Tiffany & Co was one of the first companies to introduce fixed pricing. Then became the luxury brand of New York.
Dave Young:
Welcome to the Empire Builders Podcast, teaching business owners the not so secret techniques that took famous businesses from mom-and-pop to major brands. Stephen Semple is a marketing consultant, story collector and storyteller. I’m Stephen’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is, well, it’s us, but we’re highlighting ads we’ve written and produced for our clients, so here’s one of those.
[Maven Roofing Ad]
Dave Young:
Welcome back to the Empire Builders Podcast. Stephen Semple is right there. I’m Dave Young and we’re talking about empires. We’re talking about the businesses that started small and grew into empires. And today we’re talking about, man, these guys have been, I mean, a long time ago. I don’t know. I’m anxious to know the history because I don’t know the history.
Stephen Semple:
1837.
Dave Young:
1837. And I’m trying to think if I’ve ever been in one of their stores. Maybe. I’ve walked by a couple of them.
Stephen Semple:
Yes.
Dave Young:
We’re talking about Tiffany & Co. So that one, Breakfast at Tiffany’s, the little blue box, all of that.
Stephen Semple:
All of that. Well, and here’s the thing I’m going to say. Anytime I’m in a mall or somewhere that has a Tiffany’s, I always go and take a look at the display windows. And I cannot tell you how many photographs I have of Tiffany’s display windows. Tiffany’s display windows.
Dave Young:
I have walked by Tiffany’s. Yeah, yeah.
Stephen Semple:
Tiffany display windows are the best in the business. No one does it better. I will go out of my way to go see one. I probably have got 50 pictures in my phone of Tiffany displays. They’re spectacular. And they update them. Their website, here’s one of the other things that’s crazy. I don’t know how often they update their website, but I continually go back and take a look at their website and it’s almost always completely redone with brand new photography, brand new feature items, brand new stories. But here’s the interesting thing. So they were founded in 1837. Today there are about 300 stores worldwide, 14,000 employees. They do five billion in revenue. A chunk of the company was bought by LVMH back in 2021 at a valuation of $16 billion. Everyone recognizes the Tiffany Blue Box. It’s a part of pop culture. And it’s frankly, probably one of the largest, most recognizable luxury brands on the planet. Did not start out in jewelry.
Dave Young:
Oh, gosh. Oh, gosh. Now I have to guess.
Stephen Semple:
What do you think it started out as?
Dave Young:
Probably not… It was 1837, so it wasn’t cars.
Stephen Semple:
1837.
Dave Young:
No?
Stephen Semple:
No. Nope. They started off selling stationary, paper, ribbons, and small little items.
Dave Young:
Really? I was about to guess watches, but that… No.
Stephen Semple:
Yeah.
Dave Young:
They’d still be making watches if that was the case. Stationary.
Stephen Semple:
Yeah. It was located on Broadway in New York, and it was originally Tiffany, Young and Ellis. And the first day they sold $4.98 worth of stuff.
Dave Young:
Wow, that’s a start.
Stephen Semple:
Yeah.
Dave Young:
Got to start somewhere.
Stephen Semple:
But here’s some of the first bold things that they did. So we got to remember, it’s 1800s and shopping was a negotiation game. Everything was bartered. Okay? What they did, and retailers would argue with you at that time, it was part of the fun, part of the adventure. You can imagine this conversation, right? People like negotiating. They want to feel like they’re getting a deal. Even today, how often do we hear this? They want to feel like they’re getting a deal. And here’s what Tiffany’s did. They said, “Screw that. We’re introducing fixed pricing. No haggling, no exceptions.” And at that time, that was considered crazy.
Now, it’s interesting. Here in Canada, along a similar timeline, company which is no longer around today, but grew to being one of the biggest businesses in Canada was a retailer called Eaton’s, and it was founded by Timothy Eaton. Same thing, fixed pricing. Fixed pricing.
Dave Young:
You know what you’re going to spend. And if you don’t want to spend that, walk away.
Stephen Semple:
They started out right away with, “We’re going to do something different.” Now, they very quickly, after a few years, they very quickly pivoted from stationary to jewelry. Here’s what Charles Tiffany noticed, and it’s a big deal. And before I share this, I want to share part of our marketing approach, because this is where I think there’s a real parallel. We believe as Wizard of Ads Partners that you want to be the company that has thought of first and liked the most. Now, our partner, Gary Bernier, has put a really nice little twist on this that I think really helps people. He likes to ask it this is like the most for, fill in the blank.
