Tiffany CEO sings the blues
Alessandro Bogliolo became Tiffany & Co.’s chief executive at a time of drooping sales. He has overseen a turnaround and a rejuvenation of the venerated brand — beginning with breakfast.
A café in a luxury goods store is nothing new, but when that store is Tiffany & Co.’s New York flagship/tourist attraction on Fifth Avenue and there’s a well-known movie that includes a daily meal and your name in the title and you have a signature colour that is immediately recognisable — if you mix all that together, well, you almost don’t need to worry about the food. When Tiffany & Co. opened the Blue Box Café late last year it was an Instagram sensation and an instant hit with diners wanting their very own Breakfast at Tiffany’s moment. The café, which occupies a corner position on the store’s fourth floor, is decorated in the brand’s distinctive robin’s egg blue and has views up Fifth Avenue to Central Park. It was a stroke of genius that achieved the holy grail of modern luxury retail: it brought new customers to the store and, even better, it’s brought millennial customers to the 181-year-old brand. But it almost didn’t happen.
Alessandro Bogliolo was appointed chief executive at Tiffany & Co. in October last year when planning for the Blue Box Café, which opened in November, was already well under way. “Of course I was new to the team so I was supportive of it, but I also had some doubts,” the Italian-born Bogliolo told WISH on a recent visit to Sydney (where a new flagship on King and Pitt streets will open in March). “I thought, it’s obviously a reference to the Breakfast at Tiffany’s movie of 1961. Now almost 60 years later here comes Tiffany and opens a café? I was wondering who’s going to be interested in this? Will it just be for people who saw the movie decades ago, because millennials will hardly know it or who Audrey Hepburn is and will never have watched the movie?” Instead of acting on his misgivings and canning the idea Bogliolo says he decided to let the café be a test of whether the brand could connect with millennial customers. “I was totally wrong,” he says. “Totally wrong. The reaction has been impressive but especially from young people. You see these young girls come into the café dressed like Audrey Hepburn and with big sunglasses. That for me was very important. It was a sign that the connection between the brand and the new generations was there.”
Bogliolo joined the New York-based jeweller at a difficult time for the brand. In 2016 sales in the US, the company’s single biggest market, declined while growth in Asia-Pacific, its second biggest market, slowed significantly. As a result, in February last year Tiffany & Co. parted ways with its then chief executive Frederic Cumenal. (It also attributed part of the sales slump to its nextdoor neighbour, Trump Tower, where the president-elect was living under intense security between his election and his inauguration). Just seven months into his tenure, Bogliolo was hailed as a great reformer: by the end of the first quarter of 2018, sales had increased by 9 per cent year-on-year in the US and by 28 per cent in Asia-Pacific, hitting the $US1 billion ($1.4bn) mark. For the six months to July 31, worldwide sales rose 12 per cent to $2.1 billion with increases experienced across all categories. Bogliolo — who spent 16 years with Bulgari, had a stint with the LVMH-owned beauty retailer Sephora and most recently was the chief executive of the fashion brand Diesel — ascribes the Tiffany turnaround to being clear about his vision for the company and restoring morale in the workforce.
“There was nothing new or nothing extraordinary about our strategy for the brand but at least it was clear,” he says. “And I think the communication to the organisation has been even more important than the strategy itself. Because at the end of the day, especially for a luxury brand with a heritage like Tiffany, it’s not that you have so many different options. You have such a legacy to evolve that the direction is pretty clear.” He says luxury is so global, very little adaptation is needed to serve different markets. “With fast moving consumer goods, for example, you can have under the same brand totally different products depending on the countries you are in. It’s not the case in luxury. What we have is this balance of being true to our heritage and our DNA, understanding the world we are living in and being a sort of cultural agent between the brand and the world.”
One of Bogliolo’s objectives as CEO was to restore the confidence of the company’s 13,000 employees. “I have worked in the luxury business for the last 20 years and I always looked at Tiffany as the benchmark in terms of craftsmanship, in terms of expertise in diamonds and in terms of heritage, and I was shocked at the recent performance of the company, and how this had dented the confidence of the people,” he says. Bogliolo spent the first few months on the job visiting as many of the company’s stores and production sites as he could. When he meets WISH he has just come from his 105th store visit, in Melbourne. “When I visit the stores I tell them how great they are and how great this brand is and how there is no reason why we shouldn’t grow as much, if not more, than our competitors. I’ve been a little bit of an evangelist within the company.”
A potential problem Tiffany had, which might have impeded its growth, was one of the very things that sets it apart from many competitors: its 181-year heritage. “There was a little bit of a problem in the company because of this amazing legacy; there has been a bit of a concern about preserving it rather than making it evolve,” he says. “It’s understandable because when you have such a huge legacy you don’t want to get it wrong. But then you risk becoming repetitive and boring — you keep repeating the best-selling products. You have the same messages in the same way with the same aesthetics and then you become less relevant to the current culture. So what I did a lot was to push and to empower people to be daring and more culturally relevant.”
