The New Zale: Focus On ‘Basics’ Brings Success

A “continuing sense of urgency about running the business” permeates this revitalized jewelry chain from top to bottom

A framed poster is prominently displayed in the office of Tom Whiddon, chief financial officer of the Zale Corp. It shows a golf hole in the middle of an island, in the middle of a lake, in the middle of a golf course. The caption reads simply “FOCUS.”

That word, in a nutshell, defines the transformation of Zale from bankruptcy two-and-a-half years ago into a revitalized company now aggressively reclaiming its influential role in the U.S. jewelry market.

Chairman Robert J. DiNicola, 48, calls the new attitude “a continuing sense of urgencyŠabout running the business.” And it permeates the new Zale, from top executives at their weekly Monday strategy huddles to staffers at in-store training sessions.

To rebuild the firm and resume its leadership role in the industry, Zale’s new bosses drafted a three-phase strategy for its four retail divisions – Zales, Gordon’s, the Fine Jewelers Guild and Diamond Park. The strategy rests firmly on what DiNicola calls “back-to-basics retailing,” which means catering to customer needs, offering quality merchandise at affordable prices and creating effective marketing.

Most of the change occurred in phase one. It started in mid-1994 with Zales and Gordon’s (which account for about 70% of Zale Corp.’s business), and spread to the Guild and Diamond Park divisions in late 1995. Phase two, lasting another couple of years, will build on and fine tune the changes and successes of phase one. Phase three will explore new markets and growth opportunities.

How is the strategy working? “We are on stable ground again,” DiNicola told JCK in late 1995. “Zale is back on track, focused and – thanks to our back-to-basics format and the tremendous effort of the entire organization – ahead of schedule in rebuilding our company.”

Focus on best sellers: A major part of the plan has involved overhauling Zale’s merchandising. Based on sales and product reviews, its divisions created a core of must-have best-sellers, dubbed the “Key 100,” such as tennis bracelets, diamond anniversary rings, basic solitaires and stud earrings. “It’s the merchandise I’d bet the ranch on,” says Zales Jewelers President Beryl Raff.

All outlets keep a well-stocked inventory of these key items at all times. “The old policy was ‘one to show and one to go,'” says DiNicola. “Now, we have product in depth [in the stores].”

The next step, now underway, will broaden the assortment and pricing of key sellers. For example, Diamond Park (Zale’s leased jewelry department division) sold 9,000 cubic zirconia leverback earrings last year. This year, stores are adding a variety of styles, including pearl, amethyst and garnet versions.

“We now have 17 SKUs of different leverback earrings,” says Max Brown, president of the Diamond Park division. “We’ll do over $1 million in that alone this year, and we’re developing ideas to spread this to other classic styles.”

For Gordon’s Jewelers, the new strategy also means upgrading product as it moves from a discount image under Zale’s former owners to what President Mary Forté calls “being a real jewelry store again.”

There’s been a significant increase in giftware, precious gem and 14k gold jewelry and, for the first time, Gordon’s now offers necklaces for as much as $1,999 (they’re selling well). One recent hot-seller was the 500-piece limited-edition “Novanta” .90-ct. diamond, 18k and platinum anniversary ring. Priced at $7,000, it was designed for Gordon’s 90th anniversary in 1995.

The new merchandising means changing long-held assumptions. For example, Zale’s upscale Guild stores are broadening their customer base by promoting the price points and items which do best. That seems obvious, but not everyone agreed what those were. “Some people – both staff and customers – thought we did most of our business in the very high end, when actually much of it is in the $1,000-$2,000 range,” says Guild President Paul Leonard. Thus, one Guild store manager told Leonard he was sure his store sold 30 or 40 of a $7,500 jewelry item per month. In fact, store records (detailed sales histories for all stores are part of phase one) showed the average was just two.

“We sold many more items in the $1,000-$3,500 range than we do over $25,000,” says Leonard. “So now we focus on the mid-level affluent customer and on $500-$5,000 jewelry. We tell our salespeople to treat the $25 customer with same respect as the $25,000 one – because each is often the same person.”

A new look at pricing: Zale Corp. is making more use of its buying clout as a major retailer to get better prices from suppliers, which it passes on to shoppers. Its also does more direct sourcing of basic items, such as gold chain (including herringbone, rope and box), at savings of 8% to 14%, says Joanne Connally, vice president of the Corporate Merchandising division. She says similar savings are possible in diamond sourcing, on items like center stones for bridal sets.

