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Article: Recession brings hagglers to Tiffany


#1

NEW YORK (Reuters) - In style this recession – haggling at Tiffany
& Co.

As the economic funk bears down on consumers, the upscale jeweler is
finding more jewelry lovers trying to bargain for lower prices in
its stores, even though Tiffany has a firm stand that it will not
cut prices of its products.

The trend is a fresh show of how even wealthy consumers are seeing a
need to save money when they shop at high-end stores.

“Everyone feels compelled to ask the question for fear of feeling
foolish after the fact,” Tiffany Chief Executive Michael Kowalski
said at the Reuters Global Luxury Summit in New York.

“And yes, the questions are being asked more often and the answer is
the same – the price is the price is the price.”

Though Tiffany has suffered in the recession – sales fell 22
percent in the past quarter – it has vowed to hold the line on
prices. Many investors and analysts argue that discounting would
tarnish the Tiffany brand in the long run.

“The final price of a Tiffany piece of jewelry shouldn’t be a
function of how good a negotiator you are,” Kowalski said. “I think
that’s a terrible disservice to the vast majority of folks who don’t
want to negotiate.”

Tiffany’s stand is in contrast to some other upscale retailers that
took to deep discounts through the 2008 holiday season to attract
bargain-hungry shoppers.

Its jewelry is known for classic styles, one reason why it does not
feel the pressure like apparel retailers to cut prices and clear out
merchandise fearing a change in fashion.

For example, it sells an 18.44 carat diamond engagement ring for $6
million, a $450,000 Jean Schlumberger necklace with rubies,
sapphires and diamonds, while it also has $85 sterling silver
earrings to attract aspirational shoppers.

NO GAME CHANGERS

Much like other companies, Tiffany has shed jobs and trimmed its
2009 store growth plans in order to cut costs.

The company had said that sales trends improved slightly in May, but
not enough to boost its weak full-year outlook.

To call a definite improvement, Tiffany would have to see U.S. sales
at stores open at least one year to improve by at least 5 percentage
points, Kowalski said.

However, Kowalski said that he has not seen any “game changer” so
far in any of its markets.

When asked what the company needs to see to call business better,
Kowalski said: “I would say a trend that represents a 5 percentage
point comp movement” in the United States.

“If comps went from minus 25 (percent) to minus 15 (percent), we
would say that’s significant,” he said, pointing to the U.S. market.
“We haven’t seen that yet.”

The company expects a 5 percent to 6 percent increase in the number
of stores this year worldwide, but is not targeting Latin America
aggressively due to high tariff barriers there, Kowalski said.

Its second smaller-format store will open later this year in
Seattle, he said. The first one opened in Glendale, Calif. in
October last year. The company currently has 209 of its stores
around the world, which include 88 in the Americas region.

The company recently bought bankrupt high-end handbag maker
Lambertson Truex seeking to widen its reach in the leather goods
area. Kowalski said he would wait and watch to see how that deal
would shape up.

Tiffany shares closed down 60 cents at $29.05 on the New York Stock
Exchange.

(Reporting by Aarthi Sivaraman; editing by Carol Bishopric)


#2

There are a lot of people who were wealthy at the start of this
recession and are still in very good shape. It isn’t always whether
or not a person can afford a Tiffany creation but for some, perhaps
many, how much less can they get it for? Isn’t the old adage “if you
have to ask the price” you’re in the wrong store?

Pat Gebes


#3

Or it could be that the opportunity exists to pick up some bargains.
Trying to make a better deal is something rich people do as well as
everyone else. If this is happening more often in upscale stores in
a recession, it is probably because some sellers are more willing to
haggle.

