As the chairman and CEO of Tiffany & Co., Michael Kowalski has led the jewelry house through a global expansion that enabled it to post nearly $4 billion in revenue last year. At the same time, Kowalski—who has spent half his 61 years at Tiffany—has been promoting responsible mining of precious metals and gems through the Tiffany & Co. Foundation’s environmental conservation program. —Jill Newman
Preserving What Is Precious
We believe [being environmentally responsible] is the right thing to do. It is our customers’ assumption that we behave ethically. But we prefer to work quietly behind the scenes, which we have been doing since the late 1990s. These issues are fundamental, and our consumers care more deeply each day.
There is nothing I enjoy more than being in a beautiful, pristine piece of wilderness and knowing it will be there for my children and my children’s children. A few years ago, I was in Botswana with my family. We took a safari drive at sunset and saw a pride of lions awaken and begin to hunt. Those natural experiences are most precious to me.
I joined Tiffany in 1983, and luxury is far more complex today. Thirty years ago it was about the product itself—the “it” bag or the wonderful piece of jewelry. While the object itself is still the most important thing, the how and why of these products have also become central to how consumers think about luxury. Beyond the visual impact, they want to know about the design inspiration, the artisan. They’re looking for a far deeper experience, and it makes the objects far more interesting—intellectually interesting. The day of the “it” anything is pretty much past.
Luxury consumers are also much more the wiser than they were 30 years ago. Marketing alone won’t build a success. It is more important to be a maker of luxury goods today than ever before; it is more authentic when the brand creates its own designs, and it really helps distinguish today’s great brands.
Today customers relate to what they buy in a far more personalized, individualized way; they want to express their individuality and sense of style. And jewelry is especially personal because it is often a gift tied to an emotion, such as an engagement ring or anniversary gift. So we tend to speak to our customers individually rather than collectively—there has never been a greater premium on the store experience and individual salesperson. After 175 years in business, we have lots of stories to share, such as the fact that F. Scott Fitzgerald was a customer during the time he wrote The Great Gatsby, and we are celebrating the movie today. There is new interest in authenticity that also plays to Tiffany’s strengths and history.
On the ultra-luxury level, clients have an even more personal connection with the salesperson and often seek a deeper connection to the brand. There is nothing they value more than an opportunity to come to New York to visit our workshop above the Fifth Avenue store and stand next to a craftsman and watch the creation evolve. We also provide a chance to meet with a designer to create a custom piece, at a certain price level. But the key to building those relationships is understanding what the high-net individual wants. Many of our most important customers will come to New York for our events, but others will say no, thank you. Some customers enjoy shopping surrounded by the energy and excitement of the Fifth Avenue store, while others like the privacy of the jewelry salon, and others prefer to shop at home. You have to know what they want.
Limits to Growth
In 1987, the year of Tiffany’s initial public offering, there were 31 stores in four countries. At the end of 2012, Tiffany operated 275 stores in 25 countries. Still, fine gemstones are inherently rare; fine-quality diamonds are extremely rare; and good craftsmanship is a scarce commodity, so certain types of production are limited. This helps us avoid the risk of becoming ubiquitous. At the end of the day, there are limits to growth. Today’s luxury consumer understands and disdains compromise. They intuitively sense compromise, but they reward authenticity.