Retail Management

Activity & Quiz # 1 & 2

Case Study on Tiffany & Co

“Tiffany’s global retail operations once again demonstrated the ability to generate strong operating earnings
growth despite weakness in certain individual country markets. Our continued expansion throughout Asia and
Europe should contribute to increasingly consistent and resilient long-term earnings growth,” says Michael J.
Kowalski, the chairman.
Tiffany & Co. is a holding company that operates through its subsidiary companies (“company”). The company’s
principal subsidiary, Tiffany and Company, is a jeweler and specialty retailer, whose merchandise offerings
include an extensive selection of jewelry, as well as timepieces, sterling silverware, china, crystal, stationery,
fragrances and accessories. Through Tiffany and Company and other subsidiaries, the company is engaged in
product design, manufacturing and retailing activities.
Tiffany was founded on September 18, 1837 when Charles Lewis Tiffany opened a stationery and fancy goods
emporium at 259 Broadway in New York City. Every article was marketed with a non-negotiable selling price, a
revolutionary policy that made headlines.
The first day’s store sales were total five dollars in downtown Manhattan. Soon after the company was founded
a distinctive shade of blue was chosen to symbolize the company’s renowned reputation for quality and
craftsmanship.
Tiffany as a Brand
The company adopted the color for it’s for use of boxes, catalogues, shopping bags, brochures, as well as
advertising and for other promotional materials. Over time, this lustrous color became an identify mark for
Tiffany & Co., universally recognizable as the Tiffany blue. Tiffany blue boxes and shopping bags evoke images
of elegance and exclusivity, as well as lush bounty. The Tiffany blue box was later to become an American icon
of style and sophistication.
Distribution of Tiffany & Co
The company’s channels of distribution are through: U.S. retail (50% of fiscal 2006 sales) consists of retail sales
transacted in Tiffany & Co. stores in the United States and sales of Tiffany & Co. products through business to
business direct selling operations in the United States; International Retail (38% of fiscal 2006 sales) consists of
sales in Tiffany & Co. stores and department store boutiques outside the United States and, to a lesser extent,
business- to-business, internet and wholesale sales of Tiffany & Co. products outside the United States.

Direct marketing (seven per cent of fiscal 2006 sales) consists of Internet and catalog sales of Tiffany & Co.
products in the United States; and others (five per cent of fiscal 2006 sales) consists of worldwide sales of
businesses operated under trademarks or trade names other than Tiffany & Co. (i.e., Little Switzerland and
Iridesse). Others also include wholesale sales of diamonds obtained through bulk purchases that are
subsequently deemed not suitable for Tiffany’s needs.
Growth Strategies Adopted by Tiffany & Co

The company’s key growth strategies are to selectively expand its channels of distribution in important markets
around the world without compromising the long-term value of the Tiffany & Co. trademark; to increase sales
in existing stores by developing new products; to increase its control over product supply and achieve improved
profit margins through direct diamond sourcing and internal jewelry manufacturing; to enhance customer
awareness through marketing and public relation programs; and to provide customer service that ensures a
superior shopping experience.
The company’s shares are traded on The New York Stock Exchange with the symbol TIF. Headquartered at 727
Fifth Avenue in New York, Tiffany has more than 8,000 employees around the world.
Smaller Format
Tiffany & Co. announced plans to open a smaller-format store in Glendale, California, in mid-October 2008.
The approximately 2,600 sq. ft. store was to be located in The Americana at Brand, a new 900,000 sq. ft. retail
and residential environment developed by Caruso Affiliated.
Covering 15.5 acres that’s beautifully landscaped with fountains, plazas and walkways, the expansive property
is designed as an ultimate lifestyle and leisure destination, with shops and boutiques, casual cafes, fine dining,
and luxury residences.
The store’s clean, ultra-modern environment invites relaxed browsing and interaction with contemporary
Tiffany & Co. collections, ranging from diamond jewelry in platinum and gold to an array of sterling silver jewelry.
“We are pleased to be the first retail environment in the world to unveil this new concept shop by Tiffany &
Co.” stated Rick J. Caruso, CEO of Caruso Affiliated. “Rich in history and true luxury, Tiffany & Co. is simply the
finest purveyor of diamonds, jewelry and gift items.”
Tiffany & Co. (NYSE: TIF) reported results for the three months (“second quarter”) and six months (“first half”)
that ended on July 31, 2008. Strong net sales growth in Asia- Pacific and Europe led to an 11% increase in
worldwide net sales in the second quarter.
Combined with a higher operating margin, this resulted in a 21% increase in net earnings from continuing
operations and a 31% increase in earnings per diluted share in the quarter. These results enabled the company
to slightly increase its earnings expectation for the full year.
Net sales in the second quarter increased 11% to $732.4 million. On a constant-exchange-rate basis which
excludes the effect of translating foreign-currency-denominated sales into U.S. dollars (see attached “Non-GAAP
Measures” schedule), worldwide net sales rose to seven per cent and comparable store sales declined one per
cent. In the first half, net sales rose 11% to $1.40 billion. On a constant exchange-rate basis, sales increased
seven per cent and comparable store sales rose one per cent.

Promotion Strategies Used by Tiffany & Co

The world has been infatuated with the Tiffany style since the early twentieth century. From Hollywood
premieres to Centre Court at Wimbledon, celebrities choose Tiffany for its urban sophistication and glamor.
Design that is innovative, unique and stunningly beautiful is, by definition, irresistible.
For this very reason, Tiffany’s timeless jewelry pieces are seen prominently on the world’s most beautiful
people. Movie stars, fashion models and women of achievement embrace Tiffany’s spectacular beauty and
superlative craftsmanship.

Tiffany plans to enter into Indian market because of the ideal growth prospects. The Indian jewelry sector, one
of strongest retail segments of India, has an estimated total domestic market size of Rs. 52,000 crore. The
organized jewelry retail sector accounts for just about three per cent of the total market size at Rs. 1,450 crore.

While the overall jewelry retail sector has grown by 9.2% in 2006 over the Rs. 47,600 crore market in 2005, the
organized segment has shown a nearly 32% growth in 2006 over the Rs. 1,100 crore organized market in 2005.
The share of organized jewelry retail has grown from two per cent in 2004 to nearly three per cent over the two-
year period. The Indian jewelry sector’s current global standing is estimated at over US $90 billion.
According to industry sources, in India 65% of the jewelry is bought during weddings, with gifting contributing
around 26%. Global players will look to establishing a foothold in this market in view of the sheer size of the
domestic market and because India’s expertise in the trade is well recognized across the globe.
Provide the Following:

I. Facts of the case (at least 10)

II. Statement of the Problem (at least 1)
III. Alternative Solutions for the Statement of the Problem (at least 3)
IV. Selecting the Best Alternative Solutions (Choose only 1 Alternative Solution and explain why)
V. Conclusion