Tiffany has stopped supplying its products to retailers, but many jewelers are finding that the crisis has a silver lining.
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What would you do if the entire contents of two display cases suddenly disappeared? That's the question 265 former U.S. accounts of Tiffany & Co. are asking themselves. When Tiffany halted sales from its trade division eight months ago to focus on store development, it left a major void in the inventories of those 265 retailers, some of whom relied on Tiffany products for as much as 20% of their business. And jewelers miss the venerable blue box--the classic emblem of the Tiffany purchase.
But U.S. jewelers--and those in Europe, too, as of July--are learning to cope. "I'd prefer to sell the line, but there's nothing we can do about it," says Tim Greve, president of Carl Greve Jewelers in Portland, Ore., which sold Tiffany products for 14 years. "But the upside is that now I'm finding new business in different areas," he adds.
Life after Tiffany. Jewelers suffering from Tiffany withdrawal have had two options: brand their own merchandise or pick up comparable lines. Most jewelers have made a virtue of necessity and transformed the predicament into an opportunity to strengthen their store's brand and identity or to offer unique--sometimes exclusive--products to their customers.
When confronted with Tiffany enthusiasts seeking "blue-boxed" items, jewelers explain the products' absence and suggest comparable pieces. Marc Green, vice chairman of Lux, Bond & Green in West Hartfield, Conn., is delighted with the opportunity to step up company branding efforts, despite a lifelong relationship with Tiffany. "Now we're constantly marketing ourselves," he says. Since Lux, Bond & Green products replaced Tiffany stock at Green's store in January, sales have remained steady, he reports.
Retailers who aren't interested in store-branded pieces but want to carry products that are equivalent to Tiffany's have plenty of suppliers to choose from, including Robert Lee Morris, Dobbs Boston, Links of London, and Pianegonda. Some jewelers cluster such lines with other designer merchandise. Others dedicate whole cases to new lines or create in-store boutiques for them. Prices of items from Tiffany's-alternative companies range from $40 to $1,800 keystone. Pieces include two-tone stainless-steel mesh and 18k gold jewelry sterling silver jewelry with colored gemstones such as amethyst and aquamarine sterling silver Rolo-link bracelets and snake chains and baby-related items, such as cups and pacifier holders (an item Tiffany doesn't make).
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Carrying a high-end sterling silver line is essential for jewelers in high-traffic areas such as strip malls. Most buyers of sterling silver items want high-quality products at reasonable prices--meaning $500 or less per piece, say jewelers, similar to the prices mass-market consumers are willing to pay.
Suppliers to the post-Tiffany market are faring well, with some reporting business increases as high as 70% over the past six months. Major suppliers include:
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Dobbs Boston, Gloucester, Mass. Company president Bart Schick notes that the company has 50 items that are similar to Tiffany's products. The firm, which makes sterling silver jewelry, reported a sales increase of 30% (or 60 former Tiffany accounts) at press time. Packaging includes white boxes with navy-colored velvet lining as well as gray pouches and boxes. Call (800) 233-6227 for more information.
Links of London, London, England. Among the company's offerings are sterling silver jewelry gifts, including crystal items baby goods, such as sterling silver cups and two-tone gold vermeil and silver jewelry. The firm offers a turnkey marketing program for jewelers to set up a complete in-store Links of London boutique. Packaging includes black velvet bags, tan boxes and lids trimmed with navy, and tan bows and matching bags trimmed with navy. Links' first U.S. store will open on Madison Avenue in New York this fall international sales manager Debbie Wagstaff tells JCK the firm's goal is to have 20 vendors in key U.S. cities by year's end and 40 by the end of 2001. Call (877) 795-4657 for details.
Mikimoto, U.S. headquarters in New York City. This maker of giftware and baby items (picture frames, crystal, pens, compacts, and sterling silver baby cups, rattles, and spoons) also makes a line of handbags. The company reports "double digit" sales increases over the past six months. Packaging is navy or white boxes with silver or gold ribbons. Call (800) 223-4008.
Pianegonda, U.S. headquarters in New York City. This Italian company has enjoyed sales increases averaging 70% a month since October 1999, when its products--sterling silver and colored gemstone jewelry--made their U.S. debut. "Entertainers are wearing our pieces," says Aaron Mink, American distributor and division director for the company. According to Mink, Jada Pinkett will wear Pianegonda jewelry in the next Spike Lee movie. Packaging is navy blue boxes with silver lettering and blue and gray bows. Call (305) 672-8476 for details.
