Cartier: High Jewelry for the Millennial Generation (Senior Capstone Project)

H I G H J E W E L R Y F O R T H E M I L L E N N I A L G E N E R AT I O N

S E N I O R C A PS TO N E P R OJ E CT

CAROLINE LOWE FASM 430 . PROFESSIONAL PORTFOLIO PRACTICES PROFESSOR PATTI CAPALLI TAYLOR SAVANNAH COLLEGE OF ART & DESIGN FALL 2016

CARTIER

3

CARTIER

TA B L E O F C O N T E N T S

4

I. INTRODUCTION

IV. CUSTOMER ANALYSIS

07 Mission Statement

52 Demographics & Psychographics

08 Project Introduction

53 Customer Profiles

II. COMPANY OVERVIEW

V. STRATEGIC PLAN

12 History

56 Goals

22 Timeline

57 Implementation Strategies

26 Heritage

VI. CONCLUSION

28 Size and Scope

34 Corporate Ownership

III. MARKET ANALYSIS

46 Competitors

48 SWOT Analysis

CARTIER

5

I. INTRODUCTION

MISSION STATEMENT

CARTIER

PROJECT INTRODUCTION

6

M I S S I O N S TAT E M E N T To develop a strategic plan for Cartier to utilize existing assets to build on the brand’s relationship with millennials in order to cement a strong customer base to weather economic turbulence in the luxury industry.

CARTIER

7

PROJECT INTRODUCTION

In 1917, Pierre Cartier paid $100 cash and a double-strand pearl necklace to yachtsman and financier Commodore Morton F. Plant for the tycoon’s Italian Renaissance-style Fifth Avenue mansion. Architect William Welles Bosworth converted the house into a grand, gilded-age monument to commercialism and it opened as the new New York retail location of the French jeweler.

This October, the iconic limestone mansion on Fifth Avenue and 52nd Street reopens after a two-year renovation. The glamorous new store will pay tribute to Cartier’s storied history while bringing the brand’s shopping experience into the future with an iPhone and Android app, iPads for customer service, and free WiFi. Sophisticated salons named after famous Cartier customers will hold engagement rings, watches, and high jewelry, and period antiques from the Mansion’s birth in 1905 will transport shoppers to an earlier era.

But what will happen to Cartier’s temporary location on Fifth Avenue and 59th Street?

The jeweler decamped to the former CBS studio in the GM building in 2014 for the duration of the renovation process, sharing a block with FAO Schwarz (until it closed last year) and Apple’s Fifth Avenue flagship. While smaller than the Mansion down the block, the 8,000 square foot store is still a Cartier boutique, outfitted swankily by Bruno Moiard, who is charged with all of Cartier’s boutique appointments. While only seven blocks from the Mansion, the 59th Street store attracted a new, Millennial customer, popping in on the way home from Apple or Barney’s, that may have been put off by the grandiosity of the location down the street.

With the market for luxury goods looking increasingly shaky, Cartier should utilize its existing assets to draw in a new consumer by keeping the 59th Street location open and

CARTIER

re-tooling its assortment to appeal to the Millennial jewelry customer.

8

CARTIER

9

“

JEWELER OF K INGS A ND KING OF J E W E L E R S .”

CARTIER

- K I N G E D WA R D V I I

10

II.

C O M PA N Y O V E R V I E W

HISTORY TIMELINE HERITAGE SIZE & SCOPE CORPORATE OWNERSHIP

CARTIER

11

C O M PA N Y H I S T O R Y

In 1847, Louis-François Cartier took over the

Cartier’s long relationship with the House of

helm of his master, Adolphe Picard’s, Paris

Windsor. Fourteen more royal warrants will

workshop at 29 Rue Montorgueil, and the

follow in the next quarter century, including

jewelry house of Cartier is born. It did not

royal families of Russia, Siam, Serbia, and

take long for Cartier’s designs to attract high-

Portugal.

wattage customers, with Empress Eugénie, wife of Emperor Napoleon III, becoming a

Louis Cartier, Alfred’s eldest son and director

Cartier client in 1859, soon to be followed by

of the firm’s Paris operations, creates one of

many of her aristocratic peers.

the first wristwatches for his friend, Brazilian aviator Alberto Santos-Dumont, who had

In 1874, Alfred Cartier, son of Louis-François,

complained to Louis about the difficulty of

takes over the Cartier business from his father,

checking a pocket watch while flying. Louis

and continues to build the Cartier brand,

designs the watch with Santos’s input in

developing the first women’s bracelet watch,

1904. The leather-strapped Santos watch,

in 1888, effectively merging his interests in

launched commercially in 1911, is still in

both jewelry and watchmaking. To make room

production today. Louis continued to build

for the expanding business, Alfred moved

Cartier’s watch heritage with the development

the workshop to the house’s current Paris

of the original Tank watch in 1917, inspired

headquarters at 13 Rue de la Paix, sparking

by the military tanks newly introduced on

a trend of other jewelers and luxury brands

the Western Front. The watch was officially

moving into the area.

launched in 1919, and remains one of the maison’s most enduringly popular designs.

Yves Saint Laurent, Andy Warhol, Jackie

EXPANSION

Kennedy Onassis, and Michelle Obama, who wore a Tank Française in her official White

In 1902, Pierre Cartier, the second of Alfred

House portrait in 2013, have worn the Tank.