Dave Young:
Sure.
Stephen Semple:
And if you can’t fill in that blank and it can’t be 20 things and like the most because of fill in the blank. Okay?
Dave Young:
And I think I would even tie the context of whatever it is that you do, right? Unless that’s what you’re talking about. When I talk to a client, the simple thing is, we just want to make you famous for this in your town.
Stephen Semple:
Right. Here’s what Charles Tiffany noticed. America did not have a luxury identity yet. Paris did.
Dave Young:
Okay.
Stephen Semple:
London did. New York, not yet. So he decided to create one.
Dave Young:
Nice.
Stephen Semple:
Thought of first for luxury. And even today, if I say Tiffany’s, immediately you’re like, “Oh, that’s special.” Immediately.
Dave Young:
Yeah. Yeah. Well, and so when you have set pricing, even if it’s not diamonds, right? If it’s just stationary and it’s good stationary and it’s priced higher than maybe you could negotiate for it down the street, it becomes luxury in the minds of people, right? Oh, I got the Tiffany stationary instead of the Woolworth stationary.
Stephen Semple:
So Tiffany’s even to this day does this book called the Blue Book, which has got all sorts of amazing items in it. So in 1945, they launched the Blue Book. And from the research I’ve been able to do, it was the first mail order catalog in the United States.
Dave Young:
Wow. Okay.
Stephen Semple:
And it became a desire machine. People who had never been to New York, let alone Paris, could see luxury. Imagine owning the items aspire to it. Now, it’s not clear which came first, the Blue Book or the Tiffany Box, but I think it was the blue book. This blue became so powerful that in 1998, Tiffany worked with Pantone to create the color Pantone 1837. It’s called 1837 because that’s the founding year of Tiffany’s and trademarked the color. Tiffany’s owns that color. No one else is allowed to use it. We’re going to talk about the box a little bit more later. So let’s go back to 1848. Nine years after opening, there’s an opportunity to change the face of Tiffany’s and really establish it as an icon. And this is where Charles Tiffany really understood what he was doing because he has this opportunity and he grabs a hold of it with both hands and it changes everything.
Europe is in chaos because of the revolution, right? French aristocrats are selling off their jewelry to survive. Charles goes to Paris and buys a massive amount of royal jewels that have been sold at auction. All pieces with a history. He brings them back to the United States, and this is a game changer in two ways. First of all, America now saw firsthand what European luxury looked like and it became aspirational. And Tiffany’s understood what they were selling was desire. You could now wear this prince or this princess’s jewelry. It also positioned Tiffany’s as the king of diamonds. And it changed how America saw wealth. So Tiffany’s now had four powerful things, fixed pricing to eliminate friction, desire at scale because of the Blue Book, a symbol in the Blue Box, and a leadership position in the marketplace.
Dave Young:
All these brand codes. Yeah, yeah.
Stephen Semple:
Right?
Dave Young:
Mh-hmm.
Stephen Semple:
Right.
Dave Young:
And you stick with it.
Stephen Semple:
Oh, it gets better. Oh, he leans into this. So in 1853, Charles buys out his partners and he renames the business, Tiffany & Co. It’s the 1870s, and it’s now the gilded age in the United States is really happening, which really creates this desire for status symbol. So in 1877, the largest canary yellow diamond was discovered, 287 carats uncut. And there it is, Charles, who sweeps in, buys it for $18,000. And this became the Tiffany Diamond, more on this later. Because in 1878, around the same time, like a year later, there’s another large sale of jewelry, and it’s the jewels of Isabella, the second the queen of Spain, becomes available. Where’s Charles? Right fricking there.
Dave Young:
Oh yeah.
Stephen Semple:
But the biggest defining moment came nine years later in 1887, the French government decides to sell off the French crown jewels at auction. Charles Tiffany bought one third of the things being auctioned.
Dave Young:
Oh, man. And did he buy them for resale or is there a Tiffany museum we can go look at?
Stephen Semple:
Well, everything except the Tiffany Diamond. All the other things were bought for resale, because now back to the Tiffany Diamond, Charles takes it to Paris, hires George Kunz to cut the diamond and it’s cut to 82 facets and the final cut weight, 128 and a half carat weight. Now, here’s something I didn’t know about the Tiffany Diamond. While the Tiffany Diamond is often on display, it has only been worn by four women.