Zale Corp. is more street-smart in how it prices merchandise, too. Many retailers base prices on “What does this cost me and how much margin can I get?” says Tom Whiddon, chief financial officer. But Zale “starts with ‘What does the customer want and what will they pay?’ Then we see how we can provide it at a quality and price customers want.”

To enable shoppers to move up, Zale has designed a tier of “good,” “better” and “best” prices within its key seller assortments. “People want to see a great selection [of a popular item] in other prices and/or styles,” says DiNicola. “If we had an item at $199 last year, we have [variations] this year at $299, $499 and $699 so we won’t lose a sale because of lack of selection.”

Zale’s people also shop the competition – which, surprisingly, didn’t happen often before – and keep a closer eye on local markets.

A good example of how all this comes together is the nine-stone marquise anniversary band. During Christmas 1993 (before the new strategy), Zales Jewelers priced the item at $1,295 – and sold 30. “Competition had it at $895,” notes DiNicola, “but [the then-management] didn’t know that because no one went out and checked!”

Under the new merchandising, which includes regular checks on the competition, Zale Corp. bought the band in bulk, priced it at $799, stocked Zale’s stores with it for Christmas ’94 and marketed it heavily. The result: more than 3,000 sold during the holiday.

Adopting a fashion lure: Bridal merchandise is the foundation of Zale Corp.’s business, providing 35% to 40% of sales. But the new Zale also is pumping up business in all four divisions with non-bridal diamond and gold fashion jewelry. They carry more of it, in wider selections, and it is more fashion forward, affordable and “gifty” than in the past.

“Zale Corp. abdicated the fashion side [of the business],” says DiNicola bluntly. “We’re reclaiming it. We want our fair share of that market.”

That means not only offering more affordable diamond jewelry, but also strengthening other categories, especially 14k jewelry and watches, which were “treated like stepchildren” by the previous regime, says Zales’ Raff.

Ignoring them is “throwing money away [because] these are known gift items that bring in traffic and add credibility to stores,” says Mary Forté. Thus Gordon’s recently added Swiss Watch, Movado and Rado brand watches, while Zales expanded its gold earring and chain offerings.

Meanwhile, other merchandise is disappearing from shelves. Gone are the exclusive 18k Chrysos jewelry and watch collections (unveiled by Zale with much ballyhoo three years ago), the private label Baylor watch line and 10k jewelry. Created gemstones are being downplayed at Zales in favor of natural gemstones and brand name watches.

New marketing strategies: The marketing to support all this activity has changed significantly as Zale has repositioned its stores – especially Zales and Gordon’s – as “gift-giving centers,” in line with the stress on fashion jewelry and gifts.

Zales, for example, is focusing consumer attention on the Key 100 sellers with a “Brilliant Buy” merchandising program that spotlights their value (margins are slightly lower) and quality. “Brilliant Buy” items have their own in-store displays, logo (the words Brilliant Buy on top of a diamond) and prominent place in Zales ads.

Ad and promotion budgets have expanded beyond Christmas (which still accounts for the bulk of Zale’s business and advertising) to cover other major gift-giving occasions such as Valentine’s Day, Mother’s Day and graduations. Zales Jewelers, for example, increased the number of different TV ads it created from 10 in 1993 to 18 last year, and increased their frequency on the air.

Competitors have noticed the change. “The [Christmas ’95] jewelry environment was very competitive, especially among those advertising on TV,” said Brad Stinn, president of Friedman’s Inc., during a recent press conference. (Fast-growing Friedman’s is the third-largest U.S. retail jeweler with 235 stores.) “It seemed every time you turned on the TV, you saw [jewelry] advertising, especially by Zale. In 1994, we had more of the TV time to ourselves.” Zale’s ubiquitous TV presence was one more sign of what Stinn called “a dramatic turnaround.”

Symbolizing this key change in Zale Corp.’s retailing philosophy are two several-foot-high graphs displayed on tripods in DiNicola’s office. They chart upcoming national ads, promotions and special events, as well as planning seasons, by month, week and day. The philosophy extends to the local level, too, where individual stores now tie their marketing closely to mall events (most Zale Corp. stores are mall based).

Content of the new ads and promotions also is different. The old Zale “took no stand on any item,” says DiNicola. “Now, ads are product-specific and spotlight selected key items in a variety of price points.”

