With the not-particularly-good news today about Whitehall, I think the question everyone has is: How and why did the company just a few months ago purchase 78 stores from Friedman’s? (And how would you like to be an employee at those stores? You get a reprieve and then this.)
Let’s not forget Whitehall was also the high bidder to take over the entire Friedman’s chain – their bid just wasn’t accepted, and the chain decided to liquidate.
What makes this particularly unfortunate is, from what I understand, Whitehall’s stores have been upgraded and are actually rather nice, even if that news may not have gotten out to the consumer. A while back, commenter “Mall Jewelry Boy” argued shoppers were probably a little confused:
Whitehall was trying to be one of the more upscale mall jewelers, not a guild store but comfortably between Zales/Kay and Ben Bridge/Baileys. That position is now far behind the company, and even the one remaining program from the heydays (their “White Star” branded diamond cut) has been phased down to a small collection of a handful of solitaire rings. Inexpensive color jewelry abounds. [Former CEO Ed] Dayoob may be doing his best, but customers are probably confused with the store’s brand message, plus it’s definitely hurt whatever unique cachet the company had.
Meanwhile, this analysis argues similarly that Whitehall hasn’t differentiated itself, and has other issues …
… most of Whitehall’s stores are physically much smaller than the typical mall jeweler. That limits assortment breadth, as well as, product and brand variety, a disadvantage that is marginally off set by lower fixed rents. The company’s acquisition of larger Friedman stores will help improve average store productivity, but has also increased debt and working capital requirements.
Realistically, whether Whitehall has a future remains to be seen. The middle market is already over stored and Whitehall’s offer isn’t that compelling. Small assortments, average pricing, average quality, and average locations is about the best description of the business. Add to that, the company is undercapitalized and you have a recipe for failure, especially in this economic environment.
I’m starting to hear about the industry being “over-stored” a lot. It may be worth asking, in this tough climate, is it becoming harder for a retail chain that is not already a nationally known name (like Zale, Kay or Tiffany) to attract consumers?
Analyst Ken Gassman has often noted that in most other industries (electronics, hardware, etc.), two big chains basically dominate the field. I hope that’s not where we are headed …
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