After a difficult pandemic year when Signet Jewelers
The company’s recovery continues at a steady pace, with revenue reaching $ 1.7 billion in the first quarter of 2022, up 18% from fiscal 2020 before Covid. Crediting the strong Valentine’s Day and Mother’s Day sales and the extensive digital capabilities introduced through its Connected Commerce initiative, as part of its Inspiring Brilliance transformation plan, CEO Virginia Drosos announced she was raising her forecast with year-end sales reaching $ 6.5 to $ 6.65 billion, up from $ 6 to $ 6.14 billion previously.
âWe have had strong performances across our portfolio. As the jewelry category experiences significant growth, we are overtaking market growth and gaining market share in line with our Inspiring Brilliance strategy, âshe said in a statement.
The success of the Inspiring Brilliance plan is key to expanding Signet’s penetration into the mid-range jewelry market. Signet’s flagship brands, Kay and Zales, are right in the middle of the mid-market jewelry market and together generate some 60% of Signet’s revenue. Considering the challenges faced by many mid-market retail brands, this is a great demand.
Part of the middle market expansion plan is to push the boundaries of the upper and lower ranges that define the middle market. Jared receives the call at the top and Piercing Pagoda at the bottom.
Representing 18% of sales in 2021 and around 200 stores, Jared is positioned for the âaccessible luxuryâ consumer and offers the premium brands Le Vian, Royal Asscher and Pnina Tornai. In the first quarter, the most expensive items at $ 3,000 and over were its fastest growing category.
And in line with its luxury positioning, Jared has developed its personalization offers, by installing a Foundry studio in 50 locations to design a custom piece on site. By the end of the year, it will expand the foundry to 30 additional stores.
Piercing Pagoda, operating in kiosks in shopping malls as well as online, generated 6% of the company’s revenue last year. Besides piercing services, it also specializes in gold, silver and diamond fashion jewelry.
Drosos foresees significant opportunities for the Piercing Pagoda brand with its first quarter revenue improving every quarter of its history, including even the fourth quarters.
With locations designed for efficiency, it now has more than 135 stores on track to achieve million dollar sales this year. Acknowledging that Piercing Pagoda’s name does not exactly reflect the modernity of its product or service offering, it is testing new store formats and launching a brand refresh that will include the opening of 200 additional locations over the course of the year. fiscal year 2022.
Kay and Zales share the space in the middle of the middle market. Fierce competitors before Signet’s acquisition of Zales in 2014, these two brands have largely worked against the grain until recently.
With Kay accounting for 38% of revenue and Zales 22%, it is essential for Signet to make the most of these two brands to achieve its goal of capturing 10% of the jewelry retail market share, or $ 9 billion, compared to 6% currently.
Differentiating these two brands in a unique way is key. âHistorically, we haven’t done a great job of differentiating these banners,â Drosos acknowledges. “Even when Zales became part of our portfolio, we still let them compete too much, running a big promotion at Kay one week and the next at Zales.”
With Drosos’ previous experience managing competing shampoo brands for Proctor and Gamble, she applied the brand portfolio strategy she learned to the Kay and Zales challenge.
âWe started with a blank sheet of paper and gathered data on differences in attitude, demographics and pricing to develop our banner value proposition. It’s a job that we finished about a year ago, âshe explains.
The analysis focused on the two main reasons consumers buy jewelry. One is the gift, especially the romantic gift, including the bride, and the other is the personal purchase. Research has found that these two buying motivations are roughly equal in the jewelry category.
And it became the lever to differentiate the Kay and Zales brands. Kay primarily targets the ‘generous sentimental’, a romantically motivated gift shopper, and Zales targets the ‘bold statement maker’, the self-shopper who expresses himself and his style through jewelry.
The differentiation is now reflected in all touch points of the brands.
âMore and more, we offer separate merchandise, different pieces and different brands,â Drosos explains, noting that Kay and Zales present Disney collections but with two very different expressions of Disney. Kay presents a Disney Treasures collection of Disney characters, like Mickey, Minnie and Winnie the Pooh, with sentimental appeal and Zales presents the avant-garde Enchanted Disney collection inspired by Disney princesses.
And while both brands are leading mall retailers, Signet follows different real estate strategies to ensure each is in the optimal location. Today, only around 40% of Kay stores are located in malls that also have a Zales store.
In addition, about half of Kay stores are located outside of traditional malls, including locations in malls and malls and lifestyle centers. Zales also goes beyond malls, with around 25% of stores located outside malls. Each brand’s shopping malls are also selected based on the target buyer they attract. Therefore, for Zales, it is the more fashion-oriented malls and Kay that attract more male shoppers.
The differentiation strategy is also found in the online presentation of each brand. Zales’s website has more influencer content and style quizzes to guide self-buyers. Kay delves into gift giving occasions with Father’s Day now receiving the sentimental treatment.
âThis is how we run larger companies in these two banners with a well-defined target customer base,â explains Drosos. And she is proud to announce that the differentiation strategy is paying off. Kay and Zales both saw double-digit growth in the first quarter compared to two years ago, before Covid.
This is a marked difference from before the implementation of the strategy. Previously if one mark was up the other was down and vice versa. Now both are enjoying strong sales growth with a higher average transaction value and an influx of new, younger customers.
âWhen we combine our product knowledge as a jeweler and our customer knowledge as a retailer, along with the scale of our data-driven operations, we win, especially in our larger companies,â concludes Drosos, noting that approximately 60% of the first quarter sales growth at Kay and Zales came from new customers.
She credits having the right products targeting the right customers in the right places a proven formula for retail success.