Why wouldn’t they be? This story establishes that Tiffany’s considers
it beneath their dignity to negotiate on price. Good for them. You
can’t read a story like this without realizing that it contains a
certain amount of manufactured news generated by Tiffany’s PR spin
doctors. Again, good for them. It is a very clever story because it
sets it up that there is something crass about haggling and that
Tiffany is above that despite hard times. I am sure that some people
feel reassured by this story and feel it reinforces their image of
Tiffany as quality and class. I never have “sales” at my shop either,
but I will discreetly haggle, never in front of other customers. I
also don’t mind shopping around or negotiating for better prices when
I am buying something. It is foolish to pay more than you have too,
just as it is foolish to loose a sale when you need the money. I
think it is pretty much a given that if you shop at Tiffany’s you are
going to pay top dollar. But don’t think for a minute that there is
some kind of deep cosmic truth in play here. It is all about
marketing, perception and the image of the brand. The deep cosmic
truth is supply and demand. Tiffany’s is just doing some damage
control on the demand side. Good for them.

Stephen Walker


#4

Pat,

There are a lot of people who were wealthy at the start of this
recession and are still in very good shape. It isn't always
whether or not a person can afford a Tiffany creation but for some,
perhaps many, how much less can they get it for? 

Just like to add to your point.

Wealth is never destroyed, it is merely transferred. All the talk
about how much money was lost in the stock market by the media and
the Government, does not trully reflect the situation. In any
situation where someone says sell, there must be a buyer and the same
applies to when a buyer wants to buy, someone must be willing to
sell.

Therefore, of the few trillions dollars that where lost in selling
off stocks at lets say depressed prices, someone gained by shorting
the market. Therefore, 2 trillion loss for one group becomes a 2
trillion gain for another. Think of the movie Trading Places. The
trick is being on the right side of the trend. Same thing with the
housing situation. A house once valued at $200,000 became $500,000
during the bubble, and lets say that someone bought that house for
500k which certainly happened. In that case there was a 300k gain or
profit to the home seller. Now, the flip side is that the house is
for the sake of argument back to 200k. The new owner and/or the bank
now have a loss in equity of 300k. In reality there was a positive
gain of 300k and a negative loss of 300k, and the house is still
there, therefore are we not back where we started?.

Granted, some of the losses and gains in some areas aren’t as simple
as how I described it, but the fundamental basis and the logistics of
how capitalism revolves is what needs to be understood, For example,
the homes that where let go for pennies on the dollar and
specifically in this case Las Vegas, reflected losses for the banks
or builders and home owners to the point where you couldn’t build it
for what it was sold for. Now the silver lining is that the new home
owner over time will be rewarded for buying the property at the right
time and will see positive growth in the years to come. So in one way
or another, some will screw up and others will capitilize on that
mistake. For every action there is a reaction.

I’ll keep it short. Please don’t get me started on this :slight_smile:

Best Regards.
Neil George


#5

Hello Neil.

wealth is never destroyed, it is merely transferred. The money was
never there in the first place and in this instance, debt will be
transferred to our children and grandchildren...It is their money
that has been spent! The economic bomb has dropped, but it hasn't
exploded yet! In order to get out of this one, capitalism as we
currently know it will have to change. They (banks and
governments) can't just keep printing money or lending what does
not exist! There is no 'gold standard' anymore. Laws regarding what
banks are allowed to lend were changed about 10 years ago and I
believe that that is when it all got out of hand.. Having said
this, there will always be wealthy people and Cartier is aiming for
exclusivity... 

I believe you are wrong…If capitalism functioned as you explained
it, there would be no problem, but it doesn’t. To try to make an
extremely complex sublect very simple I will summarise what I have
been lead to believe has happened economically and why capitalism as
we know it is nearing it’s end…I believe the current ‘crisis’ is
due to the fact that the western world has overspent and overlent
(and overprinted money) by more than the borrower is able to pay back
in their, and sometimes their children’s lifetime…


#6

Hello Gwen,

This is not how I explained it.

“wealth is never destroyed, it is merely transferred” is all I
wrote, the rest I have no idea where you got it from.

Now if it was part of your explanation then it needs to be clarified
as such.

wealth is never destroyed, it is merely transferred. 

I’ll answer this anyway.

