12 STATE OF THE MAJORS 2018 this issue, has been embroiled in two well-publicized lawsuits over its watch and jewelry inventory—battling Swatch Group over gray market Omegas and Tiffany & Co. over the use of “Tiffany setting”— consumers ultimately still buy a lot of watches and diamonds there. “The whole experience of Costco is price,” which is attractive to an American middle class that is both shrinking and feeling strapped, says Reid Sherard, associate director of European research at L2 Inc., a business intelligence and research firm. “The product is fine and you’re going to get a good deal on it.” Walmart Inc. also saw watch and jewelry sales increase year-over- year and maintained its spot at No. 2 on the 2018 $100 Million Supersellers list, with an estimat- ed $3.21 billion in jewelry sales. Walmart will be one to watch, however, as the retail giant is report- edly shrinking its watch and jewelry departments. Golan says he expects to see “a large drop” in jewelry sales forWalmart on next year’s list. Amazon, meanwhile, broke the billion-dollar mark in jewelry sales for the first time in 2017.The online giant’s 2017 jewelry and watch sales are estimated at $1.06 billion, catapulting them from No. 8 on last year’s list to No. 6 this year.Amazon is now within striking distance ofTiffany & Co., which ranks No. 5 with $1.25 billion in sales in NorthAmerica. The Seattle-based retailer has “invested heavily in jewelry,” Golan said, “and hit a sweet spot—a combination of [the right] price points and design.” And while putting “Tiffany” in the same sentence as “Amazon” might seem like retail blasphemy, Sherard says the e-tailer is competition for theAmerican jeweler. Tiffany is a retail operation normally equated with luxury—Audrey Hepburn in that incredible black Givenchy dress, lust- ing after what’s in the windows at the Fifth Avenue flagship—but what the specialty jeweler mostly sells is lower-priced silver jewelry and gift items, he points out. (For more on Tiffany & Co., see Snap- shot inset.) While success can be found at the top and the bottom of the market, many of the companies with estimated sales de- clines are those stuck in the middle. They are neither high-end brands that are top-of-mind or aspirational for consum- ers, nor do they boast the low prices and unbelievable convenience of an Amazon, or the thrill-of-the-hunt experience con- sumers enjoy at a T.J. Maxx. A prime example is Sears Holdings Corp., which posted a nearly $200 million year-over-year drop in watch and jewelry sales and slid from No. 10 to No. 17 on the $100 Million Supersellers list, with Blue Nile, Ross-Simons and Target among the chains leapfrogging it. The company is not in a position to compete with Amazon on price, and there is not one item sold in a Sears or Kmart store that cannot be found either on Amazon or in Home Depot, Lowe’s, Target, Macy’s, Walmart, etc. In short, noth- ing sets Sears apart and the retailer finds itself adrift in this no man’s land—between best price and best product/ service/experience—which is a dangerous place to be. STRUGGLE IN THE MIDDLE The large brands with big marketing budgets and high levels of consumer recognition are doing well, yes, but so are THE STATE OF THE MAJORS THE DIAMOND INDUSTRY JEWELRY DESIGN THE COLORED STONE MARKET TIFFANY & CO. Like Signet, Tiffany did not have a great 2017 but does have a new CEO and is making changes in an effort to turn sales around. The iconic New York-based jeweler announced the appointment of former Diesel boss Alessandro Bogliolo as CEO in July 2017, and since has embarked on a whirlwind succession of changes all designed to modernize the company and make Tiffany appealing to the next generation of jewelry consumers. Chief among them was the introduction of “Paper Flowers,” the first collection designed by Chief Artistic Officer Reed Krakoff and the biggest new collection since Tiffany Keys in 2009. The retailer released a buzzy marketing campaign that included painting New York its signature robin’s egg blue and giving “Breakfast at Tiffany’s” anthem “Moon River” a modern update. Starring actress Elle Fanning, “Believe in Dreams” is arguably the best modern-era marketing campaign conceived by a specialty jeweler. Tiffany also revamped the entire fourth floor of its New York flagship and added a cafe (pictured left) in late 2017, but then one upped itself this summer, when it announced plans to renovate the entire store at a reported cost of $250 million. Also like Signet, time will tell if Tiffany’s changes will take with consumers, though early indications are positive. The retailer reported a 9 percent increase in same-store sales in the Americas in the first half of the year, with total sales rising 8 percent. SNAP SHOT Continued on page 14