Regarding Zale, I think we're reaping the effects of sameness and being overstored. Look at other retail categories like hardware and books--you have two dominant national players (Borders and Barnes & Noble, or Home Depot and Lowe's) and a smattering of regionals and locals. In terms of jewelry, I think there is a customer for the traditional mall jewelry store--but I don't think there are enough customers for six similar jewelry stores per mall, especially when they're all offering merchandise that's not much different from each other. So I suspect we'll end up with one dominant national player and a few strong regionals or two strong nationals and a lot fewer regionals--but I don't think there's enough to sustain two strong nationals plus all the existing regionals. It'll come down to which of the businesses is better-run and the rest will eventually go away, unless they're able to turn the existing business model on its head and do something utterly, totally, and completely different. And that's something we haven't seen from a major.

Hedda, one of the many interesting, and I thought smart, things the new CEO said on the conference call was that Zale had to determine "different" product. I've heard that from the company before, but at least they acknowledge what their problems are.

Merchandising is definitely a problem in the mall, especially at the mid-range stores. Both Zale and Whitehall tried to move upscale to differentiate themselves and had it blow up in their faces. Both of these companies overhauled their catalogs and featured items with much more exclusive and upscale pieces, but then faced a confused and sticker-shocked customer. The jewelry chains need to put together collections that are unique and show good quality without blasting their price points too high. A product that comes to my mind is Tiffany's silver: luxurious, exclusive, and yet desirable and affordable by most people. The retail chains have relied on manufacturers almost entirely to create appealing collections, but they really should take a hint from the department stores and do their own product development. And by product development, I don't mean slap a trademarked name on a three stone ring and engrave something in the shank! I mean carefully create a merchandise story through research, materials, design, craftsmanship, display, and marketing. Or is that too much to ask?