They’re lively, too. Gordon’s bouncy radio ad campaign, “We’re Going to Make You Smile,” was a 1995 finalist for both Clios and International Broadcast Awards, two of advertising’s most prestigious awards. And Zales Jewelers’ new TV ads “pay a little attention to fashion and have a little more pizzazz and personality,” notes Raff. In keeping with the product focus and gift-center motif, 1995 Christmas ads promoted “Zales. The diamond tennis bracelet store”; “Zales. The Diamond Solitaire Store”; and “Zales. The Diamond and $99 Gift Store.”

More thought goes into which media work best for specific stores. Guild stores, for example, “used to use many media without focus,” says President Paul Leonard. “Now it uses direct mail almost exclusively. We appeal to a small percent of the population and target marketing – like zeroing in on American Express Gold Card holders in a five-mile radius of Guild stores – is more effective. We draw more people into the stores than ever before.”

Zale’s credit card program (accounting for 52% of the corporation’s total retail sales) now is a key marketing tool. The company uses its private-label card’s mailing lists to send promotional material encouraging purchases for major gift-giving occasions.

Providing the support: A revitalized distribution system keeps store shelves replenished, especially with the Key 100 items. Merrill J. Wertheimer, head of administration and finance, and Jerry Muse direct Zale’s distribution department, which shipped some four million pieces to stores in 1995 (up 10% from 1994) and should do more this year. On an average day, Zale’s shippers pick, pack and send 25,000 to 30,000 items. During a holiday season, that can rise to 58,000. Regular shipments go out weekly (twice a week during holidays); special orders go within 24 to 48 hours of receipt.

Making this possible is an efficient assembly line process that would have tickled Henry Ford. Human sorters at each station along the line use state-of-the-art scanners on orders and read the information on computerized keyboards which tell what and how much to pick, pack and send to the next stop. Further on, a computerized audit system enables 15 people, rather than the 40 who used to do the job, to inspect and ensure the right number and right products have been packaged.

Trimming away layers: Zale went through a major organizational makeover under DiNicola and Larry Pollock, the former chief operating officer and president who left in January. Since early 1994, when Pollock came on board, it has eliminated five merchandising and seven operational levels of management to meet DiNicola’s vision of “a horizontally-run company.” It has changed from top-down to divisional management, raising productivity in the process.

That makeover continued in January with realignment of Zale’s finance

and administration areas (with the human resources department added to Wertheimer’s duties, and commercial credit to Whiddon’s), and the resignation of Pollock (to return to Cleveland to devote more time to his family).

DiNicola added the job of president to that of chairman and CEO and eliminated, for now, the post of COO. He says that title is unnecessary because of hands-on management by divisional presidents, who now report directly to him. Only they stand between him and the stores and buyers, which speeds corporate management and decision-making.

The divisions changed, too. There previously was one management and buying team for Zales and Gordon’s. But that caused confusion in marketing, especially for Gordon’s (the second-largest U.S. jeweler when acquired in 1989). “It didn’t have leadership or a well-thought strategy of where [the-then owners] wanted to take the business,” says Forté.

So the new bosses split Zales and Gordon’s into separate divisions. Though still supported by corporate distribution and credit departments, they now have their own management and buying teams, as well as individualized marketing and merchandise aimed at specific customer bases. And as a result of tinkering with the other two divisions, “now all four run independently of each other, and [we] hired people who can run each effectively,” says DiNicola. The four:

Zales Jewelers, the flagship chain, is Zale’s national brand. Its business strategy has changed the least: Its goal is to cater to mainstream America with quality merchandise at a good value.

Gordon’s Jewelers underwent a double repositioning:

  • First, as a regional brand competing with whoever is the toughest local chain. It sells jewelry that is more contemporary than Zales and more suited to regional tastes, such as heavy men’s rings in the South or subdued designs in the Northwest. It is concentrating on 29 specific regional markets, most in the Northwest and east of the Mississippi.

  • Second, away from its discount role under Zale’s former owners toward “a place between Zales and the Guild [stores],” says Forté. Gordon’s has reduced its use of deep discounts, raised the profile of credit-worthy shoppers to equal Zales’ and upgraded merchandise and marketing.

The Fine Jewelers Guild sells higher-end, exclusive merchandise and caters to upscale customers. The plan is to make it “the national upscale jewelry chain in all major markets,” says Leonard. “There are none there now, and we can fill the niche.”

