Signet Jewelers president and chief customer officer Sebastian “Seb” Hobbs (pictured) spoke to JCK at the JCK Las Vegas show last weekend. In this wide-ranging interview, he talks about where the company plans to cut costs, how it hopes to find new occasions for jewelry, and, of course, lab-grown diamonds. (This interview took place prior to the announcement of Signet’s financial results on Wednesday.)
JCK: One of the things that [CEO] Gina [Drosos] has talked about is cutting $200 million from the company. Where is that going to coming from?
Seb Hobbs: As part of our Path to Brilliance [initiative], one of three key strategies within that is [developing] a culture of efficiency and agility.… As we have [announced], the plan is to net save $200 million. Gina has a fabulous expression, “Let’s remove costs the customers don’t see or care about.” There are a number of strategies and sub-strategies within that to identify costs that we can remove. They could be third-party consulting costs, they could be freight costs, they could be some costs of goods as well.
The important thing is that we are looking at all aspects of [our] cost structure.… [We plan] to reinvest some of [those cost savings] into top-line growth activities and return some to our shareholders.
A lot of companies are closing stores today. You have already announced plans to close 200 stores this year. Do you view store closings as an ongoing process?
The headline [issue] here is: How do we believe customers want to shop? We know that, today in the market, 85 percent of purchases of jewelry are done in store. We know that 40 percent of people start their journey online. The value that our stores bring is physical—[they let customers] see a product, let them touch the product, let them interact with our teams. We have 30,000 dedicated people that help customers every day. That value that [Signet employees] add to that journey is really important to customers. We are a low frequency–high involvement category.
I’m not going to give you a forward-looking statement on the number of stores. The direction that we take is based on local markets and the best decisions for customers in those local markets.
I know that Signet has been asking vendors to develop products more quickly and be more responsive to the cycle of fashion. Signet used to believe in “test before you invest.” Does the new policy contradict that?
The method that we have is a new method. It’s something that Gina has brought us.… What we’re putting in place is some really exciting customer insight, earlier on than we ever have. So we’ll get maybe an idea from a vendor-partner or from inside our business, and we can “concept test” it. We can put it in front of hundreds of customers in a very short space of time and they’ll say, “Yeah, this is really interesting” or maybe, “We need to look at it in a very different way.” There is a whole series of qualifying questions for each product and each concept that guides us….
We are [saying], “Yes, let’s have more newness in our business, but also let’s have better-qualified newness.” Trends are faster and customers are more demanding, and we have to respond to that.
So you are doing less testing in stores, more customer research, like focus groups?
It’s not focus groups, but it’s customer insight-backed. It’s done through a sophisticated online technique, so it’s quantitative. Yes, we will still test in stores, of course. But this expedites the process that we have had for many years.
Gina has also spoke about doing a study on discounting. Do you expect to see less promotions at Signet?
If we just [look at]: What are we trying to achieve? If we [look at Signet’s] value proposition—design, value, service, and price—we’re saying that price is one element of that which we need to fully understand. We have done some studies and some tests about: What do customers see as value and which elements of discounting will support and help customers? And how do we utilize the moneys that we have between discounting and marketing? The long and the short of it is: How do we put together the full value proposition, not anything in isolation, because that is really what delivers growth.
Gina has also mentioned that you are trying to differentiate the store banners.
If we go back to our Path to Brilliance, one of the core strategies was customer first, and under that is: Who are our customers and how do they want us to manifest ourselves through the different banners? We did the organizational change earlier this year, so that we now have banner teams. We have a team at Zales, led by Jamie Singleton. The team at Kay is led by Bill Luth, who is a 30-year veteran.
An element of that is understanding the market position of that banner. Who are the customers? How different and how similar are they? And where they are different, what are the aspects of the differences? So we can communicate clearly what each banner stands for, and within that, it’s the communication, the product, and the service.
We are midway through that process, and we can expect it to come into market over the course of the second half of the calendar year.
As chief customer officer, what does research tell you about how customers see the different banners?
If we think about the positioning in a fairly simple way, while bridal is important to everyone in jewelry, Zales is probably the more fashionable business we have. Think about empowered females and female self-purchaser. That’s a very strong part of the market that Zales can talk to.
Kay is really about, beyond bridal, how jewelry can express love, the gratitude that you [can show] to your loved ones through jewelry. Jared is clearly a slightly different business. With Jared, consumers…are spending slightly more and investing more time in what’s beyond the jewelry, which is one of the reasons why the Chosen brand has been so successful in Jared.
Gina has also talked about trying to sell jewelry for more occasions besides Valentine’s Day, holiday, and Mother’s Day.
It’s a really interesting thought that Gina has. How do customers interact with our category? What moments can we help them with that are beyond the ones that we know of? There are a couple of examples that we have already started to think about. Graduation is a really good example.
So, for graduation, [we are thinking about] how do we identify the people who are graduating, and how do we provide them with a diamond for the graduation? So when [the graduate] is wearing those diamonds, they always refer back to that graduation. Perhaps for a young man, it’s a watch or piece of jewelry. So we are using our data analytics on that to start understanding who is on that journey and how do we communicate with them.
There are other examples: birthdays, anniversaries, and other moments in life. But the thought there is: through being able to individualize and personalize our communications, to find people on these journeys, and make jewelry relevant to people who are having these fabulous moments in their lives.
The big news at the show is De Beers’ Lightbox line of lab-grown diamond jewelry. In her keynote speech, Gina seemed very open to the concept.
We’re a retailer. We’re a demand-led company. What the customer wants, our role is to provide them. Our research tells us that, for major events, major moments in people’s lives, the vast majority of people are looking for a natural diamond. That’s a fundamental truth in our industry.
But our research also shows us for self-purchase, and for some secondary gifting moments, that there is a small population of customers that say, “Yes, I may consider a lab-grown or synthetic.” Our research has shown us that that is a small number, but it is growing slightly.
Our position at Signet is that we don’t trade in or stock lab-grown diamonds. We are consumer-led. As things change, and we learn more, we may review that policy in time.
Can you talk about Signet’s involvement in De Beers’ blockchain project, Tracr?
We are thrilled that there is activity going on. Consumers today expect us as retailers, and as an industry, to say, “Where does our product come from?” Trust is such an important part of our industry. It’s our responsibility to do everything we can to provide that.
(Image courtesy of Signet Jewelers)