CARTIER

Cartier’s three sons, opens a Cartier branch at 4 New Burlington Street in London. Edward,

Jacques, the youngest of Alfred Cartier’s three

Prince of Wales, orders 27 Cartier tiaras

sons, took over the operations of the London

for his upcoming coronation. He later issues

branch in 1906, opening a second London

a royal warrant, making Cartier an official

location at 175-176 New Bond Street.

purveyor of jewels to the crown, beginning

Meanwhile, Pierre, sensing a growing

12

CARTIER

13

opportunity in the rising prominence and

collection is still in production today.

wealth of American industrialists and entrepreneurs opens an American branch in

In 1933, Louis Cartier promoted one of

New York City, at 712 Fifth Avenue in 1909.

his jewelry designers, Jeanne Toussaint, to

His instincts were proven correct the following

head Cartier fine jewelry. Nicknamed “La

year with the sale of the famed 45.5-carat

Panthère” for her feminine sensibility and

Hope Diamond to American Evalyn Walsh

known as “the Coco Chanel of jewelry,”

McLean. In 1917, Pierre moved Cartier’s

Toussaint went on to create many of Cartier’s

New York operations to its current location

most iconic fine jewelry designs. Toussaint

at 653 Fifth Avenue. Pierre purchased the

developed Cartier’s first panthère motif, a

limestone mansion, designed in the Italian

leopard print paved with diamonds and onyx

Renaissance style in 1905 by Robert W.

on the bezel of women’s wristwatch, after a

Gibson, from the industrialist and yachtsman

trip to Africa with Louis Cartier. Her iconic

Commodore Morton F. Plant for $100 cash

animal designs, including parrots, flamingos,

and a double-strand pearl necklace valued at

and the panthère, were coveted by royalty.

$1 million. Plant’s wife, Maisie, had admired

In 1940, the Duke of Windsor had Toussaint

the necklace of 128 perfectly matched natural

reassemble an existing necklace and four

pearls in the window of the Cartier workshop

gemstone bracelets into a flamingo brooch

at 712 Fifth Avenue (now part of Henri

for Wallis Simpson. The couple purchased

Bendel,) and convinced her husband to trade

a panthère brooch featuring the platinum-

their home for the necklace. Pierre brought on

and-diamond-encrusted animal perched atop

architect William Welles Bosworth, who had

a 152.35-carat cabochon sapphire, one of

recently spearheaded the renovation of the

Simpson’s favorite pieces from Cartier in

American Telephone and Telegraph Building

1949.

at 195 Broadway, to transform the stately home into a boutique and headquarters for the

During World War II, Toussaint designed

jeweler’s American operations. Pierre would

a jeweled brooch featuring a songbird in

remain head of Cartier New York until taking

a cage as a symbol of protest against the

over Cartier Paris after the deaths of his

Nazi occupation of France, produced with

brothers in 1945.

limited materials due to wartime shortages.

Louis Cartier offered his London offices as a home base for General Charles de Gaulle’s

ARTISTIC EXCELLENCE

“Free France” movement. Many of de Gaulle’s wartime speeches were written in Cartier’s

In 1924, Cartier debuted the three-band

London headquarters. To celebrate the war’s

“Trinity de Cartier” collection. The design

end in 1944, Toussaint designed the “Oiseau

is known as the “Rolling Ring” in France.

Libéré” brooch, with a now joyful songbird

The French poet, director, and artist, Jean

freed from his cage.

Cocteau, helped Louis Cartier develop the

CARTIER

design, and popularized the Trinity collection among his Parisian society peers. The

14

FOURTH GENERATION

Love bracelet, which was created by in-house designer and 70’s icon, Aldo Cipullo.

In 1945, the fourth generation of the Cartier

A NEW ERA

family rises to the forefront after the death of Louis and Jacques Cartier. Claude, Louis’s son, helms Cartier New York, and

While Cartier was aesthetically strong in the

Jean-Jacques, Jacques’s son, takes over

1960’s and 70’s, the company’s finances

Cartier London. Pierre’s daughter, Marionne

were deteriorating. In 1972, financier Joseph

Claudelle, later takes over Cartier Paris after

Kanoui led a group of investors, including

Pierre’s death in 1964.

industrialist Robert Hocq and the South African Rupert family, to purchase Cartier’s Paris operations. Hocq is named President of

ICONIC CLIENTELE

Cartier Paris, and, in 1973, he and General Director Alain Dominique Perrin, began

In 1953, Cartier’s place in Hollywood legend

developing a diffusion line of non-jewelry

and popular culture is cemented when Marilyn

products for wholesale under the new label,

Monroe sings “Cartier!” in the film adaptation

“Les Must de Cartier.” The lower-priced

of Anita Loos’s Gentlemen Prefer Blondes. The

collection included cigarette lighters and

firm’s jewelry first appeared in its iconic red

the first line of leather goods in the house’s

box in the original Broadway production in

signature Bordeaux red. The Kanoui-led

1926. In 1956, Prince Ranier III of Monaco

group went on to purchase Cartier’s London

proposed to the American actress Grace Kelly

operations in 1974 and New York in 1976.

with a 10.47-carat emerald cut diamond ring

The Cartier interests were combined into

from Cartier. Kelly had been a Cartier client

“Cartier Monde” (meaning “Cartier World”)

for years after being introduced to the maison

in 1979. In 1981, Cartier Monde and Les

by director Alfred Hitchcock. Ranier’s family,

Must de Cartier were merged into Cartier

the Grimaldis, had originally issued a royal

International, and Perrin was named Chairman

warrant to Cartier in 1920. Kelly wore a suite

of the newly formed entity.

of Cartier diamond jewelry for her wedding on April 19, 1956.

