Hearts On Fire announced last week it would be opening up as many as 75 stores in the next five years, with about half of them in the U.S. My colleague Emili Vesilind yesterday looked at the concept behind the company’s second store, which opened May 21 at the Caesars Palace Forum Shops in Las Vegas.
Today, I speak to founder and CEO Glenn Rothman about why the company has decided to make this move—and what it means for retailers. Edited highlights of our conversation follow:
We received one comment that said: “I do not have a history of a vendor going retail. What is the downside for me? Is there any upside?” What would you say to that person?
Retailers always shrug their shoulders and say, “Yeah, sure, [a retail chain] will generate more business for me.” But it’s absolutely the truth. It can be documented. Every brand that does this ends up with more business for the independent jeweler.
Hearts On Fire needed to go to the next level of brand awareness and desirability. The way to do that is to consistently project its brand message to the consumer. This is going to generate a lot of PR, a lot more exposure.
Our retail stores all have local partners. We wanted retail jewelers, not just to maintain the integrity to our distribution channel, we wanted to be part of the local community. We wanted to be a part of a partnership that is involved with charities, that takes a local leadership role. That way Hearts On Fire can be part of the community.
That will benefit the brand, it will also benefit the retailer. Together, we can create value, we can create wealth. I don’t believe any other brand has partnered with retailers in this way.
The cons are: Everyone is always afraid of change. When I look at the reaction to the announcement, we see fear. [The commenters] are worried we are going into competition with them.
I have spent 35 years of my life committed to the independent retail jeweler. That has been my entire career and it’s still my career. We live and breathe based on the success of our retail distribution. We will continue to service them. We want the retail world to understand we are partnering with them to create wealth, and to create value.
What is the split between retailers and HOF?
These are proprietary joint ventures. Every joint venture will probably be different.
Where will the new stores be located?
The new retail concept will be focused on the highest performing retail areas, the malls that will generate the most brand awareness. That is the best use of our human resources and financial resources. We are planning to open in King of Prussia, Pa., and Boston, with prestigious local retailers. We are not going to be opening stores in secondary and tertiary markets unless our retailers want to buy franchises at a later date.
We hope this year to open in Sydney, and Kuala Lumpur. We have real estate identified in both cities.
Will this change how you sell online?
We still will have the same formula. Every online sale has a retail partner attached to it. The retailer still gets a percentage of every sale. That’s what we’re doing, and will continue to do for the foreseeable future. In a lot of cases, we send the consumer to the retailer, and all they have to do is smile, wrap it up, and collect the money. And they get their information so our customer becomes their customer.
What is some of the thought besides this change in the direction?
After 15 years of growing the brand, I decided I want to blow it up. I wanted to totally reinvent the brand. I wanted to take a hard look at everything. What I do best is dream. I took some time off last summer and I spent most of the month of August thinking and writing …
We know that there is a very low closure rate in most jewelry stores. There is fear of diamond buying among consumers. They end up in a business transaction, instead of a celebration of the meaning of what they are buying a diamond for. We recognized the best thing we could do is to make it easier for our retailer family to sell Hearts On Fire. For 15 years our focus has been how to make the retailers better at it. Now we just say: let’s find out how to make it easier for them …
We have created videos—the “Evolution of Perfection” and “Behind the Scenes“—that give a proper introduction to the brand. In January, we revamped our pricing system. We have hired a top-notch Italian designer. She has gotten us in a place where jewelry can be even more exciting. We have been working constantly on digital marketing. We’ve spent a fortune on SEO and social media. We have completely revamped the website since last HOFU. We have a blogger, the “Hearts On Fire Girl.” We are releasing perfectmoments.com. It is all about sharing, on a social media basis, perfect moments of your life. We are going to be releasing an iPhone app.
You have cancelled the Hearts On Fire University this year. That has been a crucial part of your retail training. Is this something you plan to continue?
I have said I want to blow everything up. And one of the things I want to blow up is the university. I want it completely revamped. The retailers want us to revamp the processional curriculum and keep the personal curriculum. I challenged my team in such a way that I stressed them out. So we couldn’t do it in time for 2012. But 2013 is all booked. We will have a completely revamped professional curriculum.
HOFU are my four favorite days of the year. I get so much juice from it that I live off it for the rest of the year. That is the last thing I want to carve out of my life.