Can Lady Gaga help put a shine to Tiffany & Co.?
The New York-based company certainly hopes so. The 180-year-old Tiffany in February featured the pop star in its first Super Bowl commercial to introduce its fashion jewelry Tiffany HardWear collection. The company, which will report its Q1 financial results on Wednesday, may give some sign of how the new collection has performed and give the troubled luxury retail industry another reading on how it's connecting with consumers, in particular millennials.
Like many high-end retailers, Tiffany’s comparable sales have been falling. In Tiffany's case, they have declined for two straight years. A stronger US dollar that affected some tourist spending and dented translated overseas sales (which make up more than half of the company's revenue total) was only one of the factors.
The company also has blamed “macroeconomic and geopolitical challenges” that have affected luxury spending. For instance, in its top and home market in the US, Tiffany has seen lower spending by both US customers and foreign tourists. The company’s New York flagship on Fifth Avenue, adjacent to the Trump Tower, saw an 11% drop in sales last fiscal year before the decline slowed to a 7% drop in Q4.
However, the tie-in with Lady Gaga goes beyond those factors. As millennials shift more spending to experiences over material things and opt for brands like Danish jewelry retailer Pandora that allow them to customize their designs, Tiffany is trying to be hip and respond to changing tastes.
Tiffany is increasing the pace of new jewelry introductions, where it aims for them to eventually represent more than 10% of sales. It’s also introducing more products under $500, such as a $250 Tiffany HardWear ball pendant in sterling silver."The traditional luxury brands, in jewelry and so many other categories, are slow to attract the next generation of affluent consumers."
The luxury industry “is in throes of change,” Pam Danziger of Unity Marketing told eMarketer Retail. “The traditional luxury brands, in jewelry and so many other categories, are slow to attract the next generation of affluent consumers, what I call the HENRYs (High-Earners-Not-Rich-Yet). Tiffany is more or less sitting in the middle spot between mass and true ‘luxury.’ Many brands there are taking a hit, not really knowing which way to turn. More up market (which would shut many of the HENRYs out) or down market (which would threaten the brand heritage)."
Tiffany partnered with Whitney Museum this year to work with five artists in the Whitney Biennial showcase to unveil products that included hand-painted pitchers that are sold at both Tiffany and the museum stores. The company this year also hired former Coach creative head Reed Krakoff as its “chief artistic offer.” Krakoff is set to help introduce later this year a luxury accessories non-jewelry collection that Tiffany said is among its strategies to drive traffic.