The money was never there in the first place and in this instance,
debt will be transferred to our children and grandchildren...It is
their money that has been spent! The economic bomb has dropped, but
it hasn't exploded yet! In order to get out of this one, capitalism
as we currently know it will have to change. They (banks and
governments) can't just keep printing money or lending what does
not exist! There is no 'gold standard' anymore. Laws regarding
what banks are allowed to lend were changed about 10 years ago and
I believe that that is when it all got out of hand.. Having said
this, there will always be wealthy people and Cartier is aiming
for exclusivity...

The real issue is that capitalism worked very well for some, but not
for others especially those who thought they had available capital,
when they really didn’t. In housing, there was a perceived value
driven by greed and not on reality. People thought they where rich
when prices became inflated, when in fact you can only relize that
gain or profit in a simplified form, when you actually sell the house
and physically take possesion of your cash, check, gold or silver and
hand over the keys. When you sold a property and had a 100k equity
and you spent it, there was no debt. You enjoyed the splurge free and
clear. However, people took out a 100k line of credit against their
percieved equity, spent it and now technically still owe that money.
Money they didn’t have to begin with as you mentioned above,
Therefore
they spent a 100k and still owe a 100k, geeeeez what a surprise that
the kids and grand kids have to bail out a bunch of dumb asses. The
individuals who spent the money carelessly, are as much to blame as
the banks are for giving it to them. Your right, the deregulation of
the lending criterias thanks to Fanny and Freddie Mac and even Acorn
to a degree caused sub prime loans to become a major instigator in
allowing credit to individuals that where not credit worthy to begin
with. Having said that, the 100k is in circulation, just not moving
around right now.

I believe you are wrong...If capitalism functioned as you
explained it, there would be no problem, but it doesn't. To try to
make an extremely complex sublect very simple I will summarise what
I have been lead to believe has happened economically and why
capitalism as we know it is nearing it's end...I believe the
current 'crisis' is due to the fact that the western world has
overspent and overlent (and overprinted money) by more than the
borrower is able to pay back in their, and sometimes their
children's lifetime...

Overspent, overlent and fiat money not worth a damn is your summary,
but that does not indicate that capitalism as we now it, is coming to
an end.

Lets take spending as a starting point. If someone has $20 and they
go and spend it, then the recipient “capitalized” on that transaction
by that invidual transferring their little bit of wealth over to the
other entity. Somewhere that $20 exists.

Overspending is the same, but now with additional money coming from
somewhere else. Therefore, if someone has $20 but the item they wish
to purchase is $30, well hey, lets borrow the $10 and pay it back
later. The credit card lends the individual the $10, which therefore
means that they are transferring a portion of their wealth by means
of a loan to someone who now goes out and buys that $30 item. The $30
is still intact, and is merely transferred from one entity to
another. Therefore, and again, the recipient of the $30 is
capitalized. However, the individual still owes that money plus
interest, therefore, $30 is in circulation with $10 plus interest on
the books with the lender as money owed. As you pointed out, the $10
will be paid at a later point in time. In reality here, an additional
$10 was “created” on paper and will be collected at some point in
time, if they are lucky :slight_smile: Lets say that the money was never repaid,
in a nutshell, the loss on paper disappears, but the $10 is still in
circulation along with the other $20. Do you think the $10 is lost?
If you think so, then can you lend me $10 that I never have to repay?
I can offer a guarantee that it will not be lost, I will know exactly
where it is :slight_smile:

Overlending means that they would lend more than they had, and yes I
know, quite obvious, therefore, it must be obvious that the entity
that recieved the money became funded, and therefore capitalized.
Whether it was a $1 or a $1m is irrelevent, a transfer was made, and
someone was capitalized. So who is to blame, the one who overlent,
or the one who borrowed in excess?. It doesn’t really matter, because
those two entities are the ones in trouble especially if the borrower
spent it. The final recipient, who as Al Pacino said in the Movie
Scarface “What we gonna do with all the freaking cash”, will now
decide how that capital will be distributed or not. But it does
exist.