Under new financial leadership, the Cartier business flourished, as the Must product line grew to include silk scarves in 1978;

doyennes of the silver screen, later creating a

the first Cartier perfumes, “Must de Cartier”

serpent-shaped diamond necklace for Mexican

and “Santos de Cartier,” in 1981; and

actress María Félix in 1968, and selling a

a collection of porcelain, crystal, and

69.42-carat pear-shaped diamond to Richard

silverware, called “Les Maisons de Cartier”

Burton, who bought the stone as a birthday

in 1987. The entry-level price points for these

gift for Elizabeth Taylor in 1969. The stone

items allowed a new group of customers

was renamed the Taylor-Burton diamond.

access to the Cartier brand, raising Cartier’s

1969 also marked the original launch of the

profile. This effort worked in tandem with

15

CARTIER

Cartier would continue its relationship with

CARTIER IN THE 21 ST CENTURY

massive retail expansion, as a slew of new Cartier boutiques opened worldwide. To boost its watchmaking business, Cartier also acquired majority stakes in watchmakers

In the early 2000’s Cartier moved to make

Piaget and Baume and Mercier in 1988.

its jewelry supply chain more transparent.

In 2001, the maison adopted the Kimberly Process, an industry-wide effort to end trade

CURATION OF HERITAGE

in conflict diamonds. In 2005, along with thirteen other jewelry industry leaders, Cartier

Simultaneously, the new Cartier leadership

co-founds the Council for Responsible Jewelry

worked to cultivate the brand’s rich heritage.

Practices, which sets standards for responsible

Michelle Kanoui, the recently named head of

business practices for each step of the jewelry

jewelry design debuted her first collection for

supply chain for its 850 member companies.

Cartier in 1982. Her collection, “Nouvelle Joaillerie,” was inspired by the brand’s

In 2011, Kate Middleton wore a diamond and

Paris lineage and drew on many of Jeanne

platinum Cartier tiara with foliated scrolls,

Toussaint’s iconic designs of the early

known as the “Halo Tiara,” for her wedding

20th century. In 1984, Perrin founded the

to Prince William. The tiara was originally

“Foundation Cartier pour l’Art Contemporain,”

created in 1936 for Queen Elizabeth II, then

a foundation for contemporary art, to

the Duchess of York, and was also worn by

strengthen ties between the maison and artists

Princess Margaret in 1955.

of the time. This effort culminated in the 1989 retrospective of the Cartier collection, called

In 2012, Cartier debuted L’Odyssée de

“L’Art de Cartier,” staged by the Musée du

Cartier, a three-and-a-half minute long film

Petit Palais in Paris. The exhibit displayed

that took two years and $5.3 million to

jeweled creations dating back to the maison’s

produce. The film starred real panthers and

founding and included pieces from Cartier’s

was directed by Bruno Aveillan. Cartier

archives as well as items on loan from their

hosted a premiere at the Metropolitan Museum

royal owners. The exhibition was later shown

of Art in New York to screen the film, which

at the Hermitage Museum in Saint Petersburg

celebrated Cartier’s 165th anniversary.

in 1992, the Tokyo Metropolitan Teien Art Museum in Tokyo in 1995, the Museo del Palacio de Bellas Artes in Mexico City in 1999, the Shanghai Museum in Shanghai in 2004, and the Deoksugung National Museum

CARTIER

in Seoul in 2008.

16

Wallis Simpson wearing her Cartier panthère brooch (pictured at right) on the belt of her dress.

Jewelry designer Jeanne Toussaint, “La Panthère,” designed the first panthère motif for Cartier in 1914.

CARTIER

17

R E N O VA T I O N O F A N I C O N

In 2014, renovations began on Cartier’s

app designed for Apple and Android phones

Fifth Avenue store. The design team is led

that offers customers a guided historical tour

by two New York-based architectural firms

around the store. A portrait of the maison’s

specializing in historic preservation. Beyer

original matron, Maisie Plant, wearing her

Blinder Belle worked on the 1980’s renovation

pearl necklace, hangs prominently overlooking

of Ellis Island, and Thierry W. Despont

the grand staircase.

led the 1980’s restoration of the Statue of Liberty. Retail operations are moved up the street to the GM Building on Fifth Avenue at 59th Street. The 59th Street store opening coincides with the launch of the lower-priced “Amulette de Cartier” collection, which is featured in an accompanying interactive microsite with links to influencer content on social media on Cartier’s website and promoted with #UnlockYourWish.

In September 2016, with renovations complete, the mansion reopens at Fifth Avenue and 52nd Street (officially named “Place de Cartier” in 2001.) The occasion is marked with a gala attended by Katie Holmes, Sienna Miller, Taylor Schilling, Sofia Coppola, and Rooney Mara, among others from the glitterati set. The new store offers four floors of selling space, with specialty salons named for some of Cartier’s famous clients. Private booths above the main selling floor allow sales associates to confer with high-dollar clients without being disturbed.

CARTIER

The new store also offers Wi-Fi connectivity, iPads for inventory searches, and a mobile

18

The newly renovated Oak Room (top) and Princess Grace Salon (bottom) at 653 Fifth Avenue.