An example of this is the recently launched Paper Flowers collection, the first by the company’s new chief artistic officer, Reed Krakoff (see our story on page 36). The idea behind the collection, according to Krakoff, was for it to be a more relaxed way of wearing jewellery. “We are an American company and a democratic one,” he says. “We want our jewellery to be worn every day just as easily with casual clothes or an evening gown.” This collection was already in the prototype stage when Bogliolo arrived at Tiffany, but he insisted that the marketing be different from what the company had done before. “I said, let’s not make the mistake that because this is a line in platinum with diamonds, therefore it’s traditional fine jewellery and should be marketed with a very elegant lady in a gown for a formal occasion. That would be the wrong positioning for the product. It’s not occasion-based, it’s not about formality, it’s more about expressing yourself.” Tiffany chose the 20-year-old actress Elle Fanning for the advertising campaign and modernised a scene from Breakfast at Tiffany’s: Fanning wears jeans and a hoodie as she looks in the famous window, a version of Moon River plays with Fanning singing and A$AP Ferg rapping. “The message really resonated with people,” says Bogliolo. “We had this entirely new audience waiting for Tiffany to talk to them in a way that was relevant to them.”
All luxury brands are trying to court millennial customers but Bogliolo says Tiffany is uniquely placed to appeal to this younger demographic because of one of its core products: engagement rings. “Now we call them millennials, but Tiffany has always been selling to young people — people in their 20s and 30s — because engagement rings are a product for younger people getting married,” he says.
Tiffany & Co. is also aware that millennials looks for different values in the brands they shop with than previous generations. According to a report by the consulting firm Deloitte, millennials are more ethically minded than previous generations and more educated about the brands they shop with. Tiffany, according to Bogliolo, is in a good position to meet those attitudes. “Baby boomers like me would aspire to a brand because the brand is very prestigious without knowing exactly why,” he says. “Millennials are much more educated and they research more.” Tiffany, he says, is therefore much more open about the sourcing and production of its materials and products and is investing more in the sustainability. “For example, we are vertically integrated when it comes to diamonds in order to make sure that we know where the diamonds come from,” he says.
As well as transforming the culture and staff morale, Bogliolo has also been working on the products. Tiffany & Co., he says, has always been known as a house of design but in the past few years it had become a little too conservative. Now every Friday he meets with Krakoff to review the designs and prototypes he and his team are working on. “It’s the most beautiful meeting of the week,” Bogliolo says. “It’s very open, very constructive and it’s about bringing something new to the business. This has been one important step. It’s really a perfect working relationship, and it’s part of bringing back that optimism I was mentioning before.”
The success of the Blue Box Café was a confirmation for Bogliolo that customers are looking for experiences as much as products, and the lessons from that will be applied in other markets. That doesn’t mean the café concept will be replicated around the world — Bogliolo says it’s likely to be a one-off for the Fifth Avenue store only — but that there will be more activities to lure customers back into stores. In Melbourne, for example, at the brand’s Chadstone and Collins Street stores the company offers a new personalisation service where certain jewellery items (though not necessarily Cracker Jack trinkets) can be engraved with anything from your initials to a child’s doodle. “I don’t believe in doing replications of the Fifth Avenue store,” he says. “It’s amazing because it’s a true thing, but we have other amazing things that we can do. We are definitely going in that direction of making our stores more experiential.”
For many Tiffany fans shopping at the company’s Fifth Avenue flagship is the ultimate experience. It is estimated that the Fifth Avenue store generates as much as 10 per cent of the company’s annual sales. One of Bogliolo’s biggest moves since taking the reins at the quintessential New York brand is to announce that the company will embark on a major three-year refurbishment of the 10-storey store that has been its home since 1940. The overhaul of the building, which the company owns, is expected to start in the spring of 2019 and will reportedly cost $US250m. Some administrative offices will be transformed into selling space. A temporary store will remain on the ground floor at 727 Fifth Avenue as well as around the corner on 57 Street in an adjacent building that was previously a Niketown. Bogliolo says major refurbishments like this one are essential and are key to the ongoing success of the business, but they are not without risk.
“You have to do it because the building becomes old and it’s as much about preservation as about improving the store,” he says. “The challenge is to take a building that was designed in the 1940s and that went through several redecorations over the years, but they were just redecorations. So that was a very difficult decision, because this is one of those things where if you touch a monster of heritage like the Fifth Avenue store you have to get it right — not only for the brand, but because it’s the most important luxury flagship store in the world.”