Robert Lee Morris, New York City. At press time, the company, which produces two-tone gold and sterling silver Tiffany jewelry, sterling bowls, candlesticks, and platters, had picked up 15 former Tiffany accounts "with little effort," says Lisa Roman, vice president of sales and marketing. "We expect many more after The JCK Show in Las Vegas," she adds. Packaging consists of black pouches adorned with the silver RLM logo and a "romance" card about Morris and the inspirations for his designs. Black textured paper bags and boxes featuring the RLM logo also are available. Call (800) 829-8444 for details.
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Syratech, Boston, Mass. Syratech is the parent company of Wallace Silversmiths, International Silver Co., and Towle Silversmiths. It makes sterling silver bracelets, baby cups, picture frames, and giftware including flatware, bowls, and candlesticks in sterling silver as well as in crystal. Sales in the past six months are up 20%, says Marshall Steed, a sales manager for the company. Packaging consists of navy, green, or white gift boxes. For details, call (617) 561-2200.
The John Hardy Collection, New York City. Hardy designs two-tone silver and gold jewelry as well as some gift items and flatware, including sterling silver cufflinks, silver and palmwood letter openers, goblets, bowls, utensils, and baby items such as silver cups, bracelets, frames, and spoons. Sales in the past six months are up, according to the company exact figures were unavailable at press time. Packaging consists of different-colored boxes wrapped in textured cotton with beige on top and black on the bottom and a pink and cream combination for the baby collection. For more information, call (800) 2-HARDY.
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Tous, U.S. headquarters, Walnut Creek, Calif. The company makes jewelry in gold, two-tone gold, stainless-steel mesh, and some in sterling silver. It also offers giftware, baby items, and leather products. Although at press time, Tous had picked up only two former Tiffany Necklacesaccounts since January, jewelers are setting up roomy in-store boutiques to house the diverse Tous line. "We even lured a former Tiffany sales representative to work with us," says Sharon Williams, the company's national sales director. "She left a secure post at Tiffany's to sell our line because she was so excited and confident about its success in the States." Packaging for stainless-steel and gold jewelry consists of teal boxes lined with white velvet and white ribbons featuring the Tous name in teal. Giftware and sterling silver pieces are placed in reusable silver-colored "bubble" packs with Velcro seals and "Tous" in red lettering. Jewelry comes with a certificate of authenticity. Call (925) 280-5444 for information.
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Tiffany, meanwhile, expects to maintain an annual growth rate of 12% to 15%. "Our net earnings are up 88% in the first quarter of 2000," notes Mark Aaron, the company's vice president of investor relations.
TIFFANY'S TOP SELLERS
According to retailers who previously sold Tiffany goods, these were the best-selling Tiffany items:
* Baby gifts, such as sterling silver cups.
* Sterling silver jewelry of all types.
* Sterling silver "Return to Tiffany" charm tags.
* Tabletop gifts, such as leaded crystal.
ROOM FOR IMPROVEMENT
The Tiffany brand is "irreplaceable," said a New Jersey jeweler to Bart Schick, president of Dobbs Boston in Gloucester, Mass., while placing an order for sterling silver jewelry in January. Schick understands why retailers are sad to see the Tiffany's relationship end. "Their merchandise is excellent," he acknowledges.
Most of the companies mentioned as alternatives to Tiffany don't fully measure up in every product area. The downsides:
Dobbs Boston. Doesn't offer baby items, such as sterling silver cups, rattles, and frames or giftware, including crystal, porcelain, and flatware.
Link of London. Has a limited selection of crystal barware and porcelain.
Mikimoto. Its line of sterling silver jewelry is sold only in department stores.
Pianegonda. Doesn't offer baby items or giftware, including crystal, porcelain, and flatware.
Robert Lee Morris. Doesn't offer giftware (including crystal, procelain, pens, flatware, or pocket knives) or baby goods.
Syratech. Doesn't make sterling silver rings, necklaces, pendants, key rings, cufflinks, or porcelain giftware.
Tous. Doesn't offer baby cups, crystal, or glassware.
The John Hardy Collection. Has a limited selection of crystal and does not make porcelain giftware, though select items do feature exotic wood accents.
All companies. Not one secures treasures in the sine qua non of the Tiffany's shopping experience--the pale blue
Tuesday, May 5, 2009
Putting the boot in
With the 'umble ugg now fashion footwear, there are new moves to get the name back from the Americans who hijacked it. Kirsty Needham reports.
