Introduction of Both Companies and their Comparative analysis.

1. Blue Nile and diamond
retailing
Presented By
Irfan Mehdi Khan Zardari
Zahid Ali
Muhammad Ilyas
Mahnoor Shafique
Irfan Mehdi Khan
Quaid-i-Azam University Islamabad

2. Introduction
Blue Nile
 Largest retailer of Diamond online.
 Blue Nile was established at the end of 1999.
 Blue Nile articulated philosophy
“offer high quality diamonds in fine jewellery at outstanding prices”
 The concept of 4 Cs by Blue Nile
 cut, color, clarity and carat .
 Lower prices because of lower inventory and warehousing expense.
 Single warehouse in the US.

3. The Diamond Retailing Industry
 Excess supply of diamonds in the market in 2008.
 World’s largest producer, DeBeers, appeared unmoved, refusing to give any
commitment to curtail production.
 The company discovered new mine in South Africa and could add 800,000
carats a year into already oversupplied market.
 Russia was 2nd largest producer of diamonds in the world after Botswana.
 The situation was difficult for traditional jewelry retailers like Wal-Mart.

4. Cont…
 Friedman's filed for bankruptcy protection in January 2008
 Friedman’s was 3rd largest jewelry chain in North America with 455 stores
 In Feb 2008 Zales closed 100 stores in 2008
 This was opportunity for other players to gain market share
 With weaken economy in 2008 successful players like Blue Nile,
Tiffany and Zales saw a decline in sale and significant drop in share
price.

5. Zales
 Established by Morris and William Zale and Ben Lipshy in 1924
 Marketing strategy to offer a credit plan of "a penny down and a
dollar a week“
 Success allowed them to grow to 12 stores in Oklahoma and
Texas by 1941
 Four decades later, company grew to hundreds of stores

6. Tiffany
 Opened in 1837 as a stationery and fancy good emporium in NYC
 Enjoyed tremendous success, with its silver designs
 In 1886, introduced its now famous "Tiffany setting" for solitaire engagement
rings
 Offers high-end products including diamond rings, wedding bands, and
gemstone jewelry

7. Blue Nile Zales Tiffany
Blue Nile offers a variety of
great, high quality
diamonds online at
reasonable prices.
Customers like the low-
pressure selling tactic that
focuses on education and
providing good value to its
customers.
Zales Jewelers offers a
credit plan of "a penny
down and a dollar a
week," marketing
strategy. Selling
mostly diamond
jewelry to working-
class shoppers.
Tiffany is popular due
to its demand of silver
designs and its now
famous "Tiffany
setting" for solitaire
engagement rings.
Offers high-end
products.
What are some key success factors in diamond retailing? How do Blue
Nile, Zales, and Tiffany compare on those dimensions?

8. Q. What do you think of Tiffany's decision to not sell diamonds
online?
 Chose to sell non-diamond or only Category D items through the online
channel "D" products were higher in demand and would lower the inventory
cost.
 Tiffany diamonds are set at an average price of $2,000. This would set
diamond products at a lower demand compared to non-diamond products with
a price of $200.
 Ultimately, it would lead to an access in inventory that can increase costs.

9. Q. Which of the three companies do you think is best structured to
deal with weak economic times?
 Blue Nile has the main advantage and was best structured to deal with the
downturn in 2008Main fixed costs were operating facilities and transportation
cost.
 Offer variety of diamonds online at reasonable prices
 Zales and Tiffany had more costs/expenses Retail, admin, facility, and
transportation cost
 Tiffany offers high-end products at a higher cost
 Zales offer high-end products at reasonable prices at retail stores and online

10. Q. What advice would you give to each of the three companies regarding its
strategy and structure?
Blue Nile Zales Tiffany
Blue Nile has an
advantage when it comes
to selling a large variety
of high-end diamonds at
reasonable prices. They
may need to continue
focusing on their selling
tactics and could re-
structure their marketing
strategy to reach out to
new customers.
Zales may need to gain
control of their inventory
and limit their lower
demand, higher cost
products in their
inventory while selling
lower cost diamonds at
retail stores.
Tiffany needs to be
careful when trying to
lower prices on their
diamonds or their
reputable image may get
ruined. Instead, they
need to continue focusing
on their brand image by
offering outstanding
products and great
service.