected batches of fresh products into its offerings, including its branded "Celebration" diamond and the "Ed Hardy" and "Hello Kitty" by Simmons Jewelry Co. lines.

"It's attracting more of a younger, more of a contemporary, customer," he says.

In addition, Goldberg says the retailer will be testing a line of diamond fashion jewelry similar to "Open Hearts" over Mother's Day in a group of 155 stores in five markets. Further details were not available at press time.

In addition to improving its product offerings, Zale will continue to emphasize its virtual presence.

In March, Zale introduced "Love Stories," an interactive area of its Web site where customers are encouraged to share romantic stories about proposals, anniversaries and birthdays involving jewelry from Zale.

As of mid April, more than 400 consumers had posted engagement stories, more than 100 shared stories under the heading "Just Because" and 67 wrote about their anniversaries.

The company's "Celebration" diamond has its own Web site, and its commercial is popular on You Tube. It has even spurred a parody on The Tonight Show with Jay Leno, Goldberg says.

In addition, he says Zale is in the process of setting up a Facebook page, joining millions of other businesses already logged on to the popular social networking site.

"We're going to be doing more social networking because that's what we very much believe in," Goldberg says. "It can create a lot of great business for us."

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