It's the stretch that makes sheepskin so hard to work with, reflects Bronwyn McDougall, who sits with her daughter stitching thousands of pairs of "genuine Australian" ugg boots each year. "Ugg boots are not made on fancy machines. They are virtually a cottage industry. Sheepskin is very variable and needs the human touch," says the 60-year-old. Her husband, Bruce, mans the glue pot to hand-lay soles in an old suburban house-cum-workshop in Kenwick, Western Australia.
Long relegated to somewhere under Australian beds as scruffy suburban slipper wear, the ugg boot will emerge in an entirely new light this winter. Department stores are stocking embroidered, lace-trimmed and pastel versions of the woolly stompers, which are now worn by teenage girls, knee-high. A Myer fashion buyer, Karen Brewster, says: "It will be a key look this winter, worn with mini-skirts and jeans. We have expanded our range dramatically."
The uggs new cachet is being driven by the the way the boots have been adopted as street fashion overseas. But millions of dollars in sales have brought Australia's "cottage industry" into collision with the hard-headed world of international fashion.
The McDougalls started their family business Uggs-n-Rugs 26 years ago, selling ugg boots at a farmers' market stall. In 1996 they were among the first wave of small businesses to venture online. International sales through their website were steady and mostly to men.
That suddenly changed three years ago, when the ugg began stepping out on celebrity legs. Madonna, Brad Pitt and Oprah Winfrey led the Hollywood charge. By the next northern winter the craze had spread, with British model Kate Moss and Sex in the City's Sarah Jessica Parker among those now sporting Ugg Australia boots made by an American footwear company, Deckers, which was trading on the legend of Australian surf culture.
All of a sudden, young American women were hitting the internet en masse in search of Australian sheepskin ugg boots, and small businesses like the McDougalls' were at the centre of an international fashion boom.
The online demand reached fever pitch three months ago when Deckers ran out. Bidding on auction websites for the then rare Ugg Australia boots (carrying the not-so-ocker titles "Fluff Momma" and "Sundance") topped $US500 (about $650).
From his Sheepskin Factory in Maitland, NSW, Tony Mortel began offering an alternative, "Australian-made ugg boots from Mortels", and sold hundreds on Ebay for up to $US250 before being suddenly kicked off. Ebay said it was barring Mortel whose father began making ugg boots in 1958 because Deckers had claimed trademark infringement.
According to the American company, there was only one "ugg boot", and it was theirs.
It was the opening salvo in a legal assault that was soon to see Deckers hire lawyers in Australia to target another 20 small businesses, firing off letters in December demanding they stop any reference to the term "ugg".
The McDougalls were told to give up their Uggs-n-Ruggs business name and trademark. In Dubbo, a charity employing 65 intellectually disabled workers that does not sell ugg boots online but has a factory shop called the "Westhaven Ugg Boot Shop", was ordered by Deckers to hand over all price lists, brochures and labels containing the words "ugg", "ug" or "ugh".
Tony Watson, a partner with Middletons, the law firm acting for Deckers, says the company acquired the Australian trademark to "ugh boot" from Australian Shane Stedman, who had registered the term in 1971. Deckers had purchased the Ugg Australia company in 1995 from another Australian, the California-based surfer Brian Smith. In 1999 it registered Ugg Australia as another Australian trademark.
Ugg mania in the US saw Deckers rake in a record $US37 million last year as sales of its boots leapt 55 per cent. Watson readily admits the Australian legal action has been spurred by Deckers' concern about lost sales.
"It is quite staggering the demand in the US and Europe, and definitely around Christmas-time Americans were having a lot of difficulty getting my client's product," he says. "Americans type `ugg' into a search engine and are getting hold of Australian retailers who have cottoned on to the idea. American consumers only know the product as my client's, and are disappointed when they don't get my client's product."
To overcome supply problems, Watson says, Deckers are now sourcing boots from China. The fact that Deckers is seeking to shut down use of the term "ugg" in Australia, when its boots are no longer even made here, has outraged the local sheepskin industry, which also points out that it is impossible to buy an Ugg Australia product in
this country.
Small ugg boot makers have rallied together, and are fighting back with plans for a class action and political agitation under the banner "Save our Aussie Icon".
Gordon Tindall, manager of the charity group Westhaven, says: "We have said `bugger this we own the name'. It is Australian."