Banks did not go under for over lending on a dollar to dollar ratio
persay, that’s the simple explanation, they went under for being
"over leveraged" in financial vehicles such as derivatives for the
most part and other extremely complex financial intruments that no
one really understood. Look up Bear Stearns. Additionally, look up
fractional-reserve banking and inflationary central banking as a
means to understand true instability and volatility. Back in 2002,
JP.
Morgan was leverged to the hilt and to the tune of 600 times their
asset holdings. What Happened to them? The whole pyramid was held
together by spit and a prayer. Any chance there was a problem back
then?

Printing money is not a new concept. It happened in the mid 90’s
under Greenspan which fueled the dot com bubble, and centuried before
that. The problem with cheap money, is it encourages speculation,
which is not necessarily a bad thing, but one never knows the
direction it will take. Money will flow wherever it will, and whether
assets or the market is the target, something will be created out of
nothing. The key is whether it has real, hard or tangible assets vs
paper wealth. The smart money made a little cash in residentiaql
real estate, then moved to commercial real estate and then back into
the market and mainly in commodities. They understand the principles
of buy low and sell high, but unfortunately many miss the boat and
are merely carried along by the emotional ties of maybe missing out.
When the majority of people make a move, it’s too late. The original
hedged investments already took their profits on the uptick and
profited again on the way back down shorting the market. You can
thank the SEC for eliminating the uptick rule in 2007 for that one.
The printing of money does have valid and negative points in doing
so, but sometimes it’s the necessary evil in dealing with the choice
of inflation vs deflation, but that’s another post.

If you did some research, you would be trully amazed how much money
everyday Americans are sitting on. Statistics say that Americans
don’t save. Don’t believe that for one second.

My point still stands, that wealth is transferred and not destroyed.

Best Regards.
Neil George


#7

Hello George,

sorry for the very late reply, I have been sorting out all the
paperwork and emotional stuff that goes with having been held up at
gunpoint…again…

Armed robbery seems to be the local form of income here in
Johannesburg.

Back to your posting…

Yes, the portion that was marked as having been your posting was in
fact mine, thanks for replying to it. I am not in finance or the
banking sector, so any opinion I have is my very own…

From where I see it, the system has already collapsed, but because
the dollar is so widely used worldwide, they can’t just let bottom
out, they have to take it down gently.

Looking at the finer detail makes one get lost. The big picture
seems quite straight forward…

The money is not moving around because the tap has been turned off.
Basically, the institution has recognised that they can’t just keep
lending money that does not exist, it has to be paid back… so they
have to stop lending till they get a little back. But, people can’t
pay it back because they have spent more than they earn, not some,
but the majority… so now there is little lending and little paying
back and little money circulating at all. Until the banks get some
money back, the breaks are on, they can’t keep lending, so you can
have that $10 you were referring to, I will write an IOU for
it…easy to earn money isn’t it! (and easy to lend as it never
formed part of the system in the first place and essentially does
not exist!)

-There are too many dollars and the value is over-inflated…

-They can’t just keep printing dollars…

-The majority of people have spent money they do not have…

-The banks have lent money that they will never get back and that
they did not have in the first place…

so, the system needs to change…

To me, in my opinion it’s really simple, the whole world will suffer
for this because the dollar is the accepted currency for trade, but
America will be the ultimate losers as this is the beginning of the
end of their hold on global influence. All empires collapse at some
point, just turn to your history books.

just an opinion!


#8

Hello Gwen,

sorry for the very late reply, I have been sorting out all the
paperwork and emotional stuff that goes with having been held up
at gunpoint...again... Armed robbery seems to be the local form of
income here in Johannesburg. 

Sorry to hear that Gwen. For once, I am at a loss for words. At least
for a moment anyways :slight_smile: Hope it works out ok for you.

