CASE STUDY 2 1
Tiffany and Co Case study
Case Agenda
Is blue box packing a great strategy?
Given that spending in the luxury retail market has demonstrated resilience during and post recessionary times, how can Tiffany continue to grow? Will it be able to maintain a prominent brand in future?
Company History
Timeline
1837: Founded in New York by Charles Lewis Tiffany and John F. Young: The Blue Box introduced
1910-1940’s: 57th street and Fifth Avenue Flagship store
2000: Tiffany and Co. foundation established
They sell jewelry, timepieces, silverware etc using their key stores in high profile locations. 90% of their revenue is from jewelry.
Out of 90%, 57% revenue is generated from their affordable line collection.
PORTER’S V FORCES
Competitive Rivalry
a) Market is fragmented with Tiffany having the second largest market share after Signet
b) People can go to other retailers such as Cartier, Signet or Blue Nile
c) Even the chain stores, like Costco is posing huge competition not because of cheap cost and good quality but also good return policy.
Customers can get bigger carat diamonds of next to similar quality at half a price; the only difference is the brand and bi big blue box packaging.
Supplier Power
a) Few diamond suppliers in the world, so they have power to dictate prices.
b) Moreover they do diamond cutting and polishing on their own
Buyer Power
a) Buyers have high disposable income
b) They feel connected with the brand
c) Able to choose from retailers and easily switch, so emphasis on experience
Threat of Substitutes
a) When buying engagement rings, there are few substitutes
b) When buying other designer pieces and accessories then wide range of options and retailers.
Barriers to Entry
a) High cost of capital to start a luxury jewelry business
b) Consumers likely to shop from a brand that they know
Analysis of external factors
Political: Government plays a key role in mining practices, so there is an ease in getting raw material at cheap prices.
Case Agenda
Is blue box packing a great strategy?
Given that spending in the luxury retail market has demonstrated resilience during and post recessionary times, how can Tiffany continue to grow? Will it be able to maintain a prominent brand in future?
Company History
Timeline
1837: Founded in New York by Charles Lewis Tiffany and John F. Young: The Blue Box introduced
1910-1940’s: 57th street and Fifth Avenue Flagship store
2000: Tiffany and Co. foundation established
They sell jewelry, timepieces, silverware etc using their key stores in high profile locations. 90% of their revenue is from jewelry.
Out of 90%, 57% revenue is generated from their affordable line collection.
PORTER’S V FORCES
Competitive Rivalry
a) Market is fragmented with Tiffany having the second largest market share after Signet
b) People can go to other retailers such as Cartier, Signet or Blue Nile
c) Even the chain stores, like Costco is posing huge competition not because of cheap cost and good quality but also good return policy.
Customers can get bigger carat diamonds of next to similar quality at half a price; the only difference is the brand and bi big blue box packaging.
Supplier Power
a) Few diamond suppliers in the world, so they have power to dictate prices.
b) Moreover they do diamond cutting and polishing on their own
Buyer Power
a) Buyers have high disposable income
b) They feel connected with the brand
c) Able to choose from retailers and easily switch, so emphasis on experience
Threat of Substitutes
a) When buying engagement rings, there are few substitutes
b) When buying other designer pieces and accessories then wide range of options and retailers.
Barriers to Entry
a) High cost of capital to start a luxury jewelry business
b) Consumers likely to shop from a brand that they know
Analysis of external factors
Political: Government plays a key role in mining practices, so there is an ease in getting raw material at cheap prices.