Tiffany and Co. (TIF) wants to make its products more personalized than ever before.
The company has been trying to engage its customers through new marketing and personalization strategy. So far, it's been working, analysts note.
Ivan Feinseth, CIO of Tigress Financial Partners said the increased sales in engagement jewelry in the last six months and customization initiatives are positive indicators for the company going forward.
"They are benefiting from a strong global economy, but their customization and marketing efforts are also helping create excitement around the brand," Feinseth said.
Engagement rings alone posted a 10% increase in sales over the first six months of this year compared to the previous year, the company reported today. Engagement and designer jewelry sales segment in the second quarter rose 18% compared to a year before.
'So Far So Good'
Back in June, Tiffany's launched 'Make It My Tiffany' program, an in-store service that allows to personalize jewelry with initials or even artwork. The program is running in the U.S. stores, Australia and New Zealand.
"We are at the beginning of the program, it is running globally," Alessandro Bogliolo told analysts on the earnings call. "It's also good for the average transaction because of course this is a service that is normally charged and so it helps on one side to make the product memorable for the customer, but on the other side is also to sell an additional service so I would say so far so good."
Morningstar Inc. consumer discretionary and luxury goods analyst Jelena Sokolova agreed with Feinseth's assessment that the initiative is helpful in the rejuvenation of the engagement rings segment.
"So far customization has been positive to revive growth in engagement ring category, which has historically struggled," she said.
She added that customization of engagement rings and jewelry plays into a larger luxury retail trend of customization as each company tries to appear tailored to its consumer.
"The customization trend has been used before, more in mid-range jewelers versus the high-end, but the trend is increasingly adopted elsewhere in luxury industry, for example customizable Gucci sneakers," she explained. "I believe it plays to the industry's efforts to provide perception of uniqueness to the consumer."
To be sure, Sokolova was not convinced that the effort will make much difference for the company as a whole, despite its rehabilitative efforts on the engagement ring segment.
"I don't expect it to be a meaningful contributor to overall sales," she said, tempering her statements and establishing her opinion that the stock remains overpriced in the current market.
For the company, it's also an additional way to drive traffic to the stores.
"This concept is really resonating with customers and it's really elevating jewelry, also silver jewelry," Bogliolo said today. "I see it as a business, as a traffic driver, but also an elevation of all our price-points including the lower ones."
- Martin Cassidy contributed to this article