From where I see it, the system has already collapsed, but because
the dollar is so widely used worldwide, they cant just let bottom
out, they have to take it down gently. Looking at the finer detail
makes one get lost. The big picture seems quite straight forward...
The money is not moving around because the tap has been turned
off. Basically, the institution has recognised that they cant just
keep lending money that does not exist, it has to be paid back...
so they have to stop lending till they get a little back. But,
people cant pay it back because they have spent more than they
earn, not some, but the majority... so now there is little lending
and little paying back and little money circulating at all. Until
the banks get some money back, the breaks are on, they cant keep
lending, so you can have that $10 you were referring to, I will
write an IOU for it...easy to earn money isnt it! (and easy to lend
as it never formed part of the system in the first place and
essentially does not exist!) 
-There are too many dollars and the value is over-inflated... 
-They cant just keep printing dollars... 
-The majority of people have spent money they do not have... 
-The banks have lent money that they will never get back and that
they did not have in the first place... 

With respect Gwen, your points above are what I consider to be main
stream media talk, meaning that its just enough to stay on top or to
have a percieved finger on the pulse of current affairs. However,
this is merely scratching the surface and your opinion unfortunately
has no depth beyond what we hear and read about in the news. This to
me is very old news. I dont mean to sound harsh, so please do not
take it as such. Im trying to keep it to the point and concise. The
reality is that you see the problem with capitalizm revolving around
the government and the banks which puts us not only on a different
page to one another, but more so in completely different books.

Capitalizm for me revolves around the private sector, where small
and medium sized businesses normally flourish and grow. Individuals
here on Orchid such as yourself, who buy material, convert into
product and hopefully sell for a profit are the beat to that heart
that pumps capitalizm. Even if you are gainfully employed you are
essentially a capitalist. Why?, because you sell or trade your time
for money. As a business grows, the mindset becomes flipped and you
then trade money for time by investing in manufacturing solutions
that increase productivity. An employee might buy a tool out of their
own pocket to make it easier on them to earn that dollar and to
further enhance their productivity to maybe make more money within
that entity. All around us capitalizm is at work 24 hours a day in
one fashion or another and what is important to understand, is that
money is always on the move in one way or another. You have not
presented a single shred of data on why my position on wealth is
tranferred and not destroyed is incorrect, because in reality you
cant.

Let me try to explain it in your way of thinking and maybe you will
get my point. Lets take as you say that the banks lent money that
they
didnt have to begin with and that it was all on paper and didnt
exist. Therefore, if they lent what did not exist, then surely there
was no loss. You cannot lose what you did not have. Does that make
sense to you?.

You mentioned “The money is not moving around because the tap has
been turned off”. The problem with that statement, is that you are
looking at the wrong pile of money. The real money has already moved
beyond that fiasco a long time ago. Liquidated and on the run.

In a simple form. The banks lent the money to a home buyer, who in
turn handed it over to the seller. The seller walks away with his/her
money. The money is out there, which I have said several times
already. but you fail to grasp it for some reason.

Now the problem lies between the bank and the borrower in one form
or another. Here is where the losses that you see are. The gains that
I see have already left the building. The speculators that started
the ball rolling where in and out quite early in the housing bubble
build up. Whilst the rest of the herd where rallying in residential,
the smart money was already moving the commercial market. Once they
had taken a position and relized a gain/profit, the money moved into
commodities. Any reason you think why oil and gold spiked amongst
other things?

So once again I will say that wealth is transferred and not
destroyed. Are we getting there yet? :slight_smile:

Regarding the $10 loan you replied "I will write an IOU for
it…easy to earn money isnt it! (and easy to lend as it never formed
part of the system in the first place and essentially does not
exist!) ".

I applaud your attempt at humour, however you have it the wrong way
around. The borrower signs an IOU not the lender. Look up the
difference between a mortgagee and a mortgagor.

I will however play along with your opinion and again try it from
your angle. If the ten dollars was not part of the system and
essentially did not exist as you say, how was it lent?

What you are telling me, is that no money changed hands because it
didnt exist, therefore all the properties that where bought and sold
didnt really happen. I wouldnt sell a piece of property or any other
asset I held unless the funding was there, which meant at least in my
mind the money surely existed. In realty from your perspective, I do
not need any money to buy a piece of jewellery from you. Your view is
that nothing existed and people handed over assets for no money or
for free because it wasnt there to begin with… Therefore can you
send
me one of your finest pieces and money is no object :slight_smile: or is it?.