Tindall says the term ugg boot is as generic as sausage or beer. Westhaven, which sells about 25,000 pairs each year in Australia and the US, has correspondence showing it has been using the term ugg for 30 years. "We believe the word is a variation of the word ugly," he says.
The McDougalls and Tony Mortel have separately lodged applications with the government trademark regulator, IP Australia, disputing Deckers' right to "ugh" and "ugh-boots". They argue that since Ugg Australia doesn't sell its products in Australia, and has never marketed them here, the trademark is invalid. IP Australia is obliged to consider the applications, and a court-like hearing in which both parties will be required to give evidence will take place later this year.
Tony Mortel was in the middle of moving his business this week to a bigger factory, which he says has been "built on the back of the resurgence of the ugg boot. Our sales have been increasing 10 per cent a year for the past 10 years, but we found last season that there has been huge demand for our product in Australia and overseas. But Deckers are shutting down my international operations in the US and UK.
"We have documentary evidence of the word `ugg' being used in 1918," adds Mortel. He believes the term can be found in the national archive in the description of an RAF standard uniform boot. And Mortel claims Shane Stedman, the original trademark owner of "ugh-boot", never tried to enforce it in Australia, because he was aware of this widespread use.
Bronwyn McDougall has lodged a Freedom of Information request with IP Australia in an attempt to find out how the "ugh-boot" trademark was passed in the first place. "If they had rung just a handful of people in the sheepskin industry, they would have found that everyone called them ugg, and it was generic," she says.
In recent weeks, there has been a flood of new trademark applications for terms including Hug Boots, Fug Me Boots and Snug Boots, as small traders attempt to stay in business.
Gennady Ripkin, a Sydney businessman who has been in the fashion trade for 14 years, has applied for the name "Designer Ugg". Ripkin was also recently banned from Ebay for selling boots to Americans sourced from Golden Rams on the Princes Highway, St Peters, but denies Deckers' claim that American consumers are being misled. "I stated clearly it is not related to the Ugg Australia brand."
Mortel says: "It is Deckers that have misled the US consumer to believe their brand of ugg boot is the only product ... There are hundreds of different kinds of ugg boots in Australia."
While Myer will stock one line of real sheepskin boots in Australia this winter, the bulk of its ugg boots will be synthetic and from China. "It's the look at a price-point," Brewster says.
It's the stretch that makes sheepskin so hard to work with, reflects Bronwyn McDougall, who sits with her daughter stitching thousands of pairs of "genuine Australian" ugg boots each year. "Ugg boots are not made on fancy machines. They are virtually a cottage industry. Sheepskin is very variable and needs the human touch," says the 60-year-old. Her husband, Bruce, mans the glue pot to hand-lay soles in an old suburban house-cum-workshop in Kenwick, Western Australia.
Long relegated to somewhere under Australian beds as scruffy suburban slipper wear, the ugg boot will emerge in an entirely new light this winter. Department stores are stocking embroidered, lace-trimmed and pastel versions of the woolly stompers, which are now worn by teenage girls, knee-high. A Myer fashion buyer, Karen Brewster, says: "It will be a key look this winter, worn with mini-skirts and jeans. We have expanded our range dramatically."
The uggs new cachet is being driven by the the way the boots have been adopted as street fashion overseas. But millions of dollars in sales have brought Australia's "cottage industry" into collision with the hard-headed world of international fashion.
The McDougalls started their family business Uggs-n-Rugs 26 years ago, selling ugg boots at a farmers' market stall. In 1996 they were among the first wave of small businesses to venture online. International sales through their website were steady and mostly to men.
That suddenly changed three years ago, when the ugg began stepping out on celebrity legs. Madonna, Brad Pitt and Oprah Winfrey led the Hollywood charge. By the next northern winter the craze had spread, with British model Kate Moss and Sex in the City's Sarah Jessica Parker among those now sporting Ugg Australia boots made by an American footwear company, Deckers, which was trading on the legend of Australian surf culture.
All of a sudden, young American women were hitting the internet en masse in search of Australian sheepskin ugg boots, and small businesses like the McDougalls' were at the centre of an international fashion boom.
The online demand reached fever pitch three months ago when Deckers ran out. Bidding on auction websites for the then rare Ugg Australia boots (carrying the not-so-ocker titles "Fluff Momma" and "Sundance") topped $US500 (about $650).
From his Sheepskin Factory in Maitland, NSW, Tony Mortel began offering an alternative, "Australian-made ugg boots from Mortels", and sold hundreds on Ebay for up to $US250 before being suddenly kicked off. Ebay said it was barring Mortel whose father began making ugg boots in 1958 because Deckers had claimed trademark infringement.