Diamond Park operates leased jewelry departments for host department stores. Despite fewer locations due to consolidation among department stores, Max Brown says fiscal ’95 (ended July 31) was “the best year we ever had, and we’re outperforming department stores [in which Diamond Park is located]” in fiscal ’96.

The division’s marketing strength, says Brown, is that “we are whatever our landlord wants us to be, and have a variety of marketing styles, from ‘every day low prices’ to deep discounts. Once they’ve approved our assortments, they pretty much leave us alone.”

Finding the best stores: Working to improve its stores, Zale first identified the most successful, creating a core of 300 “focus stores” in its Zales, Gordon’s and Guild divisions. (That expands to 450 this year.) Then it shifted its most experienced and capable managers to these outlets. Their salespeople receive more extensive training in sales techniques and customer relations, including a new role-playing game created by Zale. And more salespeople are on duty during peak traffic times. Focus stores also get more merchandise and marketing support. As a result, these stores have outperformed the rest of the chain and methods they’ve used successfully are being applied to other stores.

Zale also launched a $60 million store-remodeling plan (on top of its annual $15 million capital spending) in late 1994. Eventually all of its approximately 900 stores (excluding leased departments) will be upgraded.

More than just a paint-and-carpet job, this is a makeover consistent with revised images. Wider doors make new Guild stores more inviting to passing mall customers, while new Zales store interiors have “a toned-down look, more traditional and warm,” says President Beryl Raff. Most extensive is the Gordon’s makeover, launched last year. It includes a new logo, charcoal gray entry arches, cherry wood showcases with black trim, walls of soft rose marble, purple tone carpeting and upholstery. “It [represents] the rebirth of Gordon’s as a jewelry store,” says President Mary Forté. “It is a new look that is elegant, appealing and upgrades both the image and the merchandise.”

Zale Corp.’s architects and designers are creating these new looks with a tool rare among major retailers: scaled-down mock-ups of the interiors of typical Zales and Gordon’s stores. Located on the second floor of Zale headquarters in Irving, Tex., they resemble a stage or movie set. And like them, these can be changed to test various interior looks, styles, displays, fabrics and colors. The designers also use the two mini-store sets to try out possible case displays, seasonal decorations and promotional artwork.

Keeping in touch: Staying focused in a successful company means staying informed. “Everyone on the staff knows how each fits in,” says DiNicola. “They understand the game plan, the obstacles and how they contribute to the success of the company.”

Staying informed starts at the top. The executive team meets in Zale’s huge board room every Monday. The top 30 officials convene monthly, and the top 100 (executives, divisional bosses, regional managers) meet quarterly to review the previous three months’ results.

Starting last year, both Zales and Gordon’s now have annual managers’ meetings in Dallas (the first time since 1988 for Zales and the first since Zale bought it for Gordon’s). All store managers, regional managers, each division’s management teams and Zale’s top executives attend. The three-day conclaves include workshops on merchandising, training and related topics, social events and awards programs to recognize top achievers.

“There is tremendous energy,” says Raff, “and a real feeling of everyone pulling together [and] getting an overall perspective on what’s happening” in the division and company.

Zale’s bosses not only confer; they also listen as never before. “People here are motivated to do more because they’re getting recognition for having ideas and offering them,” says Senior Vice President Joanne Connally, who heads corporate merchandising. “No one ever asked them before for their opinions.”

The brass also hit the road. For example, Mary Forté, Gordon’s president, often takes her buyers and regional managers on trips “so they can appreciate regional differences, meet the people, get a sense of the contrasts in merchandise or fixtures. If you don’t keep in touch and talk to the people, how will you know what they want?” She says this also provides “bonding” between regional and national staffs.

Financially back in favor: Zale Corp., now in its best financial shape in years, is again catching the eyes of investors and financial analysts who track the retail industry. January reports by several leading houses, for example, gave high marks to the company’s recovery and earnings potential. Indeed, several say one sign of Zale’s renewed corporate and operational strength is that Larry Pollock’s recent resignation had “no negative implicationsŠas [Zale] continues to make steady progress in turning around,” according to Goldman Sachs & Co. And in a typical review, the Paine Webber retail group called Zale “a winner.”

“We have credibility again [in the investment community],” says Tom Whiddon, Zale’s chief financial officer. “We told them what we are going to do and we are doing what we said we would.”

