NEW YORK, United States — While Europe’s luxury houses typically play a long game, working hard to maintain the perception of exclusivity, America’s large luxury players have historically adopted a different approach altogether, sprinting to sell as much as possible, as fast as possible, then suffering the consequences in brand dilution.

For years, the shining exception to this rule was Tiffany, which, in some ways, is more like a European-style luxury house. But even Tiffany has had its ups and downs — and today the brand seems to be in a dip.

The company is not immune to the wider forces of the market — and fashion. However, many of the company’s problems are of its own making and an internal tug-of-war over strategic direction has certainly not helped. Now, the arrival of Alessandro Bogliolo — the company’s new chief executive, tasked with driving “extraordinary design, outstanding customer experience and capital efficiency” — presents the opportunity to make some real decisions.

Tiffany’s shortcomings do not seem impossible to address and the company has the advantage of strong brand equity, especially outside the US. The key issues facing the company can be boiled down to poor in-store merchandising, poor in-store experience and poor “exclusivity pretence” — maintaining the illusion of exclusivity, while selling units by the millions — the latter being the crux of it all.

The key issues facing the company can be boiled down to poor in-store merchandising, poor in-store experience and poor exclusivity pretence.

A number of strategic avenues seem clear. To begin with, silver and jewellery make for a poor product mix and blur the company’s image: is Tiffany a jeweller or a retailer for silver gifts? The company’s leadership seems to recognise the need to distinguish between the two. They have tried not selling silver in China, moving silver to the back of the store (or else to the first floor) and downsizing its silver presence.

But a more constructive starting point would be separating the brand’s “silver collection” from its “jewellery collection” as much as practicably possible. This is not such a radical idea. Indeed, department stores that have separated silver and jewellery have driven significant improvements in sales of both. To go a step further, the internet offers the most natural and practical outlet for the “silver collection”, perhaps backed by a specialised retail format dedicated to silver (or silver plus entry-price bridal), for example in secondary locations in the US.

This would free Tiffany to develop global flagship stores dedicated solely to jewellery, similar to what the brand has done in China. The company would then be able to better exploit the “luxury pretence” of its jewellery offering, beginning with a complete revamp of its stores. This is essential. Many of Tiffany’s stores in its home market are old, badly merchandised and offer a poor customer experience — and this includes stores in major American cities frequented by foreign tourists. These stores must be revamped and made as good as Tiffany’s flagships in China and Europe. This means more than architectural refurbishment. It means a full merchandising overhaul. If silver should be removed from the brand’s jewellery flagships, then decanters, ashtrays and the various other bits and pieces must go even sooner.

But enough about what must go. What must come? Well, Tiffany’s watches offering could benefit from an upgrade. This is a relatively new category for the company and teething problems are understandable. Nevertheless, a sharper focus on women’s watches would certainly make sense and match what many successful European jewellery brands are doing.

Tiffany’s T Collection seems a sensible move towards building the brand’s design jewellery offering. Design jewellery should be a positive margin contributor, as it typically sells at a higher margin than bridal. And T Collection could be extended and grown to become an effective and presentable entry-price point offer within Tiffany’s jewellery stores.

But all these measures must have one clear ultimate objective: to project a stronger image of exclusivity. Modern luxury is not about actually being exclusive, it's about making people feel you are exclusive. In this respect, Tiffany falls short. It does not pretend to be exclusive well enough.

Advertising entry-level products, as Tiffany has typically done in the past, is a mistake. On this point, Cartier and Tiffany have been polar opposites. Cartier always emphasises its high-end products in its communications, while offering a wide range of accessible products in store. Whose approach has worked best: Tiffany or Cartier? The answer is clear.

Luca Solca is the head of luxury goods at Exane BNP Paribas.

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