Group 13 – Blue Nile and diamond retailing

Introduction
 A dilemma that many jewellers face – should I lower the price or let customer walk away ?

 2008 – a tough year for Diamond wholesalers and retailers – situation worsen for when world’s
largest diamond producers refused to cut supply

 Though some retailers survived the diamond downturn business many other diamond business
filed for bankruptcy protection.

 Zales closed 100 stores that year

 With the shrinking of customers – competition got fierce and every retailers were looking for a
way to succeed in such situation.
 Blue Nile:
Philosophy of business – offer quality diamond at economical price and guide customers.

Apart from educating, give customer choices for customization as 4C to “build their own ring.”
Kept a low mark up – because of low inventory and warehouse expense.

Downside – low brand value and no hands on experience; to overcome this company offered 30
days money back guarantee.

Further expansion in Canada and U.K and by 2007 an established player – a very efficient and
quick supply. Started offering non-engagement products.

By 2016, it opened “Webrooms” service where customers could feel the products. By Nov. got
acquired by another group.
 Zales
Strategy - offer down payment of one penny and a dollar a week

Zales sold jewelry for all classes. Be it teenagers, working class or high end customers.

Tough competition from Walmart and Costco forced Zales to change its strategy to move away from low-
end reputation but backfired due to delays.

New CEO started transition to return to the promotional retailer role and focus on diamond fashion jewelry
and rings but was hurt due to high fuel price and housing prices.

Cost cutting strategy was implemented – closed 100 stores, reduced inventory and cut manpower –
worked

Got acquired in 2014

 Tiffany:
Opened in 1837; got popular with silver designing, and enjoyed a strong brand since then, went public in
1987.

Company was selling high end products, non gemstone products and other products as watches or silver
trays.

The company has a global reach, also sells through online channel.

58% of sales which came through direct channel were mostly non-gemstone, in contrast to half of sale in
retail belonging high end products (gemstone jewellery and diamonds)

Has manufacturing facility ( accumulate 60% of jewellery) also source from third party. Has a retail service
centre to fulfil retail store and customer fulfilment centre for direct channel.

Entered into rough diamond business since 2003.

Deep association with quality and luxury and enjoys a high margin.
Continuation……

 Omni Channel retailing was utilized at some point by all

three companies mentioned here. Blue Nile which is
primarily a online store, started their Web rooms. They
could use showrooms or retail stores to enhance
customer experience for high end products. Similarly,
Tiffany as well as Zales could have used online retailing
along with their showrooms . This would help them to
reduce inventory cost along with facility costs.
Thank You