Zale Corp. now claims some 6% of the national retail jewelry market. Since the bankruptcy reorganization in August 1993, its stock has risen about 70% – from $8.37 to a high of $17 in late 1995 and to $14.12 in early 1996.

For fiscal 1995 (ended July 31), Zale reported sales of $1.04 billion, operating earnings of $77.7 million and net earnings before extraordinary items (including a loss due to early cancellation of debt) of $31.5 million. Comparable store sales grew 12.8%.

Prospects for fiscal ’96 look good. Net sales for the first quarter (ended Oct. 31) were up 4%, with a 7.1% rise in comparable store sales. And several analysts expect an earnings rise for the second quarter. Solid gains for Christmas ’95 should help; sales were up 7.6% for “comp stores” and 6% overall. (Zales and Guild stores had

double-digit gains, and Gordon’s a single-digit increase. Diamond Park’s “comps” fell, due mainly to soft business in the West Coast Broadway chain, since bought by Federated.)

It was Zale’s second strong Christmas – a fact noted by several investment analysts reviewing the generally difficult retail market – and a benchmark of its recovery. When DiNicola came in early 1994, he said it would take “two Christmases to get Zale on an even keel again and reposition it.”

Financial analysts cite a number of factors in Zale’s favor. Among them are stricter trade-ins on jewelry, reduced warranties and tighter credit controls. It has erased the $1.6 billion debt from bankruptcy reorganization, giving it an edge over competitors who still carry sizable debt. Zale also has a tighter handle on spending and margins. For example, it cut consignment inventory 22%, from $111 million in July 1994 to $86 million in 1995. (In one move, it erased invitation-only Christmas parties at Guild stores which featured consignment merchandise at very low margins.)

Zale’s managers and buyers scrutinize what they spend more closely. In the old days, “people paid 35% over the price of gold when they should never pay more than 12% to 15% over,” says Beryl Raff. “People didn’t know what was happening in the real world, and buyers’ hands weren’t held to the fire.” Now, buyers and vendors must cost out prices.

On the other hand, Zale divisions have wooed back important vendors who were disenchanted by the old Zale’s failure to pay its bills. Thus the Fine Jewelers Guild recently brought back Mikimoto, of pearl jewelry fame, as a major supplier, adding it to two more stores each month.

What happens next? With phase two efforts to strengthen the firm already bearing fruit, phase three of Zale’s strategy -which focuses on growth, expansion and retail opportunities – is also underway.

The firm will add 250 stores between 1995 and 1998. Of these, 180 will be Zales Jewelers, bringing the division to more than 700 stores in the U.S. by decade’s end. Key markets in which the chain wants a new or stronger presence include New England, the Mid Atlantic region, Atlanta (which Zale’s prior owners left) and the Midwest (including Chicago, Columbus, Cleveland and Akron, headquarters of rival Sterling Inc., where it wants to double its four stores).

Gordon’s is filling gaps where it has clusters of stores now. But, says Mary Forté, “there is no limit to my vision. There are a lot of malls I want us to be in.” And Guild President Paul Leonard cites “up to 200 locations – in the Mid Atlantic, Central, Southeast and Southwest states – that could be right for us.”

Though much of Zale Corp.’s expansion will come through new stores, it also is ready for acquisitions. Its first was the January purchase of 20-store Karten’s Jewelers, a well-known, 50-year-old, family-owned New England chain. The fact that it fit plans to expand in New England – and that Pollock as its president for four years before joining Zale “knew it inside and out,” said one source – made it a sound purchase. (Karten’s will be part of Zales Jewelers, and eventually will change to that name.)

That won’t be the last purchase. “Bob wants to rebuild the Zale empire,” says a knowledgeable retailer. And DiNicola says, “We’ll look at anything that makes sense strategically [and fits] our corporate strategy of expanding our valuable franchises.”

Some other moves to expand volume:

  • The Guild Division will use Zales’ and Gordon’s databases to target potential affluent customers.

  • The Zales and Gordon’s divisions want to build annual per-store sales from $650,000 about 18 months ago to $950,000 this year.

  • Diamond Park is seeking additional host stores. It also wants to raise its average share of department store business (of which jewelry already is the biggest ticket sale area) from 2.5% now to 2.7%-2.8%.

  • Zale also is back in the mail order market, which it abandoned in 1986.

