Marketing & Advertising

Store brand name recognition by consumers is believed to be an important factor in jewellery retailing, as the products themselves are predominantly unbranded. Signet continues to strengthen and promote its US brands and build name recognition through an integrated marketing campaign. The marketing channels used include television, radio, print, catalogues, direct mail, telephone marketing, point of sale signage, in-store displays and the internet. Gross advertising and marketing expenditure increased by 20.7% to $184.5 million over the 53 weeks to 3 February 2007 (52 weeks to 28 January 2006: $152.8 million), reflecting the sales growth achieved by Kay, the regional brands and Jared. Over the last five years, advertising and marketing expenditure has increased by some 80%. Gross expenditure as a percentage of sales was 7.0% (2005/06: 6.7%) reflecting the increasing proportion of sales from Jared which has a higher percentage of sales spent on marketing than the mall brands, and the impact of the 53rd week which includes the commencement of television advertising for Valentine’s Day in 2007.

Advertising activities are concentrated during periods when customers are expected to be most receptive to the marketing message. The proportion of television advertising expenditure to sales continues to grow, and the cost of national television advertising is leveraged as the number of stores increases.

Kay television advertising

The romance-and-appreciation-based theme of Kay’s television advertising programme continues to utilise the tag line “Every kiss begins with Kay”, which has improved name recognition of the chain. This programme was supplemented with national print advertising in USA Today and national network radio advertising.

Management believes that use of national television advertising, which is considered to be the most efficient and cost-effective form of marketing, enhances brand name recognition nationwide, thus providing increased marketing leverage and improved access to prime store real estate sites in large, high cost advertising markets.

Regional brands television advertising

Local television advertising was tested in the Cleveland, Ohio market for JB Robinson during Christmas 2005 and expanded in 2006/07 to three additional markets. This is designed to complement seasonal promotion campaigns using local radio advertising. Direct mail and telephone marketing are also used to encourage repeat purchases by current customers. The regional brands’ marketing support is a similar proportion of sales as for Kay.

Jared television advertising

Jared advertising on local radio takes place for most of the year and is complemented during key trading periods by advertising on television. For Christmas 2006 Jared advertised nationally on cable television for the first time. National broadcast television advertising for Jared is planned to start during the fourth quarter of 2007/08. Jared has a higher advertising to sales ratio than the division’s mall stores because it is a destination store and is still at an early stage of development. Jared advertising is designed to build name recognition and visit intent through an emphasis on selection and service and utilises the tag line “He went to Jared”.

Other marketing channels

In 2006/07 the US division produced ten Kay catalogues that featured a wide selection of merchandise and were prominently displayed in stores and are also mailed directly to targeted customers. A similar number of catalogue editions were produced for each regional brand. Statistical and technology-based systems are employed to support a direct marketing programme that uses a proprietary database of over 24 million names to strengthen the relationship with customers. The programme targets current customers with special savings and merchandise offers during the key trading periods. In addition, invitations to special in-store promotional events are extended throughout the year. A special catalogue featuring luxury watches was produced for Jared.

A new Kay website including a transactional capability was launched in September 2006 and has had an encouraging start. Informational websites for Jared, JB Robinson and a number of the other regional brands display a selection of merchandise assortments, provide store locations, and allow for on-line customer registration and credit application.

UK

Gross expenditure on marketing and advertising amounted to 3.1% of sales in 2006/07 (2005/06: 3.2%). Marketing campaigns have been tailored to reinforce and develop further the distinct brand identities of H.Samuel as a middle market jewellery chain and Ernest Jones as a more upmarket diamond and watch specialist. Both campaigns aim to expand the overall customer base and improve customer loyalty.

Catalogues

For most of the year the primary marketing and advertising medium employed in 2006/07 consisted of a series of catalogues for each brand, distributed as inserts in newspapers and magazines as well as by mail and available in all stores. The quality of catalogues was improved and their distribution was better targeted.

Television advertising

During Christmas 2006 new television commercials were used by both H.Samuel and Ernest Jones; the former using national television advertising for the first time. Ernest Jones’ television coverage of its store base was about 60%, a similar level to that of 2005/06.

Internet

Following the launch of an e-commerce (transactional) capability for the H.Samuel website in 2005, a similar facility was enabled on the Ernest Jones website (www.ernestjones.co.uk) as a complement to store-based customer service. Both websites performed satisfactorily in 2006/07.

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