Dave Young:
Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this.
[Using Stories To Sell]
Dave Young:
Let’s pick up our story where we left off and trust me you haven’t missed a thing.
Stephen Semple:
While the Tiffany Diamond is often on display, it has only been worn by four women.
Dave Young:
Wow.
Stephen Semple:
Mary Whitehouse in 1957, Audrey Hepburn in 1961, Lady Gaga in 2019 and Beyonce in 2021.
Dave Young:
No kidding.
Stephen Semple:
Another fun fact, Breakfast at Tiffany’s, which we all think of, came out in 1961, but there was no cafe in Tiffany’s until 2017. You can now go have breakfast at Tiffany’s.
Dave Young:
Yeah. And when did the song come out? It was way after the movie. It was in the ’90s maybe.
Stephen Semple:
Yeah. Now here’s the other cool thing is in New York, the Tiffany’s building. If you go buy the Tiffany’s building at night, all the lights are the Tiffany Blue. You walk and you’re like, “Oh God, that’s Tiffany’s.” It’s amazing. In this adding of doing all these things just as cemented Tiffany’s in our heart, our mind, our soul, in terms of what is Tiffany’s. We immediately know what is Tiffany’s. And Tiffany’s ends up doing this amazing early work. We could do a whole episode on what Tiffany’s did with silversmithing. We could do a whole episode on what Tiffany’s did around lamps. We could do a whole episode on Tiffany’s window displays and how they do it. I mean, I could do four episodes on Tiffany’s with the things I learned about it. The photography on the website is outstanding. If you want to really understand how to display things and show things, study Tiffany’s. Like the Blue Box, you can buy the used Blue Boxes on eBay. There’s a market for them on eBay and they’re not cheap.
Amazing. Amazing. They decide they want to own, thought of first for luxury and like the most because of status. They just absolutely own that place in our minds.
Dave Young:
I’m just glancing at their website. One of the things I love is they call their jewelry hardware. Like that’s the hardware department.
Stephen Semple:
Right. Talk about fits but doesn’t fit in a strange thing. And you would think that Tiffany’s would have to give it some sort of fancy name. They’re like, no, the fancy name is Tiffany.
Dave Young:
Yeah, exactly.
Stephen Semple:
That’s all you need to know. If I said to you, “Hey, Dave, I went and bought some…” I wouldn’t even have to say fancy. I bought some Tiffany hardware. You don’t need to say anything else. Tiffany ends up becoming the descriptor that immediately says this thing is special. Right?
Dave Young:
Oh man. They have a bocce ball set. I think Wizard Academy needs that. It’s only $3,750.
Stephen Semple:
There you go.
Dave Young:
But they’re the Tiffany blue balls.
Stephen Semple:
Yeah, that’s cool.
Dave Young:
That’s a weird thing to say. But yeah.
Stephen Semple:
So here’s what I found interesting. They were innovative on fixed pricing. They’re also innovative on the fact that luxury was not yet a thing in the United States and they did a mail order catalog. And then when they suddenly realized that this is what they’re going to do, Charles Tiffany really leaned into those opportunities that came out of Europe and went, “I’m going to buy as much as I can get my hands on.” When you think about going to an auction and walking away with a third of the things that were put up for sale. But what he recognized is he was going to bring that back and suddenly in the United States, people are going to go, “Oh my God, this is the way we should be.”
Dave Young:
Even if I can’t buy it, I want to go in and see it.
Stephen Semple:
Right.
Dave Young:
And I might buy something just to get the box.
Stephen Semple:
Bingo.
Dave Young:
Or a bag. Yeah.
Stephen Semple:
When you consider five billion in revenue across 300 stores, what they sell per store is also remarkable.
Dave Young:
Oh, I believe it.
Stephen Semple:
Also remarkable.
Dave Young:
And I think about this. There’s sort of two paths in business. You can go the luxury most expensive in the market route, or you can go be the Walmart and try to take the low ground and say, “We always will save you money.” And Tiffany’s knows you’re never going to save money by shopping at Tiffany’s.
Stephen Semple:
Oh God, no.
