Hallstead Jewelers
"Hallstead Jewelers was one of the largest jewelry and gift stores in the United States for 83 years. Customers came from the tri-state regions to buy from Hallstead’s extensive diamond collections in each department. Any gift from Hallstead’s had an extra cache attached to it as they were known for having the best.
Even though the principal retail shopping areas shifted two blocks west, Hallstead’s reputation and selection still brought in customers. In 1999 however, sales became stagnate and profits were starting to slip. After the father died his two daughters became the owners (two sisters, Gretchen and Michaela) made several changes in an effort to revitalize the store. The first decision was to move the stores location, expanding it by 50% more space and selling staff. This resulted in a five-year lease as well as a year to complete the expensive renovations. They also made some changes in product offerings and offered more sales potential at the cost of minor reductions in margins.
Within the year that it took to complete the renovations the industry started showing major changes toward internet based jewelry sales. Tiffany & Company, a business with an origin much like Hallstead Jewelers, grew to become the number one seller of diamonds in the United States. At the same time, a start-up internet seller, Blue Nile, became the second largest diamond seller in the U.S. While Hallstead’s was growing their fixed costs by doubling their rent payments, Tiffany and Blue Nile were increasing their revenue with “virtual” storefronts allowing them to increase sales with very little increase in expense.
In an effort to explore ideas in strategy that would return the business to profitability, the sisters compiled some questions for their accountant to analyze using some additional operating statistics. The following answers
Even though the principal retail shopping areas shifted two blocks west, Hallstead’s reputation and selection still brought in customers. In 1999 however, sales became stagnate and profits were starting to slip. After the father died his two daughters became the owners (two sisters, Gretchen and Michaela) made several changes in an effort to revitalize the store. The first decision was to move the stores location, expanding it by 50% more space and selling staff. This resulted in a five-year lease as well as a year to complete the expensive renovations. They also made some changes in product offerings and offered more sales potential at the cost of minor reductions in margins.
Within the year that it took to complete the renovations the industry started showing major changes toward internet based jewelry sales. Tiffany & Company, a business with an origin much like Hallstead Jewelers, grew to become the number one seller of diamonds in the United States. At the same time, a start-up internet seller, Blue Nile, became the second largest diamond seller in the U.S. While Hallstead’s was growing their fixed costs by doubling their rent payments, Tiffany and Blue Nile were increasing their revenue with “virtual” storefronts allowing them to increase sales with very little increase in expense.
In an effort to explore ideas in strategy that would return the business to profitability, the sisters compiled some questions for their accountant to analyze using some additional operating statistics. The following answers