Blue Nile Opening First U.S. Stand-Alone Store

Blue Nile, which built its business disparaging brick-and-mortar jewelers, may soon become one.

In a test, the Seattle-based e-tailer plans to open its first stand-alone store, CEO Harvey Kanter announced on a conference call following the release of its financial results.

The freestanding showcase store—the company’s first brick-and-mortar outlet in the United States—will be located “in one of the top malls” using “one of the world’s leading developers,” Kanter said, but declined to get more specific. 

“Similar to the showcase in Nordstrom, this webrooming experience will allow customers who may be initially hesitant to buy online to see and feel rings, speak with our non-commissioned store associates, and even purchase online with in-store tablets, all while keeping our overhead costs low and keeping our superior price advantage,” he said. “Like the test with Nordstrom, this is another test from which we will learn and leverage.”

The company had previously opened up showcases in two Nordstorms.

“Those tests are coming to an end, and we consider them a success,” Kanter says. “We learned a lot about how the customer expects to interact with us in a store-based environment.”

He added, “At some point we may go back and have a conversation with [Nordstrom],” but the showcases were stationed in the low-traffic bridal suite, and for now it sees greater opportunities in a freestanding store. 

As with the Nordstrom’s showcases, customers will not be allowed to walk out of the store with merchandise, but they can purchase it online via the tablets, says spokesperson Josh Holland.

Blue Nile is one of many e-tailers to experiment with brick-and-mortar locations recently, including Warby Parker, Bonobos, and Amazon, which just opened a store at Purdue University in West Lafayette, Indiana. 

The news came as the company became the latest prominent jeweler to report a “below expectations” holiday, as fourth-quarter sales rose, but profits took a hit.

“The general slowdown that affected the industry also affected us,” said Kanter, calling it a “challenging quarter” for the jewelry business.

The company’s net sales jumped 7.9 percent for the fourth quarter (ended Jan. 4), compared to $146 million the prior year. Net income totaled $4.8 million, down from last year’s $4.9 million. 

“We sold more engagement rings in our fourth quarter than any other quarter in our history,” Kanter said. 

The company also saw a double-digit increases in wedding bands and its Monique Lhuillier line, Kanter said, as well as a strong jump in its China business, which posted 37 percent growth.

The company’s full-year sales totaled $473.5 million, a 5 percent rise over last year, but net income for fiscal year 2014 totaled $9.7 million, an 11 percent drop from the prior year’s $10.9 million.

The company will also introduce a new bridal line that will include a brand ambassador and plans to beef up its mobile sales. 

“The customer has clearly shifted,” said Kanter. “[We] need to make it easy to purchase on a device.… It is really where the customer is.” 

He said the company recently made a $309,000 mobile sale.

 

JCK News Director