Why did Zales fail in its effort to go upscale?
We simply moved away from our core Middle America customer, from diamond fashion and solitaires to more investment in gold and silver. We changed 30 percent of our product SKUs and 15 percent of our vendors. But we learned customers want diamond fashion and a solitaire assortment in breadth and depth. So, we’ve changed the merchandise mix. Also, inventory orders [for the 2005 holiday] were late, and product arrived late in stores. But we still carry a little more upscale assortment, like 2.00 or 3.00 ct. solitaires, in stores in affluent locations to reach higher-income consumers. What are the elements of your “back-to-basics” plan? First and foremost, a fresh and expanded diamond assortment, with renewed emphasis on diamond fashion and solitaire engagement rings. Lessons learned at Zales in fiscal ’06 are that breadth of assortment is necessary for a successful diamond solitaire ring business, that a promotional diamond fashion business drives incremental volume and traffic, and that
