Jared
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2006/07(1)
2005/06
2004/05
Total sales ($m)
$664.4
$534.2
$415.0
Average sales per store in thousands(2)
$5,676
$5,453
$4,975
Average retail price of merchandise sold
$719
$697
$644
Total open at the end of the year
135
110
93
Total opened during the year
25
18
14
Total closed during the year
(-)
(1)
(-)
(1) 53 week year.
(2) Based only upon stores operated for the full financial year.
Introduction
Jared is the Group’s fastest growing brand and the 135 stores are equivalent in space terms to some 550 of the US division’s typical mall stores. Jared offers a wide selection of merchandise at highly competitive prices, superior customer service, and additional facilities including an on-site jewellery work shop, a diamond viewing room, a complimentary refreshment area and a children’s play corner.
Jared targets an under-served sector at the upper end of the middle market. This customer is more mature and has a higher income than that of Signet’s US mall stores.
Since Jared opened 14 years ago it has become the fourth largest US speciality jewellery retail brand by sales, and is by far the largest chain of off-mall destination jewellery stores and the only one with national coverage. Its main competitors are independent operators, with the next largest chain having about 25 stores.
Compared with its competitors, Jared benefits from leveraging the division’s established infrastructure, access to a pool of experienced store management, and availability of capital required to develop and grow the brand.
Customer service
A key point of differentiation for Jared is its superior customer service. Due to its larger size, more specialist staff are available to serve the customer. For example there are dedicated managers for the diamond, watch, and gold & other jewellery departments, as well as for the repair workshop. Also more in-depth selling methodologies can be used, such as the “white glove” presentation of watches. In 2006/07, the techniques for explaining the diamond collection to customers were enhanced further.
Merchandising
Jared’s merchandising range is about five times that of one of the Group’s mall stores and includes larger and better quality diamonds, such as the “Peerless Diamond” launched chain-wide in 2006/07. The diamond range also includes an extensive choice of loose stones in sizes from 1/5 carat to five carats.
There is a wide selection of settings into which the chosen stone can be set on-site, normally within an hour. In addition each Jared has a virtual diamond vault, linked exclusively to a vendor’s inventory, allowing an item selected by the customer to be delivered to a Jared store, usually within 24 hours.
Watches account for about twice the sales mix in Jared compared to that of the US division as a whole. The range, which continues to be expanded, includes Baume & Mercier, Cartier, Movado, Omega, Raymond Weil, Rolex, Tag Heuer and Tissot. Each store also has a comprehensive range of gold and coloured stone jewellery.
Marketing
Jared advertising on local radio takes place for most of the year and is complemented during key trading periods by advertising on television.
Jared benefited from the roll-out of local television advertising, both network and cable, to all its markets between 2001/02 and 2005/06. For the 2006 Christmas season Jared had sufficient scale to use national cable television advertising together with local network television advertising. It is expected to be cost effective to use national network advertising for Christmas 2007.
The use of national television advertising, the most efficient and cost-effective form of marketing, will, over time, enhance nationwide brand name recognition. It will also provide increased marketing leverage and more flexible access to prime store sites in large, high cost advertising markets. Jared has a higher advertising to sales ratio than the division’s mall stores because it is a destination store and still has an immature store profile.
Real estate
Jared locations are typically free-standing sites in shopping developments with high visibility and traffic flow, positioned close to major roads. In 2006/07, Jared entered nine new markets, with stores being opened in Los Angeles for the first time. Representation was expanded in eight markets, including such major markets as Boston, Chicago, Baltimore and Denver. It is planned to enter the major centres of New York and Philadelphia in 2007/08.
In the longer term, the chain has the potential to expand nationwide to over 250 stores, generating annual sales in excess of $1.5 billion based on the current performance of existing Jared stores.
Investment
In its first year of trading a typical Jared store requires an investment of about $3.9 million, of which about 70% is working capital. In the first five years of trading a Jared store is projected to have a faster rate of like for like sales growth than that of a mall store during the same period. At the end of this period the projected sales level is $5 million to $6 million and the expected operating margin is comparable to that of a mall store at maturity, with a greater return on capital employed.
The average sales of the 55 Jared stores that have traded through the five year period forecast in the investment models is $5.6 million in their fifth full year. At 3 February 2007 some 59% of Jared stores had been open for less than five years. The average sales per Jared store opened for the whole of 2006/07 was $5.7 million (2005/06: $5.5 million). The average sales per store for those locations that have been open for six years or more was $6.8 million in 2006/07.