CARTIER

19

Clockwise, beginning at top | Katie Holmes, Sienna Miller, and Sofia Coppola arriving at the gala to celebrate the reopening of Cartier’s 653 Fifth Avenue store. Invitations embossed with the image of the Plant mansion. Portrait of Maisie

CARTIER

Plant, wearing her Cartier pearl necklace, now hanging in the mansion.

20

59th Street and Fifth Avenue store in the GM Building, across from the Plaza and Central Park.

CARTIER

21

Left | Mobile ad on The New York Times announcing the move to the 59th Street store in 2014.

CARTIER

Right | The GM Building on Fifth Avenue in New York.

22

Interior of the Central Park store.

CARTIER

23

TIMELINE 1847-1953

1904 Louis Cartier creates one of the first wristwatches for his friend, Brazilian

1847 Louis-François Cartier

aviator Alberto Santos-

takes over the helm of

1874

Dumont, who had

his master, Adolphe

Alfred Cartier, son of

complained to Louis

Picard’s, Paris workshop

Louis-François, takes

about the difficulty of

at 29 Rue Montorgueil,

over the Cartier business

checking a pocket watch

and Cartier is born.

from is father.

while flying.

1859

1902

1909

Empress Eugénie, wife

Pierre Cartier, the

Pierre Cartier opens

of Emperor Napoleon

second of Alfred

an American branch

III, becomes a Cartier

Cartier’s three sons,

in New York City, at

client. Many of her

opens a Cartier branch

712 Fifth Avenue, to

aristocratic peers soon

at 4 New Burlington

take advantage of

follow.

Street in London. Edward

the growing wealth of

VII orders 27 Cartier

American industrialists

tiaras for his upcoming

and entrepreneurs.

CARTIER

coronation.

24

1949 The Duke and Duchess of Windsor purchase an

1917

iconic panthère brooch

Louis Cartier designs the

featuring the platinum-

Pierre Cartier sells the

first Tank watch, inspired

and-diamond-encrusted

famed 45.5-carat Hope

by the military tanks

animal perched atop a

Diamond to American

newly introduced on the

152.35-carat cabochon

Evalyn Walsh McLean.

Western Front.

sapphire.

1910

1917

1933

1953

Pierre Cartier moves

Jeanne Toussaint,

Marilyn Monroe sings

the New York store to

knicknamed “La

“Cartier!” in the film

its current location at

Panthère” for her

adaptation of Gentlemen

653 Fifth Avenue. The

feminine sensibility and

Prefer Blondes.

mansion, designed by

known as “the Coco

Robert W. Gibson,

Chanel of jewelry,” is

is purchased from

named head of Cartier

industrialist Morton F.

fine jewelry.

Plant for $100 cash and a double-strand natural pearl necklace valued at CARTIER

$1 million.

25

TIMELINE 1953-2014

1974 Cartier loans Art Decostyle pieces from its house collection to

1956 Prince Ranier III of

director Jack Clayton

Monaco purchases a

as part of the costumes

10.47-carat emerald-

1969

for his period film, The

cut diamond ring for his

The first Love bracelet is

Great Gatsby, starring

engagement to American

designed for Cartier by

Robert Redford and Mia

actress Grace Kelly.

Aldo Cipullo.

Farrow.

1964

1972

1979

Pierre Cartier dies,

Financier Joseph

The Cartier interests are

Cartier Paris is taken

Kanoui leads a group

combined into “Cartier

over by his daughter,

of investors, including

Monde.”

Marionne Claudelle.

industrialist Robert Hocq and the South African Rupert family, to purchase Cartier’s Paris

CARTIER

operations.

26

2012 Cartier debuts L’Odyssée

2002

1981

de Cartier, a three-and-

Cartier adopts the

The first Cartier

a-half minute long film

Kimberly Process, an

fragrances, “Must de

that took two years and

industry-wide effort to

Cartier” and “Santos de

$5.3 million to produce

end trade in conflict

Cartier” are launched.

and celebrated Cartier’s

diamonds.

165th anniversary.

2001

2011

2014

The intersection of Fifth

Kate Middleton wears a

Renovations begin on

Avenue and 52nd Street

diamond and platinum

Cartier’s Fifth Avenue

in New York City is

Cartier tiara with

store. Retail operations

officially named “Place

foliated scrolls, known

are moved up Fifth

de Cartier.”

as the “Halo Tiara,” for

Avenue to 59th Street.

her wedding to Prince William.

CARTIER

27

H E R I TA G E

Above | Princess Grace of Monaco wearing her 10.47-carat Cartier engagement ring.

Left | The Duchess of Cambridge on her wedding day in 2011, wearing Cartier’s “Halo Tiara,” originally designed

CARTIER

for Elizabeth II in 1936.

28

Below | Andy Warhol photographed in a Cartier Tank watch. One of the salons in the new Fifth Avenue Mansion is named for him.

Right | Elizabeth Taylor wearing the 69.42-carat TaylorBurton Diamond, set in necklace designed for her by Cartier, and part of her enormous jewelry collection.