Last fall and Christmas, it tested mail order opportunities in 12 markets.Though initial results were less than expected – several hundred orders and hundreds of thousands of dollars in sales – the response proved “there is a definite mail and phone business to be pursued,” says Raff. Zales, Gordon’s and Guild stores expect to have permanent mail order operations running by Mother’s Day.

DiNicola and other Zale officials predict a toll-free phone number will be available soon. A Zale TV Shopping Network and retailing on the Internet may follow eventually.

But that’s tomorrow. “I’m quite proud of what Zale is today,” says former president Larry Pollock. “Two years ago, it was in total disarray. We turned it around, and now it is totally productive, with strong leadership in place in all divisions, a corporate strategy that is well thought out and executed, and a terrific leader in [chairman and president] Bob DiNicola.

“Zale is well-positioned to continue growing in the future.”

But both he and DiNicola say that to do that, Zale must stick to what has turned it around and made it successful. That’s why Pollock told JCK last fall, “The first phase will really never be over. Zale must constantly ‘start over,’ remaining a very focused company, always focusing on the basics [of retailing].”

A ZALE SNAPSHOT

Zale Corp., the largest U.S. fine jewelry retailer, was founded in 1924. Today, it’s headquartered in Irving, Tex. Sales in fiscal 1995 (ended July 31) totaled $1.04 billion; net income was $31.5 million. Zale employs about 9,800 people, operates 1,187 outlets in 49 states, plus Puerto Rico, with four retail divisions and three non-retail affiliates (in insurance and re-insurance). The retail divisions are:

  • Zales Jewelers (42% of Zale Corp.’s business), the national flagship chain, with 538 stores in 47 states and Puerto Rico. Its goal is to appeal to mainstream America by offering quality merchandise at good value.

  • Gordon’s Jewelers (26%), Zale Corp.’s regional brand, with 332 stores in 19 states and Puerto Rico (including 14 under the Daniel’s name). Its merchandise is more contemporary and regionalized than Zales’.

  • The Fine Jewelers Guild (19%), Zale Corp.’s upscale jewelry group, with 123 stores in 26 states. It operates under eight different trade names, the largest of which are Bailey Banks & Biddle (87 stores) and Corrigan’s (20). It sells higher-end and more exclusive merchandise and caters to shoppers aged 30-50 years, making $75,000 a year or more.

  • Diamond Park (13%), with 188 leased jewelry departments in 188 department stores operating under 11 trade names and owned by four major landlord groups (Dillard’s, Mercantile, The Broadway and Marshal Fields).

% of Division # of Average Business Volume per Store St1 Sa2 7/31/94 7/31/95 % Rise
Zales 42% 542 $255 $720,000 $850,000 18%
Gordon’s 26% 333 $225 $650,000 $710,000 14%
Fine Jlrs. Guild 19% 122 $475 $1,390,000 $1,530,000 10%
Diamond Park 13% 1883 $170 $590,000 $700,000 19%

Diamond Park 13% 1883 $170 $590,000 $700,000 19%

1. As of Oct. 1, 1995.

2. Sources: Zale Corp. annual reports, Form 10-K statements, interviews with Zale executives.

3. Leased jewelry departments.

SAVING MONEY

Corporate Merchandising is one of Zale Corp.’s important money-savers. “This used to be financially and operationally driven,” says its boss, Senior Vice President Joanne Connally. “Now we are a merchandise-driven division.” As a result, it saves several million dollars a month for Zale’s divisions. Some examples.

  • Disposing of outdated, old, damaged merchandise is a major function. The old Zale melted up to 95%. Now, Connally and her people work with vendors to return it; send it to Zale’s four outlet stores (where they are merchandised like retail goods); or liquidate it in small lots – so “everyone interested can afford them,” rather than in huge lots salable only to big buyers – and by categories, such as semi-precious gems, solitaires or anniversary rings. What’s left after that is melted down. But Connally’s department recovers the gold, diamonds and precious stones for the department’s repair section, which does 50,000 in-house repairs a month rather than send them out.

  • Its quality control section has made “a real breakthrough,” says Connally, in standardizing diamond quality and purchases for all Zale divisions. The result is “tremendous cost savings for us.”

  • Each store used to return its old or damaged merchandise to vendors, sending several items per month. Under a new program (tested in 36 stores last fall), stores now send such merchandise to Corporate Merchandising, which sorts and sends a single consolidated package to the responsible vendor. Suppliers then return replacement items to Zale, which sends them to the appropriate store.

