What advice would you give to each of the three companies regarding its strategy
and structure?
Blue Nile employs a strategy centered around offering lower prices across a wide
range of premium stones, which complements its centralized structure. Its marketing
emphasizes the importance of the four Cs and third-party validation when assessing
diamond value, aligning well with its model where customers can't physically inspect
stones before purchase. With significant cost advantages and customers' inclination to
save during economic downturns, Blue Nile stands to capitalize on this situation by
aggressively promoting its competitively priced, high-quality diamonds. While conveying
this message may be challenging in normal circumstances, the economic climate of
2009 could make it more receptive.
Positive recommendations are harder to provide to Zales. Financially speaking,
Zales must take charge of its inventory. Centralizing more of its pricey diamond
inventory and making it available to businesses on a need-basis is one method to do
this. Retail establishments may stock and sell lower-value diamonds. When it comes to
more expensive diamonds, consumers may be assisted in choosing a style by using
rings with mock stones. The genuine diamond would then be set at a later time and
brought to the store for the buyer to pick up. It appears like Zales would be best served
by stocking and selling less expensive items from dispersed places while centralizing
and providing higher-value stones as needed.
Tiffany encounters a dilemma as it cannot centralize its high-end stones without
compromising its prestigious brand image. Pricing pressures persist at retail, driven by
competitors like Blue Nile at the upper end and mass-market retailers such as Wal-Mart
and Costco at the lower end. To maintain its brand integrity, Tiffany must diligently
uphold its image. Venturing into the wholesale diamond business presents
opportunities, allowing the company to capture wholesale margins and potentially
secure exclusivity for its stones. Presently, Tiffany's sources for stones closely resemble
those of its rivals.
