This time, can Tiffany, who is over 180 years old, rely on China’s millennial generation to complete the comeback?
Editor’s note: This article is from WeChat public account “Prisma” (ID: lengjing_qqfinance), author Kang Lu. Authorized to reprint.
Tiffany, a US luxury jeweler founded in 1837, is putting the hope of “rejuvenation” on Chinese young people.
Starting in early 2015, the bleak performance of sales growth for the seventh consecutive quarter was negative, forcing the former jewelry retail giant to undergo a series of changes such as management exchange, product category expansion, and younger marketing methods. It gradually recovered after 2017, but it was not stable. In the second quarter of 2019, Tiffany’s global sales fell another 3%.
Behind the performance dilemma is the change in social trends. The low marriage rate in Europe and the United States, the younger generation is more refreshing than the classic consumer taste, and the rise of the artificial diamond industry, forming a “headwind” environment in the traditional jewelry industry.
China is almost the only bright spot. At the earnings conference, “China Strategy” was repeatedly mentioned by CEO Alessandro Bogliolo. The veteran of the industry who had served in Bulgari for 16 years decided to overweight China. Not only will it upgrade the flagship stores in China, but it will also enter China’s social circle through online marketing, and please half of the luxury goods – the millennial generation of China.
Tiffany has tasted the sweetness. In 2018, during the “520” festival in which the Chinese expressed their love, Tiffany, who “made in the countryside”, tested the limited-time boutique on the Chinese social platform, and chose Chinese actor Liu Yuran as the promotion ambassador. The price of 200 pieces was nearly 20,000. The Modern Keys necklace is sold out within a week. Tiffany said new sales in the Asia Pacific region are offsetting losses in North America.
McKinsey predicted in the “Luxury Report 2019” that a deep understanding of the younger generation in China and their social circle has become a key task in determining the brand’s next decade of survival. An overseas buyer once said to Prism that international brands have established time in the European and American markets. If overseas brands bring only tested overseas styles to China due to economies of scale, they will be more representative of new ones. Replaced by emerging brands in the core of consumer groups.
This time, can Tiffany, who is over 180 years old, rely on China’s millennial generation to complete the comeback?
The performance of the landslide was forced by the investors
In February 2017, the new Tiffany HardWear series, endorsed by the top American female singer Lady Gaga, made its debut at the highest-rated “Super Bowl” in the United States. The “cool” spirit conveyed in the commercials is different from the traditional Tiffany brand image in the traditional impression, and the eagerness of the transformation is evident.
But shortly before the launch of this commercial, Frederic Cumenal, the former CEO of Tiffany who personally “named” Lady Gaga, did not welcome the congratulatory board, but was informed that he had “being taken the class”. The board of directors believes that the transformation plan has not been promoted quickly enough in the past two years. Another promoter of Frederic Cumenal’s exit is the “unsolicited” radical investor. On the last trading day before the Super Bowl weekend, radical investor and hedge fund Jana Partners LLC increased its position on Tiffany to 4.9%, and nearly 5% of the red line – Jana Partners LLC sought to restructure the board.
Tiffany’s decline in performance shocked the market at the end of 2014. During the holiday season, which was supposed to be during the peak season, Tiffany’s sales were unexpectedly low and forced to cut its full-year profit forecast. Since then, in 2016, Tiffany announced the worst share of the same store after the 2008 financial crisis – global sales fell by 9%.
Barry Rosenstein, founder of hedge fund Jana Partners, said that Tiffany is losing the younger generation. He believes that more than 70 members of the board of directors have been out of touch with young people’s ideas, and it is recommended to seek younger and more internationally experienced directors to join. The new cycle lasted for several years, and the new products did not sell, and contributed only 10% of sales, which is the pain point of Tiffany’s performance being questioned.
In the end, Tiffany’s board of directors and management were forced to change their blood. The former CEO and creative director both went out. Under the mediation of the new chairman and former CEO of Bulgari Francesco Trapani, Tiffany selected the former Diesel CEO in 2017 and Alessandro Bogliolo, who had worked for Bulgari for 16 years. The new CEO, and took office in October of the same year.
New consumption concept and group emergence
But the power of fashion has changed over time.
The “underwear empire” Victoria’s secret sales dip behind the modern women’s new demands for comfort and confidence, so that the emphasis on “perfect body” Wei Mi appears cliché. Similarly, Tiffany