Stephanie Fierman - Marketing Observations Grown Daily

Tuesday September 07th 2010, 12:00 pm
Filed under: advertising,branding,luxury,retail,US economy,women

Tiffany & Co has impressed me over the years. It’s been able to show some restraint when it comes to mucking with the brand while still responding to shifts in the consumer zeitgeist.

The company has been particularly wily in its introduction of new non-jewelry items and jewelry pieces at lower price points. Leather, scarves, fragrance and the like serve multiple purposes: the products expand Tiffany‘s reach among existing customers; they help Tiffany establish earlier brand engagement among the base of young women most likely to become the core Tiffany customer; and I would expect that it’s helped the gift business, as well, particularly as tableware’s centrality in the wedding business wanes.

Its moves in its core business, jewelry, have borne fruit. 31% of the company’s sales last year coming from its lowest-priced merchandise: sterling silver jewelry at an average price of $200. The silver, in particular, is a good example of how Tiffany has made and executed on long-term commitments that have helped achieve a higher level of market accessibility. Its Paloma Picasso, Elsa Peretti and Frank Gehry lines of jewelry have built their own bases of loyal fans over the years. The company’s website top navigation makes it easy to find these pieces, and the first entry behind the “Designers & Collections” tab is currently “Elsa Peretti $250 & Under.”

Nice touch.

So what’s another potential category? Handbags. Although it may strike some as odd, sales of handbags priced at $200 or more have actually grown 15% in the year ending this past June. Many of the leaders are the usual suspects, but – if Tiffany wants a model to study – Coach has shown everyone how it’s done.

Coach’s 2009 successful launch of the more youthful, lower-priced Poppy line of bags and accessories with the positioning “Are You A Poppy Girl?” – but with bag prices starting at $200 – sparked a lot of wonder. It’s not that there wasn’t a space in the market, but $200? Hardly the “budget” youth collection, as one fashion blog optimistically coined it. Andy yet: it’s selling. A lot. Why?

To a certain extent, the answer comes back to the ill-defined but highly desirable ”affordable luxury” moniker that so many brands want to claim. Two thoughts here: (1) If a woman can get her fix with a $300 bag from a favorite brand (when she might have chosen a $1,200 one in the past), she’s more likely to make that choice, and (2) A woman needs a bag every single day. No one ”needs” non-wedding jewelry. So if I’m going to buy a bag anyway, the thinking goes, it’s penny wise and pound foolish to buy an unremarkable bag when I could just spend another $100 or $200 or even $300 and buy a bag from a brand I truly love – a brand that will “show” well on a daily basis.

Sidebar: I have two core daytime bags: one for fall-winter, the other for spring-summer. The spring-summer bag was $400, which felt expensive. Now that I get no less than, say, two compliments on the bag every single week – and the credit card charge is only a hazy memory - I’m sorry I didn’t buy two.

And just to finish it off, notice that these purchases are literally BIG: much larger in size than a bracelet or ring that I might get at the same price. More status mileage for the dollar.

So into this environment comes Tiffany’s new handbag line, created in partnership with the designers of the Lambertson Truex luxury label (which the jeweler purchased post-bankruptcy last year). The products are priced from $395 for a small suede tote to $17,500 for a large crocodile handbag, and all carry the imprimatur of Tiffany, whether it be in the clasps, the colors or the silver.

I’m waiting to see how they promote the line. The evening “Holly” bag has gotten a lot of press, but such a bag has limited use cases and narrows the market; I hope to see some creative promotion and messaging that emphasizes day and weekend bags, as well.

And not to state the obvious, but I know that Tiffany will be mindful of the fact that women already knew Coach as a handbag maker, so Poppy was an immediate “get” for the consumer. Poppy is to Coach as Elsa Peretti is to Tiffany: an extension of the core business. Jeweler Tiffany will need to build some real promotion and personality if it wants to move a lot of product. [Paging Christmahanukwanzaakah, come in Christmahanukwanzaakah...]