CARTIER

29

SIZE & SCOPE

SIZE & SCOPE STORE LOCATIONS

CARTIER

PRODUCT CATEGORIES

30

SIZE & SCOPE

STORE LOCATIONS 286 Boutiques 125+ Countries 3 Maisons | Paris

London

New York

LEADERSHIP Cyrille Vigneron | CEO Mercedes Abramo | CEO, Cartier North America Headquarters | Paris, France NUMBER OF EMPLOYEES | 5,600 ANNUAL NET SALES, FY 2015 | $6.1 billion USD

SOCIAL MEDIA Instagram followers | 3.9 million Twitter followers | 359,000 Facebook page likes | 3.9 million Pinterest followers | 18,900 Snapchat Tumblr

CARTIER

31

CARTIER

S T O R E L O C AT I O N S

32

CARTIER

33

P R O D U C T C AT E G O R I E S

JEWELRY

EYEWEAR Optical

WATCHES

Sun

HANDBAGS

WRITING INSTRUMENTS

SMALL LEATHER GOODS

Pens

Wallets

Belts

Leather-bound Diaries

FRAGRANCE

ACCESSORIES

Precious Eyewear

Silk Scarves

CLOCKS

CARTIER

Cufflinks

34

An advertisement featuring the signature Cartier panther and the “Les Msut de Cartier� leather goods, first introduced by Robert Hocq and Alain Dominique Perrin in 1973.

CARTIER

35

C O R P O R AT E O W N E R S H I P

CORPORATE STRUCTURE COMPANY HISTORY CURRENT STATUS

CARTIER

BRAND PORTFOLIO

36

C O R P O R AT E S T R U C T U R E

COMPAGNIE FINANCIÈRE RICHEMONT SA COMPANY LEADERSHIP Richard Lepeu | CEO Gary Saage | CFO Burkhart Grund | Deputy CFO Frank Vivier Chief | Transformation Officer Hans-Peter Bichelmeier | Group Operations Director Thomas Lindemann | Group Human Resources Director Cédric Bossert Group | General Counsel Cyrille Vigneron | CEO, Cartier Nicolas Bos | CEO, Van Cleef & Arpels Jérôme Lambert | CEO, Montblanc Georges Kern | CEO, IWC Schaffhausen Philippe-Léopold Metzger | CEO, Piaget Daniel Riedo | CEO, Jaeger-LeCoultre 19-member Board of Directors Johann Rupert | Chairman of the Board

CARTIER

37

C O R P O R AT E H I S T O R Y

Cartier’s parent company, Compagnie

business began to decline, Rupert moved

Financière Richemont, began as a tobacco

to diversify his companies, and in 1983,

company founded by South African tycoon Dr.

Rothmans International moved to buy out

Anton Rupert in 1941. Originally known as

Kanuoi and the other investors, giving Rupert

Voorbrand Tobacco Company, Rupert renamed

control of Cartier Monde. In 1988, Rupert

his operation Rembrandt in 1948. The success

sought to restructure Rothmans International

of Rembrandt’s cigarette manufacturing

to avoid sanctions placed on South Africa

business in South Africa allowed Rupert

by western nations upset by apartheid. He

to expand his business internationally. In

separated the South African-based business

1954, Rembrandt acquired a controlling

from the international assets, spinning off

interest in the British tobacco company,

the latter into a new, Swiss-based holding

Rothmans, the maker of Pall Malls, as part

company, Richemont. Rupert placed his son,

of a deal to distribute Rothmans cigarettes in

Johann Rupert, a veteran of Chase Manhattan

South Africa. Rupert continued to build his

and Lazard Frères who had joined the family

business internationally with the acquisition

company in 1985, at the helm of the new

of Carreras, another British tobacco

business. Johann Rupert sought to consolidate

manufacturer, in 1958. The two British

control of the Richemont assets to insulate

companies were merged to form Carreras

the luxury brands from the performance

Rothmans, controlled by Rupert’s Rembrandt

pressures of the market. In 1989, he directed

Group. In 1967, Carreras Rothmans

Richemont’s purchase of Phillip Morris’s 24

purchased a majority stake in Alfred Dunhill

percent stake in Rothmans International,

Limited, another British cigarette brand that

securing the Rupert family’s control over

would eventually expand into luxury menswear

Rothmans.

and accessories. In 1972, Carreras Rothmans was rechristened Rothmans International.

Independent of his tobacco dealings, Anton Rupert joined the group of investors led

by Joseph Kanuoi who purchased Cartier’s Paris operations in 1972, followed by the

CARTIER

acquisitions of Cartier London in 1974 and Cartier New York in 1976. As the tobacco

38

C O R P O R AT E H I S T O R Y

In 1993, Johann Rupert again sought to

This practice made Richemont an attractive

restructure Richemont by dividing the luxury

partner to companies looking to sell equity. In

and tobacco assets to better respond to

1999, Fingen SpA partnered with Richemont

industry shifts in the global marketplace.

to purchase an 80 percent interest in jeweler

The luxury businesses, Cartier and Dunhill,

Van Cleef and Arpels, with Fingen controlling

were merged into the Vendôme Group, and

20 percent, and Richemont 60 percent, with

combined with majority stakes in Piaget

the remaining 20 percent controlled by the

and Baume and Mercier through Cartier

Arpels family. Richemont later purchased

and Chloé and Montblanc through Dunhill.

Fingen’s 20 percent share in 2001 and

Joseph Kanuoi was brought on as chairman

the Arpels’ share in 2003. The Van Cleef

and chief executive of Vendôme. The merger

and Arpels purchase and the $1.86 billion

left Richemont with control of 70 percent

acquisitions in 2002 of watchmakers the Stern

of Vendôme, with existing public Rothman’s

Group and Les Manufactures Hologeres, which

shareholders controlling another 18 percent,

included majority stakes in Jaeger-LeCoultre,

existing Dunhill shareholders with 8 percent,

IWC, and A. Lange Sohne, were financed

and the remaining 4 percent of shares

by the $21 billion merger of Rothmans

controlled by Luxco, Vendôme’s holding

International and British American Tobacco in

company.

