- February 15th, 2017
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Tiffany Ads Make Us Gaga For Valentine’s Day
Nothing says robin’s egg blue like a Lady in black.
Such was the latest ad for Tiffany & Co., which featured
Lady Gaga and aired at the Super Bowl, making for one more first at the historic game. First overtime, first 25-point comeback, first game-day Tiffany ad. But will the advertisement do for Tiffany what Tom Brady did for the Patriots? The bellwether may exist in the fast-approaching Valentine’s holiday.
Some may think Tiffany chose an unlikely person and venue for its advertisement, but did it? The ad’s story (not a couple in love, but one brand in love with another), the event and Lady Gaga just might appeal to a market, and sensibility, that Tiffany has trouble attracting — a young one.
Financial results indicate that Tiffany needs to find a buying market, young or otherwise. Sales in the first three quarters of 2016 declined to $2.77 billion from $2.89 billion in the same period in 2015. Profits slipped to $288 million from $300 million. The U.S. market in particular underperformed; sales from stores open at least a year declined 6% due to weaker traffic in all regional markets except Japan.
On Feb. 5, hours before the Super Bowl, Tiffany replaced CEO Frederic Cumenal, who had been heading the company since April 2015. The jeweler’s top designer had left three weeks earlier. It appointed chairman and former CEO Michael Kowalski to succeed Cumenal on an interim basis.
It may be a coincidence that the Tiffany-CEO breakup occurred just more than a week before Valentine’s Day. The timing of the ad likely was not.
Some retail analysts have suggested that Tiffany’s struggle with lagging sales may be due to a lack of love among younger shoppers, many of whom view it as an “old world luxury.” In any event, the withering sales can certainly be tracked to Tiffany’s home turf.
The gilded chain attributed a 2% third-quarter sales decrease in the Americas largely to U.S. consumers. Likewise, a lag in U.S. spending contributed significantly to its overall year-to-date sales decline of 7%. The drop affected most product categories, particularly silver jewelry, which represents the blue-box entry price for many.
To rekindle interest, Tiffany has introduced edgier collections and more acceptable price points. It’s a good step. But Tiffany can’t get younger shoppers in the door until it changes perceptions. Enter Lady Gaga.
This may be why Tiffany chose the Super Bowl as the event for the Lady Gaga spot. She’d already generated hype as its half-time performer. And it’s worth noting that while Tiffany had not previously advertised during the Super Bowl, it has produced the Vince Lombardi Trophy since the first big game in 1967. So Tiffany probably knows a few things about the audience.
It may also know this: Almost half of Valentine’s Day gift buyers — 46% — do not start shopping for gifts until early February, according to a survey by Bing. Another 28% rush out in the week before. Those between the ages of 25 and 34 spend the most, $234, while those age 18 to 24 spend an average of $148 — not shabby.
A separate survey by Discover shows much the same — that adults younger than 35 plan to spend an average of $185, or about $40 more than survey respondents overall.
And what are they buying? Tiffany did not rank among the top-10 online search terms in Bing’s survey (interestingly, Olive Garden ranked third). However, jewelry did top its list of most-searched items via mobile devices.
And people are buying it. Overall, Americans spent $4.5 billion on jewelry in 2016, according to research by Fundivo.com, a small-business lender. That shakes out to $166 per purchase.
That’s a lot of rings. It’s also more than what Tiffany is tracking to ring up in terms of fiscal 2016 sales. To win a fraction of that $4.5 billion, Tiffany needs to turn the heads of younger star-crossed consumers. These are the shoppers it should commit to long-term, while also keeping its older, more reliable market in good hands.
Lady Gaga, thanks to her recent duo with Tony Bennett, may just be the perfect match for both.