Make us your home page
Instagram

Luxury retailers like Tiffany's getting realistic

"The world experienced an economic sea change in 2008 that affected Tiffany & Co. and the entire luxury retailing industry."

— Mike Kowalski, CEO of Tiffany & Co., March 23

"The size of the wealth markets decreased dramatically in 2008 and this decline is expected to continue in 2009."

Affluent Markets Insights 2009, Spectrem Group, March 2009

• • •

Few words conjure up the world of affluent leisure like "Tiffany's." After all, Tiffany's refers to the New York jewelry store where socialite Holly Golightly — played by Audrey Hepburn in the movie Breakfast at Tiffany's — goes to for solace when she gets depressed or, as she calls it, the "mean reds."

So when Tiffany & Co. executives gathered this week to discuss weak earnings and the global plight of the luxury market, there was a tremor in the high-end world.

Tiffany, whose sole area store is in Tampa's International Plaza, declared a 76 percent drop in quarterly net income and slumping worldwide sales. Tiffany's also confirmed plans to shut Iridesse, its young chain of stores devoted to pearls that also operates at International Plaza and at three South Florida locations.

That's what happens when the number of U.S. millionaires shrinks faster than fine knits in hot water. Millionaire households — those with a net worth of $1 million, excluding the value of their home — dropped 20 percent to 6.7 million nationwide from a peak of 9.2 million in 2007. "Affluent" households with $500,000 in net worth fell to 11.3 million from a 2007 peak of 15.7 million.

Pffft. That's the deflating sound of eligible consumers retailers like Tiffany's or Neiman Marcus don't like to hear.

The decline of millionaires is captured in a report from Chicago's Spectrem Group titled Affluent Markets Insights 2009 and released this month. The key findings:

• The attitudes of affluent and millionaire households regarding the economy are at their lowest point ever.

• Affluent baby boomers, especially those within five to 10 years of retirement, "are panicked." Almost half are being forced to delay retirement.

• A majority of investors indicate they have lost 30 to 40 percent of their net worth since September 2008.

This look at the affluent also details recent investing decisions. About 42 percent of investors already changed their investments and another 39 percent anticipate changing their investments in the next few months. Many are moving their assets into vehicles, mostly cash, they feel are "safe." This trend toward cash investments is most concentrated in baby boomers.

But about 30 percent, mostly younger households, are currently buying more stocks because the low price is considered a chance to purchase equities on the cheap.

In a way, that's Tiffany's attitude. Rather than lament and wait for a rebound, it's sorting through a fragmented and struggling jewelry industry and, in the company's words, "looking to take market share." It's even aligned itself with Swatch, a maker of watches, and aims to build a new luxury brand in watches.

Down and out in this less affluent economy? Not for a moment.

Robert Trigaux can be reached at trigaux@sptimes.com.

Luxury retailers like Tiffany's getting realistic 03/25/09 [Last modified: Wednesday, March 25, 2009 10:02pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. Water Hogs: During drought, hundreds of Tampa Bay homes guzzled a gallon of water a minute

    Drought

    When Amalie Oil president Harry Barkett plunked down $6.75-million for his Bayshore Boulevard mansion, he picked up 12.5 bathrooms, a pool, a hot tub, an elevator and a deck bigger than some one-bedroom apartments.

    During one of the worst droughts in the Tampa Bay region's history, hundreds of houses used more than a gallon of water a minute. ALESSANDRA DA PRA  |   Times

  2. Gov. Scott's tough talk on Venezuela may not turn into economic action

    State Roundup

    TALLAHASSEE — To show his solidarity with Venezuelans, Gov. Rick Scott held a rally in South Florida and repeatedly promised to punish companies that do business with the Nicolás Maduro regime.

    Gov. Rick Scott held a rally July 10 at El Arepazo restaurant to show solidarity with Venezuelans. Scott has said he wants to punish companies that work with the Nicol?s Maduro regime.
  3. Pinellas licensing board asks Sen. Jack Latvala for $500,000 loan

    Local Government

    The troubled Pinellas County agency that regulates contractors wants Sen. Jack Latvala to help it get a $500,000 lifeline from the state to stay afloat.

    State Sen . Jack Latvala, R- Clearwater, is being asked to help the Pinellas County Construction Licensing Board get $500,000 from the state so it can stay open beyond February.  [SCOTT KEELER   |   Times]
  4. In advertising, marketing diversity needs a boost in Tampa Bay, nationally

    Business

    TAMPA — Trimeka Benjamin was focused on a career in broadcast journalism when she entered Bethune-Cookman University.

    From left, Swim Digital marketing owner Trimeka Benjamin discusses the broad lack of diversity in advertising and marketing with 22 Squared copywriter Luke Sokolewicz, University of Tampa advertising/PR professor Jennifer Whelihan, Rumbo creative director George Zwierko and Nancy Vaughn of the White Book Agency. The group recently met at The Bunker in Ybor City.
  5. Tampa Club president seeks assessment fee from members

    News

    TAMPA — The president of the Tampa Club said he asked members last month to pay an additional assessment fee to provide "additional revenue." However, Ron Licata said Friday that the downtown business group is not in a dire financial situation.

    Ron Licata, president of the Tampa Club in downtown Tampa. [Tampa Club]