1999, which left Richemont with a 35 percent stake in the resulting company, also called

To further insulate the luxury portfolio from

British American Tobacco.

outside pressure and assure the brands long-term support, Rupert sought to bring Vendôme’s assets under Richemont’s control by purchasing the remaining 30 percent of shares not already owned by Richemont. Vendôme’s board approved the buyback in 1997 and the deal was completed in 1999. Following the buyback, Rupert kept to his cautious, longterm outlook, taking a conservative approach to acquisitions and resisting consolidation CARTIER

of production in order to maintain product integrity for his brands.

39

C O R P O R AT E H I S T O R Y

The BAT merger allowed Rupert and Richemont

Richemont currently allows each of its groups,

to direct focus to the stable of luxury brands,

called Maisons, to operate independently

of which Cartier remained the centerpiece,

in the areas of product development,

accounting for upwards of 50 percent of

manufacturing, distribution, communication,

Richemont’s revenue. Acquisitions continued

marketing, and customer services; but offers

with the purchase of the remaining shares

regional support platforms to handle finance,

of A. Lange Sohne in 2003, and majority

logistics, information technology, human

interests in Azzedine Alaïa and Manufacture

resources, and after sales services; in each

Roger Dubuis SA in 2007. Also in 2007,

geographic area in which Maisons operate.

Richemont entered into a 50/50 joint venture

Maisons are grouped into operating divisions

with Polo Ralph Lauren to create the Ralph

for reporting purposes: three Jewelry Maisons,

Lauren Watch and Jewelry Company, whose

nine Specialist Watchmakers, and eight Other

first collection launches in 2009.

Businesses.

In 2008, all of Richemont’s remaining nonluxury assets were spun off into a separately traded public company, Reinet Investments S.C.A., leaving Richemont as a pure luxury group. 2010 saw the acquisition of a majority stake in NET-A-PORTER.COM, which was merged with the YOOX group in 2015, with Richemont owning 50 percent of the resulting shares.

Rupert has served as chairman of Richemont since 2002. Rupert and his family, through their holding company, Compagnie Financière Rupert, still own 9.1 percent of the company

CARTIER

publicly traded on the Swiss exchange.

40

C U R R E N T S TAT U S

Publicly traded on SIX Swiss Exchange under CFR Current stock price | 6 6 .1 0 C H F ( 6 5 . 5 6 U S D ) Total shares held | 522 000 000 ‘A’ registered shares, listed on SIX Significant Investor | Compagnie Financière Rupert

holds 522 000 000 unlisted ‘B’ registered shares

Net sales for year ending March 31, 2016 | € 11, 0 76 m i l l i o n ( $ 117 5 8 m i l l i o n U S D ) Net profit for year ending March 31, 2016 | € 2 , 2 2 7 m i l l i o n ( $ 2 3 6 4 .13 m i l l i o n U S D ) Number of employees | 28,810 Headquarters | Geneva, Switzerland Listed as #2 of the top ten luxur y goods companies worldwide by Deloitte.

CARTIER

41

BRAND PORTFOLIO

OTHER BUSINESSES

CARTIER

JEWELRY MAISONS

42

SPECIALIST WATCHMAKERS

CARTIER

43

TO P 1 0 LU X U RY G O O D S C O M PA N I E S

FY 2014 LUXURY FY 2014 LUXURY FY 2014 LUXURY GOODS SALES GOODS SALES GOODS SALES RANKING (USD M) GROWTH % L V M H M o ë t H e n n e s s y - L o u i s V u i t t o n S A

$ 2 3 , 2 9 7

7.0%

02

C o m p a g n i e F i n a n c i é r e R i c h e m o n t S A

$ 1 3 , 2 1 7

3.9%

03

E s t é e L a u d e r C o m p a n i e s I n c .

$ 1 0 , 7 8 0

-1.7%

04

L u x o t t i c a G r o u p S p A

$ 1 0 , 1 7 2

4.6%

05

T h e S w a t c h G r o u p L t d .

$ 9 , 2 2 3

3.1%

06

K e r i n g S A

$ 8 , 9 8 4

4.5%

07

C h o w T a i F o o k J e w e l r y G r o u p L t d .

$ 8 , 2 8 5

-17.0%

08

L ’ O r é a l L u x e

$ 8 , 2 3 9

5.7%

09

R a l p h L a u r e n C o r p .

$ 7 , 6 2 0

2.3%

10

P V H C o r p .

$ 6 , 4 4 1

3.9%

CARTIER

01

44

CARTIER

45

III.

M A R K E T A N A LY S I S

ECONOMIC CLIMATE COMPETITORS

CARTIER

SWOT ANALYSIS

46

E C O N O M I C C L I M AT E

In September 2016, Richemont issued a

trends as well as Richemont’s strong balance

profit warning with the announcement of its

sheet of luxury brands.

sales falling by 14% for the period of April through August, from the same period in

2015 SALES DECLINE

2015. An accompanying statement added, “We are of the view that the current negative environment as a whole is unlikely to reverse

Richemont’s sales performance, though weaker

in the short term.” This sales slump, driven by

than expected, was stronger than in 2015,

a slowdown in global growth, especially in

indicating that the luxury goods market is

China, depressed tourism in Europe due to the

recovering. Compared to 2016’s numbers,

threat of terrorist attacks, and volatile shifts in

2015 represents a trough in Richemont

currencies, especially the Swiss franc, whose

profits, with a sell off in November 2015

relative strength has spiked manufacturing

triggered by an announcement from Richemont

costs, triggered a 4% drop in Richemont

that net profit for the six months ending on

shares on the Swiss Market Index.