If you dont see it, then there is nothing more to discuss on the
issue in my opinion, because I cannot explain it any simpler.

so, the system needs to change... To me, in my opinion its really
simple, the whole world will suffer for this because the dollar is
the accepted currency for trade, but America will be the ultimate
losers as this is the beginning of the end of their hold on global
influence. All empires collapse at some point, just turn to your
history books. 

Seeing as we have touched on historical factors now, I will ask you
for your opinion as to why the United States in comparison to the
Roman Empire has an even larger time bomb on its hands that makes
this problem look pale in comparison. In fact, this is peanuts to
what is coming.

Both ended up with the same problem and I will give you a clue.
Infrastucture, but not political infrastructure.

In actuality, there is no need for us to go back that far.
Historically speaking, work yourself backwards to the dot com problem
and the tech stock problem, go back further to the savings and loans
collapse. In all honesty you have plenty to catch up just in the last
20 or so years :slight_smile:

Best Regards.
Neil George


#9

Hello Neil.

You are talking about trade… trade is not capitalism, it is the
function of buying and selling… the small picture of individuals. I
agree with you. For as long as “the system” functions the individual
has the opportunity to make money. The bigger picture is that if
money is printed that cannot be supported, then the bubble bursts and
it will filter down to the individual when the currency becomes
de-valued. I think we are talking about two seperate things here. For
some, there will always be opportunity to make a buck, but look at
the bigger picture. It’s not a very pretty one! Perhaps we can
re-visit this topic in a year or two? Let’s agree to disagree?

Gwen


#10

Hello Gwen,

You are talking about trade... trade is not capitalism, it is the
function of buying and selling... the small picture of
individuals. I agree with you. 

The Market Economy also referred to as the Capitalist System, is the
vehicle that promotes free market “trading” and is both a social and
economic system controlled by the Private Sector and not Governments.
Buying and selling is a big part of it. Buy and sell product, buy
and sell stocks and shares. Very basic economics really.

For as long as "the system" functions the individual has the
opportunity to make money. 

There is always an oppurtunity to make money in one way or another,
and this can be done in good times and in bad, it’s all about
understanding how the system works and getting into position ahead of
the curve. Capitalism is all about freedom and choice, and making the
right choices will have it’s effect, and unfortunately, it’s the “bad
choices” that where made by certain “Individuals”, whether they where
greedy homeowners or greedy bankers that is the real issue here and
not the system.

The bigger picture is that if money is printed that cannot be
supported, then the bubble bursts and it will filter down to the
individual when the currency becomes de-valued. 

Filter down?, this is not trickle down economics, this problem was
created by all kinds of individuals, from all walks of life. There is
not one social class level of society that did not contribute to this
by over indulging. Therefore, the bubble burst a long time ago for
many, but the final nail in the coffin may affect us all
unfortunately, in one way or another. Having said that, I do agree
that nothing good will come out of it, so lets hope they come to
their senses sooner rather than later.

I think we are talking about two seperate things here. 

Wealth is transferred and not destroyed is what you disputed as
being incorrect. However, you did not address why it was incorrect in
any way. It was infact a direct point of discussion, yet instead, you
recited the whole economic evening news to me :slight_smile:

So, having said that, I will agree to go my seperate way :slight_smile:

For some, there will always be opportunity to make a buck, but
look at the bigger picture. It's not a very pretty one! Perhaps we
can re-visit this topic in a year or two? Let's agree to disagree? 

Gwen, it’s never pretty. In good times and in bad, the danger of
failure is always there. But that’s another post.

I will agree that we are on different pages, but I cannot disagree
with some of your opinions, because on the surface, they had merrit,
they where just out of context on what you where attacking as being
incorrect, and secondly, just not quite as deep as I like to go:-)

As a point of reference. There is a difference between a capital
system and a capital state which can have legislation imposed on by
government, and it is worth looking up to understand the difference.

Best Regards.
Neil George