Last week came word that a document is being circulated trying to raise money for Hearts On Fire, suggesting the company is seeking new investors. According to spokeswoman Angie Kielt: “Hearts On Fire is not for sale; however, we are raising capital to grow our brand in Asia.” When asked what would happen to HOF’s current 49 percent owner Eurostar if the capital was raised, Kielt declined comment, saying, “HOF is only in the early stages of exploring the opportunity of raising capital for our expansion in Asia.” (Eurostar did not return a phone call from JCK.)
Whatever happens with Eurostar, I can think of a better owner for Hearts On Fire: De Beers.
Let’s look at the big recent merger, between Signet and Zale. At some point, one imagines, Signet executives figured that Zale is competing for the same customer that they are, it’s using a lot of the same strategies, and the market is still extremely tough. What’s the point of fighting?
Both HOF and Forevermark target prestigious independent AGS-type jewelers who have the know-how to sell a brand. But the number of independents (like all jewelers) is shrinking. Why battle over a dwindling pool of customers?
And, one could argue, the brands’ strengths complement each other. Many feel that Forevermark, with all its bells and whistles, is still a little vague as a brand. Its current slogan touts it as “beautiful, rare, and responsibly sourced.” The problem is, any brand could make those assertions, though, to its considerable credit, Forevermark goes farther with the third than its cohorts. (And many retailers have found that surprisingly potent.) But there is no representative Forevermark diamond; they come in all cuts and styles, with each vendor giving its own spin.
HOF has a point of differentiation (“the world’s most perfectly cut diamond”) that’s clear, easy to understand, consistent, and proprietary. It has a devoted following among retailers. It has great trade and good consumer awareness. But lately it’s lacked the kind of big ad campaign we are seeing from Forevermark.
Of course, if all HOF diamonds get Forevermarked, that would in theory make Forevermark a brand within a brand. But that’s not much different than the “Center of My Universe,” the product concept that Forevermark introduced last year. And De Beers is creating that from scratch. With HOF, it has a tremendous head start. (Plus, think about it: When big companies enter a new sector, they don’t often build something from the ground up. They buy something established.)
For HOF’s part, hooking up with De Beers gives it a deep-pocketed owner that truly believes in branding, knows it requires an investment, and considers it important to its future. And the companies aren’t exactly strangers. Eurostar is a sightholder, and it sells Forevermark.
When HOF was first introduced in the 1990s, it drew attention as one of the first major diamond brands. In the years since, diamond brands have multiplied, including the Leo, the Celebration, the Tolkowsky Ideal, etc. The difference is, these products are all proprietary and tied to big retailers, who have the advertising budgets to promote them. If HOF has proven anything, it’s that there’s a market for a smartly promoted wholesale diamond brand geared to independents. But we don’t know if there’s room for two.
Now, all this is speculation, and, again, HOF has said it’s not for sale. But last year, when I asked Signet CEO Michael Barnes if he would ever consider a merger with Zale, he said, “That would be something else, wouldn’t it?” So would this.