September 30, 2015 rose to only $1.2 billion from $962 million the year before, missing

Sales in Europe decreased by the greatest

analysts’ expectations by $138 million.

margin, 20%, with sales in Japan dropping

Reported sales for the period of $6.16 billion

15%, and sales in the Asia Pacific region and

missed projections by $140 million. The

the Middle East and Africa both sliding 12%.

announcement was accompanied by downbeat

The smallest decrease was in the Americas,

comments by CFO Gary Saage, who stated

where sales dropped only 8%.

that Richemont expected the remainder of the year to be “challenging,” and that Hong

While watch sales decreased by 19%, jewelry

Kong and Macau, two of the world’s largest

sales only dropped by 16%, with sales in

luxury markets, remained “extremely difficult.”

other goods actually rising by 2%.

The earnings report triggered a 9.1% drop in Richemont’s shares on the Swiss Market Index as investors reacted to the gloomy news, with

confident about long-term growth, stating

luxury competitors LVMH and Swatch Group

at Richemont’s annual meeting, “We remain

taking similar hits, down 4.8% and 6.3%,

convinced of the long-term prospects for luxury

respectively.

goods globally,” and pointing to historical

47

CARTIER

However, Chairman Johann Rupert was more

BRIGHTER OUTLOOK FOR 2017

Despite this, consultants at Bain & Co., a longtime leader in analysis of the luxury sector, back up Rupert’s optimism, predicting in April that the luxury goods market should pick up again in 2017 after slumping in 2015. In October, Bain consultants updated their initial report with the “Bain & Company Luxury Study,” released in collaboration with Fondazione Altagamma, the Italian luxury goods manufacturers’ industry foundation.

The study emphasized the rise in spending on luxury experiences over personal luxury goods, but predicted a compound annual growth rate for personal luxury goods of 3-4% by 2020.

However, the study warned that with the breakdown of traditional barriers to the luxury market spurred by the “democratizing force” of digital, competition in the market would be fierce.

“Naturally, an influx of new market entrants is concerning to incumbents, who are worried about losing market share,” said Federica Levato, a Bain partner based in Milan and co-author of the study. “But, we anticipate big opportunities for the brands that are willing to think and act more like their up-and-coming counterparts.”

Bain stressed the importance of adaptability to omni-channel, customer-centric business models as a differentiating advantage for luxury goods companies, especially in regards to e-commerce, which reached 7% penetration in 2016, making it the third largest luxury

CARTIER

‘market’ globally after the U.S. and Japan.

48

REGIONAL OPPORTUNITIES

Saturation in the Chinese market and

While the U.S. market is typically considered

slowdown in the Chinese economy; a supply

saturated, many luxury brands have only a

glut in the oil industry causing political

light footprint outside of New York and Los

instability in OPEC countries, Russia, and

Angeles, leaving considerable room for growth

Brazil; and currency fluctuations and the

in other areas, including secondary cities,

looming threat of terrorism in Europe has

which are quickly becoming luxury centers.

depressed consumer spending on luxury goods in these markets, while despite an uncertain

SPENDING TRENDS

political climate, the U.S. continues to be a strong prospect for luxury brands. The world’s largest economy, while having long

Additionally, while the “Affluent Perspective

ago matured from the exciting “developing

Global Study” conducted by YouGov’s Wealth

economy” stage, still boasts stable GDP

Practice, forecasts a 0.9% reduction in luxury

growth of about 2%, and an unemployment

spending among affluent groups in 2017,

rate of 4.9%. Private consumption in the U.S.

two groups, millennials and the wealthiest

is increasing by 2-3% per year, and long-

400,000 households, are expected to

stagnant incomes are finally beginning to rise.

increase their spending on luxury goods by 8% and 10%, respectively. Millennial spending on

In terms of scale, America’s luxury market

luxury goods is predicted to reach $49 billion

is the largest in the world, with the luxury

in 2017, compared to $96 billion for Gen

market in New York alone accounting for

X and $117 billion for baby boomers. These

$25.5 billion, more than the entire luxury

increases will be driven primarily by two

market of Japan, second to the U.S. in overall

categories, travel and fine dining, up 10%

size. The U.S. has over 14 million “affluent

and 5%, respectively, from 2015.

households,” considered to be those with an annual income of over $150,000. The top 400,000 households in this group have a mean income of around $1 million annually.

CARTIER

49

COMPETITORS

TIFFANY & CO.

CARTIER

DAVID YURMAN

50

HERMÈS

CARTIER

51

S W O T A N A LY S I S S STRENGTHS Rich heritage of iconic, artful design.

Instantly recognizable branding and covetable packaging.

Large network of existing retail stores.

Wealth of eye-catching media content.

Parent company supportive of CARTIER

long-term capital investment.

52

W

O

T

WEAKNESSES

OPPORTUNITIES

THREATS

Media presence is

Utilize existing following

Decreasing consumer

inconsistent across platforms.

among millennial influencers.

confidence makes it difficult for customers to justify luxury

Well-designed campaigns

Tout transparency efforts

are easily crowded out by

and heritage appeal to

lesser ones.

build loyalty with millennial

Global trends like currency

customer.

fluctuations and decrease in

Website is clunky to navigate

purchases.

travel can cut into earnings.

and difficult to shop, and

Incorporate experiential

many items cannot be

technology in stores to make

purchased online.

boutiques into destinations.