A WOMAN’S PLACE

At first you don’t notice, because it’s so common in the business world at large. Then, you stop and think, “Wait a minute, this new Zale has something rare in the jewelry industry: Women – tough, experienced professionals – in the highest posts.”

The Zales and Gordon’s divisions rank among the very largest retail jewelers in the world and each, for the first time, now is headed by a woman. Other top Zale posts, including public relations, corporate merchandising, corporate planning, property development, employee relations and associate general counsel, are held by women. It is a mark of how much Zale has changed and how, once again, it is leading the industry in an important area of business and social consciousness.

Except that the head honchos, and indeed the women themselves, see nothing so unusual about Zale’s decision to break the industry’s old boy network by putting women in high profile posts. “Men or women, we want the best people we can get and we have [them],” says Bob DiNicola, Zale chairman.

Both Mary Forté, the always-in-motion president of Gordon’s, and Beryl Raff, the hard-driving president of Zales, say the fact that they are women in what were once men-only jobs isn’t noteworthy.

“The fact I’m a woman is irrelevant,” says Raff flatly. “What’s important is that the person [in the job] knows, and does, what’s best to build the business.”

Yet their appointments by Zale Corp. have energized women in the company. Forté’s office bookshelves are lined with “Thank You” cards from many of her women employees, while Raff admits that a number of her female employees have told her, “I can’t tell you what it means to me to have a woman in charge, what a role model it provides.” Even competitors are impressed. The female manager of a competitor’s store where Forté (whom the woman didn’t know) and one of her buyers were comparison shopping said, “I hear you have a woman president. That’s great! I wish we did.”

Still, not everyone is excited about having a woman in charge. Rumor has it that some suppliers – used to dealing mano a mano – didn’t know how to react to Raff when she became boss. Some initially took exception to her hardnose decisions on what Zales stores would and wouldn’t pay for product.

But does having a woman in the top job instead of a man really make a difference? In details, perhaps. Forté says she is “sensitive to how the jewelry looks in the store, how it’s presented, how it’s packaged.” It’s a very female thing – and women, after all, buy much of the jewelry sold in the U.S. Raff admits with a chuckle that it probably is easier for her to give an encouraging hug to a Zales staffer than it would be for a male president.

But ultimately these women bosses focus on the same thing as their male co-workers – catering to customer needs, beating the competition and insuring Zale is profitable and vibrant.

Whether man or woman, “It’s easy to work with me, if you play fair and straight,” says Raff. “But I’ll do what’s right for the company.”

ZALE’S TEAM

Between 1994 and early ’95, Zale Corp.’s new bosses created a new executive management team, mixing experienced department store retailers with Zale veterans. They are, say retail and financial analysts, strong, hands-on professionals.

This is also a fairly young team. Of Zale’s 12 executive officers, for example, two are in their 30s, six – including Chairman Robert D. DiNicola, 48 – in their 40s, and three in their 50s. They include:

  • Merrill J. Wertheimer, 55, executive vice president in charge of finance and administration since January 1995. His 28-year retail career includes 15 years at Zale in the posts of controller and chief financial officer.

  • Beryl Raff, 44, president of Zales Jewelers since November 1994. Her 22-year retail career includes turning Macy’s $20 million jewelry business into the ninth largest jewelry retailer in the country.

  • Mary Forté, 44, president of Gordon’s Jewelers since July 1994. Her 18 years in retail and merchandising include top posts at Macy’s, May Co., Federated Department Stores and QVC.

  • Paul Leonard, 40, president of The Fine Jewelers Guild since January 1995 and formerly Zale’s president of Corporate Merchandising. This 20-year jewelry retailing veteran’s career includes top jewelry and watch merchandising posts at Ames Department Stores and Macy’s.

  • Max Brown, 66, president of Diamond Park Fine Jewelers since January 1993, has been with Zale Corp. for 10 years. A veteran retailer, his career includes top posts at L. Luria & Sons, Jordan Marsh and Neiman-Marcus.

  • Tom Whiddon, 42, senior vice president and chief financial officer since August 1995, was Zale’s treasurer and formerly held the same post at Ekerd Corp.

  • Joanne Connally, 48, senior vice president of Corporate Merchandising since January 1995, is a 25-year retail veteran. She’s been with Zale in various top management posts for 10 years.

Other executives include Alan P. Shor, 36, senior vice president and general counsel since June 1995, and Paul Kanneman, senior vice president and chief information officer (MIS) since November 1994.