| Partnerships have jewelers minding brand's store |
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6/12/2009 3:18:42 PM |
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| The Pandora concept stores, such as this one in Tampa, Fla., exclusively carry and sell Pandora products but are owned and operated by independent retailers. By year's end, Pandora expects to have opened 44 concept stores nationwide, all with a similar look and design. |
| New York--From the luxury malls of Southern California's Orange County to the upscale shopping centers of Bal Harbour, Fla., branded watch and jewelry stores have become ubiquitous, gaining new admirers but sometimes at the expense of alienating old friends.
While some longtime retail partners welcome the extra brand exposure, others feel the brands have betrayed them by becoming local competitors.
And yet as big-name brands continue to open and operate their own stores, a new model is emerging for manufacturers seeking to increase their exposure without rocking the boat for retailers: Letting retailers open their own stores with the brand's name on the awning.
Independent retailer London Jewelers pioneered the concept five and a half years ago when it became the owner and operator of Cartier, David Yurman and Van Cleef and Arpels stores, all connected to its own store at the Americana Manhasset shopping center in Manhasset, N.Y.
The concept resurfaced in June of 2008, when Harvey Rovinsky, owner of six Bernie Robbins Fine Jewelry stores in New Jersey and Pennsylvania, became the owner and operator of the first Hearts On Fire store, located in Atlantic City, N.J.
Brand-driven foot traffic
Hearts On Fire has been among only a handful of "pull brands" with enough name recognition to attract jewelry customers into Bernie Robbins, says Rovinsky. So about four years ago, he pitched the idea of opening up a branded store to Hearts On Fire Chief Executive Officer Glen Rothman.
"I approached them personally and directly, and [Rothman] was reluctant because Hearts On Fire is very loyal to their retail partners," Rovinsky says. "He made it very clear that they were in the wholesale business and not in the retail business. I made it clear that I understood that and that he wasn't getting into the retail business, and that I was."
Rovinsky says that while the recession has hit Atlantic City hard, the Hearts On Fire store had its best two months this past January and February, with bridal doing particularly well.
For Mark and Candy Udell, co-owners of London Jewelers, which operates stores throughout Long Island, N.Y., their brand-to-retail partnerships at Americana Manhasset have been a winner. The Cartier, Van Cleef and Arpels and David Yurman boutiques owned by the Udells have their own branded storefront entrances, but inside, each one connects to London Jewelers, thereby increasing foot traffic to the latter.
"It's helped our exposure," Candy Udell says. "We have a very unusual situation. It gives customers a larger selection and enables them to learn about the brands and our own brand as well."
Another brand partnering with retailers is popular charm bracelet manufacturer Pandora, which opened its first Pandora concept store in 2007.
At press time, 14 Pandora stores were owned and operated by U.S. independent retailers, with 66 locations around the globe. Plans call for 30 more U.S. stores by the end of 2009.
While Pandora seeks more exposure for its brand, the company says it retailers remain a top priority.
"From the beginning, Pandora made the decision to focus on our products, product development and marketing, and let our independent retail partners focus on selling Pandora products and operating Pandora stores," says Laurie McDonald, national sales manager.
Pandora also offers several support programs for retailers, including co-op advertising and reimbursement for retailers who use Pandora's new packaging material, she says.
And, after the concept stores' first year of business, McDonald says both Pandora and the storeowners are "extremely pleased."
"Sales and traffic have remained steady and strong, even with the current economic conditions," she says.
Hannoush Jewelers is among the retailers that have opened a Pandora shop.
"After opening [the brand's product] in the Hannoush stores and experiencing the turn that we got, it was almost like a no-brainer," Vice President Camille Hannoush says.
He also noted that when the jeweler opened a Pandora concept store within the same mall as one of the Hannoush stores, sales for that store slipped, but Pandora remained a top seller at other nearby Hannoush locations.
Who's that brand?
But while retail partners who choose to open shop surely benefit, what about their peers who do not? And does it soften the punch when a branded store is owned by a retailer instead of the brand?
As one branding expert observed, probably not: "If somebody stabs you in your back and they're your friend, does it hurt less than if it was your enemy?"
But Rovinsky says the retailer-owned brand store provides equal access to any jeweler nationwide.
"The brand is getting a lot of benefits, but if the jeweler has the desire and ability to do this, I think it's a tremendous opportunity," he says.
Hannoush agrees, saying that Pandora concept stores wouldn't exist if retailers were not interested.
But branding expert Rob Frankel, author of The Revenge of Brand X, likens the situation to "making a deal with the devil" that begins with carrying the brands.
"There was probably a lot of brand support, co-op advertising, but [the retailer] basically had to subordinate their brand to his," he says. "So now, the devil gets his due."
And as branded stores, owned by retailers or not, increasingly open up, Frankel says the key to survival for all independents striving for profitability lies in implementing a clear brand strategy of their own.
"Figure out why anybody would pay more to go to [your store]," he says. "If you're well-branded, you're impervious to price because you've given people so many reasons to go to you."
Ultimately, says Russell Shor, industry analyst for the Gemological Institute of America, the retailer selling a brand is the true brand.
"It goes down to one thing: [Jewelers] know their market better than anyone else because they've been in it, and it's about the personal service and the personal trust," Shor says.
He recommends that retailers buff up their repair and custom services, areas in which the brands can't compete.
Following that philosophy is Iowa-based Josephs Jewelers, a 137-year-old, fifth-generation family operation that carries no branded jewelry and attributes its longevity to focusing on the value and quality of the custom and non-branded designs it provides--qualities that its loyal customers have come to expect, says Ray Bonnano, manager of the Valley West store in West Des Moines, Iowa.
"Know your business and work with the people who know their business," Bonnano says.
Matthew Wilson, co-owner of Portland, Ore.-based Wilson and Co. Jewelers, says his customers may walk away with a strand of Mikimoto pearls or a Rolex watch, but, he says, "They're coming into [my father] Mr. Wilson's store to get a strand of pearls, a gold watch. The reality is that we've been around for 100 years, and our most important brand is us."
A new model
Ken Mermer, owner of Burque Jewelers in Nashua, N.H., believes numerous positive manufacturer/retail partnership models already exist, but he'd like to see more.
Mermer name-checks Royal Chain, which gives him a protected area if he actively promotes its product, and created-gemstone manufacturer Chatham, which protects its partner retailers by zip code, and also cuts partner jewelers a commission check and provides contact information whenever an area resident buys from Chatham.com.
"We decided that our model is about the retailer, and we are not looking to be in the retail business," says Harry W. Stubbert, Chatham vice president. "We think not about selling but about sell-through and brand presence."
And, apparently, it is a strategy that is working, with Mermer among the manufacturers' fans.
"They'll either send the person to my store or sell direct and I'll get a piece of it," Mermer says. "To me, that is very enlightened. It's increased my business, which makes me happy, and they're selling more product. The retailer and the manufacturer are partners, and in any partnership, when it's not a win-win, it's not a partnership." |
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