CARTIER

53

54

CARTIER

I V.

C U S T O M E R A N A LY S I S

DEMOGRAPHICS & PSYCHOGRAPHICS CUSTOMER PROFILES

CARTIER

55

D E M O G R A P H I C S & PSYC H O G R A P H I C S

Millennials, the subset of the population born

The scars of the Recession also left millennials

between 1980 and 2000, are an increasingly

to place more emphasis on an experience

important slice of the consumer market for

rather than an material things. Spending on

luxury retailers to capture, having now

travel, activities, and adventures has exploded

surpassed the baby boomers as the largest

in recent years as the generation searches

generation in the United States, with 75.4

for more meaning in their spending. More

million members. The term “millennial” was

meaningful earning has become increasingly

coined by William Strauss and Neil Howe,

inportant, as well, and many millennials

whose theory of generational cycles predicts

choose to stay away from high-paying jobs

that millennials will become more “civic-

in favor of a career about which they are

minded” like the earler G.I. Generation, as a

passionate.

reaction to current events.

Another distinct trend among millennials that Millennials’ economic worldview is very much

demands attention from the jewelry industry is

shaped by the Great Recession of 2007-08,

the later dates of marriage. The drifting away

when many saw their job prospects dwindling

from traditional rites of passage in favor of a

and witnessed firsthand the downfalls of easy

personalized time table is slowing marriage

credit and overspending. In 2015, millennials

rates among the generation. Decreasing

in New York City reported earning 20% less

economic stability has also contributed to

than the generation before them, despite

this trend, as many millennials choose or are

having higher percentages of college and

forced to live with their parents to save money

post-college degrees. Thus, millennials are

long after previous generations would have,

more cautious with their money, and seek to

making it more difficult to find a partner.

purchase items that are more in line with their own personal style than the conformity of a

CARTIER

highly-advertised label.

56

C USTO M E R P RO F I L ES

N A M E | C a t e

Tyler

A G E | 2 8

32

OCCUPATION | Junior Buyer at Saks

Principal at Apollo Global

L I V E S | E a s t V i l l a g e , N e w Y o r k

TriBeCa, New York

Y E A R L Y I N C O M E | $ 1 6 0 , 0 0 0

$400,000

H O B B I E S | S o u l C y c l e

Golf

V i n t a g e s h o p p i n g

Playing basketball with friends

Visiting the Whitney Museum

Cooking

PURCHASING | Amulette necklace

Love bracelet

F O R | h e r s e l f

his girlfriend

CARTIER

57

58

CARTIER

V. S T R A T E G I C P L A N

ANALYSIS IMPLEMENTATION STRATEGIES

CARTIER

59

A N A LY S I S I. Stability and reliable growth of U.S. market is an opportunity for growth in a volatile gloabl market.

II. A cohesive omnichannel shopping experience that melds seamlessly with media content is vital to reaching millennial customers, which also represent a growth opportunity.

III. Creating a customized shopping experience available in-store and online will draw customers looking for experiential luxury.

IV. Central Park store location offers an opportunity to test these practices, and create an experiential shopping

CARTIER

and travel destination for tech-minded younger consumers.

60

I M P L E M E N TAT I O N S T R AT E G I E S

Make digital content uniform across all platforms for cohesiveness and to emphasize impact of ad campaign.

Use existing CRM systems and social media to strengthen bond with younger consumers, ensuring that they will turn to Cartier for larger purchases later in life.

CARTIER

61

I M P L E M E N TAT I O N S T R AT E G I E S

Re-tool e-commerce site and technology capacity of 59th Street boutique to allow for “cutomizable” products.

U s i n g f o u r o f C a r t i e r ’ s m o s t p o p u l a r l i n e s w i t h t h e m o s t v a r i e t y , a l l o w c u s t o m e r s t o b e

involved in the process of choosing their item. Instead of giving the customer a list of 20

pre-defined choices, allow customer to make each decision along the way.

Include the option of personalized engraving.

Customer receives a unique product tailored specifically to them.

Even online customers feel they have recieved the top-of-the-industry customer service for

which Cartier is known.

Market the Central Park store as a new shopping destination, utilizing proximity to the Apple store and Barney’s to attract a customer not necessarily enticed by the 52nd Street location.

Ensure that Cartier hallmarks of iconic design and white glove customer service permeate the

CARTIER

experience, even in a new setting.

62

TRINITY DE CARTIER tricolor

thin

4 diamonds

white gold

medium

10 diamonds

pink gold

thick

diamond pavé

yellow gold

JUSTE EN CLOU

white gold

thin

4 diamonds

pink gold

medium

10 diamonds

yellow gold

thick

diamond pavé

LOVE white gold

cuff

4 diamonds

pink gold

bracelet

10 diamonds

yellow gold

diamond pavé

AMULETTE DE CARTIER

small

onyx

medium

malachite

large

coral tigerseye lapis

63

CARTIER

amethyst

CARTIER

V I . CO N C LUS I O N

64

CO N C LUS I O N If this strategy is successful, move to implement it across a wider stretch of product, expanding the customization to other stores and countries and expanding product lines to include watches and men’s jewelry.

CARTIER

65

66

CARTIER