Dave Young:
Ever, ever, ever. And here’s the dirty little secret for other retailers and other home service businesses. And you’re worried about being the most expensive in your market, but here’s what it allows you to do. It allows you to be who you’re going to be, and it allows you to have a higher ad budget in particular. So the path to being the famous one in your town, the being known for what you do and being liked because of it, that path is made easier by selling the most expensive items in town.
Stephen Semple:
Yes. And it would be easy.
Dave Young:
It’s almost counterintuitive till you do the math.
Stephen Semple:
Right. And it would almost be easy for somebody to say, “Yeah, but Tiffany’s doesn’t advertise much,” but they do. Their stores are in the most prestigious locations.
Dave Young:
Yep.
Stephen Semple:
With the best location in the most prestigious location, and I can tell you what they spend on those window displays that get changed, I’ve never gone past the Tiffany’s twice where it’s the same display. I have no idea how regular… It’s not, “Oh, we put it up and leave it for a season.” It’s a month, probably less.
Dave Young:
There’s somebody that’s got… That’s their job.
Stephen Semple:
And the website, you look at that website and it’s not the homepage that changes, Dave. If you go back to Tiffany’s website a month from now, it’s completely changed. The whole feel of it, the whole photography, and you look at that photography, they’re spending-
Dave Young:
Oh, it’s gorgeous.
Stephen Semple:
… a boatload of money on that, but that’s their marketing. That’s their marketing is every time I come back, I get this new, different, special feeling. Every time I walk past the Tiffany store, new, special experience and feeling. That’s marketing, man.
Dave Young:
We can’t be the only ones that think of it this way, but not all marketers do, is that you have to calculate the total cost of exposure and include expensive real estate in that, right?
Stephen Semple:
Yes.
Dave Young:
Being on the most exclusive block in town costs a lot of money, and that’s money you don’t have to spend on advertising.
Stephen Semple:
Correct. That premium that you’re spending to be in that high visibility location is marketing dollars.
Dave Young:
Yeah. And that-
Stephen Semple:
And probably the best marketing dollars you’re ever going to spend.
Dave Young:
Absolutely, because it’s permanent, right?
Stephen Semple:
Yes.
Dave Young:
If you can own it, if you don’t… And when you talk about demographic targeting, guess who walks around the nicest places in town? The people that can shop at Tiffany’s. So you don’t need to find them. They’ll find you because that’s where they are.
Stephen Semple:
And here’s the other interesting thing. If you were going tomorrow to buy the Tiffany’s bocce balls, while you could order them online, you would want to go into the store.
Dave Young:
Oh, of course.
Stephen Semple:
You’d want to go into the store because the stores are special.
Dave Young:
Yeah.
Stephen Semple:
So when I got looking at Tiffany’s, I started realizing that in the early days, Charles Tiffany did a lot of innovative things. And in fact, one could say he kind of invented in the United States the luxury category and they did an amazing job on it.
Dave Young:
He figured out the DNA of this company carved it in stone.
Stephen Semple:
Yeah, literally.
Dave Young:
Literally carved it like that’s the hardware. The hardware is the color, the whole deal, right? It’s the color, the locations, all the things. They know who they are and what that tells you also is you know what you’re going to do, but you also know what you’ll never do.
Stephen Semple:
Yes.
Dave Young:
Right?
Stephen Semple:
Yes.
Dave Young:
If they never sell any of these bocce balls, there’s not going to be a bargain corner where I can pick them up for a hundred bucks.
Stephen Semple:
And the other part I’m always impressed with, here’s a company that started at 1837 and is still around and still being true to itself. It’s remarkable.
Dave Young:
Yeah.
Stephen Semple:
Remarkable.
Dave Young:
Awesome. Now I got to go find Tiffany’s.
Stephen Semple:
There you go. But their window displays are spectacular. Spectacular. All right. Awesome.
Dave Young:
Thanks for bringing us the Tiffany’s story. Now I’ve got that song in my head.
Stephen Semple:
I look forward to the bocce balls.
Dave Young:
Well, you have to bring them.
Stephen Semple:
Yeah. Yeah. I realize that. Thanks, man.
Dave Young:
Thanks, Stephen. Thanks for listening to the podcast. Please share us, subscribe on your favorite podcast app and leave us a big, fat, juicy five star rating and review at Apple Podcast. And if you’d like to schedule your own 90-minute Empire Building session, you can do it at empirebuildingprogram.com.