According to the American company, there was only one "ugg boot", and it was theirs.
It was the opening salvo in a legal assault that was soon to see Deckers hire lawyers in Australia to target another 20 small businesses, firing off letters in December demanding they stop any reference to the term "ugg".
The McDougalls were told to give up their Uggs-n-Ruggs business name and trademark. In Dubbo, a charity employing 65 intellectually disabled workers that does not sell ugg boots online but has a factory shop called the "Westhaven Ugg Boot Shop", was ordered by Deckers to hand over all price lists, brochures and labels containing the words "ugg", "ug" or "ugh".
Tony Watson, a partner with Middletons, the law firm acting for Deckers, says the company acquired the Australian trademark to "ugh boot" from Australian Shane Stedman, who had registered the term in 1971. Deckers had purchased the Ugg Australia company in 1995 from another Australian, the California-based surfer Brian Smith. In 1999 it registered Ugg Australia as another Australian trademark.
Ugg mania in the US saw Deckers rake in a record $US37 million last year as sales of its boots leapt 55 per cent. Watson readily admits the Australian legal action has been spurred by Deckers' concern about lost sales.
"It is quite staggering the demand in the US and Europe, and definitely around Christmas-time Americans were having a lot of difficulty getting my client's product," he says. "Americans type `ugg' into a search engine and are getting hold of Australian retailers who have cottoned on to the idea. American consumers only know the product as my client's, and are disappointed when they don't get my client's product."
To overcome supply problems, Watson says, Deckers are now sourcing boots from China. The fact that Deckers is seeking to shut down use of the term "ugg" in Australia, when its boots are no longer even made here, has outraged the local sheepskin industry, which also points out that it is impossible to buy an Ugg Australia product in
this country.
Small ugg boot makers have rallied together, and are fighting back with plans for a class action and political agitation under the banner "Save our Aussie Icon".
Gordon Tindall, manager of the charity group Westhaven, says: "We have said `bugger this we own the name'. It is Australian."
Tindall says the term ugg boot is as generic as sausage or beer. Westhaven, which sells about 25,000 pairs each year in Australia and the US, has correspondence showing it has been using the term ugg for 30 years. "We believe the word is a variation of the word ugly," he says.
The McDougalls and Tony Mortel have separately lodged applications with the government trademark regulator, IP Australia, disputing Deckers' right to "ugh" and "ugh-boots". They argue that since Ugg Australia doesn't sell its products in Australia, and has never marketed them here, the trademark is invalid. IP Australia is obliged to consider the applications, and a court-like hearing in which both parties will be required to give evidence will take place later this year.
Tony Mortel was in the middle of moving his business this week to a bigger factory, which he says has been "built on the back of the resurgence of the ugg boot. Our sales have been increasing 10 per cent a year for the past 10 years, but we found last season that there has been huge demand for our product in Australia and overseas. But Deckers are shutting down my international operations in the US and UK.
"We have documentary evidence of the word `ugg' being used in 1918," adds Mortel. He believes the term can be found in the national archive in the description of an RAF standard uniform boot. And Mortel claims Shane Stedman, the original trademark owner of "ugh-boot", never tried to enforce it in Australia, because he was aware of this widespread use.
Bronwyn McDougall has lodged a Freedom of Information request with IP Australia in an attempt to find out how the "ugh-boot" trademark was passed in the first place. "If they had rung just a handful of people in the sheepskin industry, they would have found that everyone called them ugg, and it was generic," she says.
In recent weeks, there has been a flood of new trademark applications for terms including Hug Boots, Fug Me Boots and Snug Boots, as small traders attempt to stay in business.
Gennady Ripkin, a Sydney businessman who has been in the fashion trade for 14 years, has applied for the name "Designer Ugg". Ripkin was also recently banned from Ebay for selling boots to Americans sourced from Golden Rams on the Princes Highway, St Peters, but denies Deckers' claim that American consumers are being misled. "I stated clearly it is not related to the Ugg Australia brand."
Mortel says: "It is Deckers that have misled the US consumer to believe their brand of ugg boot is the only product ... There are hundreds of different kinds of ugg boots in Australia."
While Myer will stock one line of real sheepskin boots in Australia this winter, the bulk of its ugg boots will be synthetic and from China. "It's the look at a price-point," Brewster says.
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