What is your ebay account name so we can watch the auctions?

I feel you are being really unfair to HOF. They have not indicated that they are not willing to take back the line. Rather, they requested to hold off the discussion until after the holiday. If you have not asked them to take back the line earlier in the year, I think the timeframe they requested is reasonable given the holiday selling season.

There could be many reasons you have not been able to sell the HOF line as much as you'd like - for instance, your client demographic profile not matching the brand's price points, or your overall marketing campaign not bringing in the right clients.

Discounting the line is not exactly constructive nor productive. What would have been a better play would be to tap your HOF sales rep for more ideas on finetuning your HOF inventory to better match your target audience given the demographic information they are likely to have. Which pieces will have the highest sales probability in your area? What co-op advertising can you participate in? Can they help you do a HOF-focused direct mailing?

If you focused on bread and butter items such as diamond engagement rings and diamond stud earrings, there's no way you wouldn't be able to increase your HOF sales. These are pieces that last a lifetime and based on the value that a HOF piece would provide, a lot of people would be willing to pay for this value. My friends are always complimenting me on my ideal cut diamond stud earrings, so I know there's a definite market out there for these diamonds. But you aren't even convinced of the value yourself, so how can you sell it?

I read the InStore article about your store's marketing campaign, it seems you really need to look at your overall marketing plan and see if it's the right strategic fit for your audience before all else.

instoremag.com/instore/editorial_detail.asp?eid=2223

I think there is a larger issue here and for your own good, you need to examine these issues rather than go on about HOF or any other brands. A brand doesn't just sell itself. If you place Gucci in a Walmart, it's not going to work out.

Times are tough. Money is tight. Co-Op involves spending more money. Who would spend that money on a line that has never sold? Clearance involves making money from failed product. Jewelry stores are folding all over...and cash is king. Cash tied into failed inventory cannot be used to pay the bills. It's Shanu's decision, and she is brave enough and gutsy enough to not post as "anonymous". I think it takes a lot to put yourself out there on the internet, open to attacks...like people posting a link to an ad sent in to seek help with a marketing campaign. I wish more people were as brave and helpful and OPEN as Shanu is, because she is opening up the secretive jewelry industry and providing transparency to a retail sector that is trusted at the same level as car dealers. Thank you, Shanu. If a company will not abide by their agreements to take back inventory, then they deserve to be called out on it, no matter what bitter authorized dealers post anonymously.

Right. And that's why you commented as 'Mall Jewelry Boy.'

Shanu is doing what she needs to do period!

Shanu, in your last paragraph you brought up an interesting point about working inventory problems out with jewelers who are doing well with jewelry brands. I might be able to help with some of the bigger names. I cannot get involved with watches though. Let me know.

To ANONYMOUS: HOF is being unfair to Gulani’s. Based on Shanu’s recounting of her efforts to make a go of the brand, she did everything she could to make the HOF brand successful using the HOF sales philosophy and resources. Obviously the HOF brand is not a good fit for her store and clientele. These things happen. Since the HOF agreement, from what I understand, clearly states that they will take back the line within 1 year, why aren’t they honoring their contract? It’s their promise to take the line back. End of story. I think what is more telling is that HOF told her “We can further discuss our partnership in January but right now we are working with partners who are selling the line.” As in buzz off loser, honoring our commitment to you is not a priority.

Seriously, what is your ebay account name so we can watch the auctions?

Seriously, what is your ebay account name so we can watch the auctions?

Jennifer--David my husband is slacking. He registered under Gulianis2 I think. I will have that info shortly. He was supposed to have them up today but now he's saying Friday.

Aside from commenting on the fact that I have chosen to post as Anonymous, no one else really had any other objections to the facts that I included in my previous post. Right now, it's Shanu's word against HOF.

We actually do not know what really went on during Shanu's discussions with HOF. However, the fact is that they did not refuse to take the inventory back. This was clear to me from Shanu's first post.

It's also clear to me that Shanu has had a history of marketing-related issues, as was evident from the InStore Magazine article.

The strategic mismatch between the HOF line and her client demographic profile is something Shanu as business owner should have caught straight away.

Why wait until the very last minute to do something about a problem? If a problem exists, deal with it right away. If Shanu had contacted HOF just a few months ago, I’

Aside from commenting on the fact that I have chosen to post as Anonymous, no one else really had any other objections to the facts that I included in my previous post. Right now, it's Shanu's word against HOF.

We actually do not know what really went on during Shanu's discussions with HOF. However, the fact is that they did not refuse to take the inventory back. This was clear to me from Shanu's first post.

It's also clear to me that Shanu has had a history of marketing-related issues, as was evident from the InStore Magazine article.

The strategic mismatch between the HOF line and her client demographic profile is something Shanu as business owner should have caught straight away.

Why wait until the very last minute to do something about a problem? If a problem exists, deal with it right away. If Shanu had contacted HOF just a few months ago, I’m sure we wouldn’t all be here debating about this. If she had overhauled her inventory then, who knows, HOF could have been a successful line for her.

To me, attending HOF University is just one part of the equation. It’s like the extra credit points we got in school. The real difference between passing and failing is whether we get the basics right.

There are larger issues at play. And the basic issue here seems to be one of merchandising rather than the HOF brand itself. Shanu has clearly purchased pieces from the HOF line that do not fit in with her client's ideal price points. Is this HOF's fault? Shouldn’t Shanu accept this as her responsibility first and foremost? Shanu knows which price points her clients are comfortable with. Why didn’t she take this into account?

Right now, the reality may be that for whatever reason, Shanu needs to liquidate her HOF inventory. However, why spend so much time posting about it when she could be using the time out in the real world to do something both constructive and productive for her business? Why put the line on ebay? That is really an action of revenge rather than of logic. Why didn’t she do a direct mailing to let her clients know about the HOF line?

A jeweler’s first line of defense seems to be to lower price points and this is exactly what is eroding margins away. Instead, our first line of defense should be to promote value. And like I said before, there is a definite value in a HOF piece, or any ideal cut piece, really.

Not keeping a broader perspective is what is limiting the industry. It's always the other party's fault, which makes it difficult if not impossible to learn the lesson.

For all the retailers who have not been able to do well with a brand, you need to explore the issue on a deeper level. Many brands offer different price points. Which of those will be most suitable for your client demographic? Without getting the merchandising right, how can we expect to succeed with any brand?

I wish you the best of luck, Shanu. Times are tough for everyone. However, approach it from a winner’s perspective.

Anonymous, Shanu was told when she took on the HOF line, that the company would take it back if she couldn't sell it. That's the bottom line.

HOF is refusing to take the inventory back by avoiding a conversation with Shanu now about the topic. Vague declarations of "We'll talk to you in January" does not constitute a firm response. And as far as "fault" for the line not selling, how about HOF having the business sense to determine, along with Shanu, that Charlotte was a good fit for the brand? It would seem that a brand as organized as HOF would have done some homework on their part to determine that the Charlotte market was appropriate for their jewelry. The decision to enter any store must be mutually beneficial for the retailer and brand.
I have a lot of respect for HOF. They are singularly focused on excellent training and product, and invest heavily in marketing--something few other jewelry firms do. JCK has written many positive reviews of HOF, and will again.
But Shanu has valid points here. She is also not the only account to have not done well with HOF. Look on ebay now and you'll see that Medniknow, with stores in Atlanta and Tennesse, is also selling HOF inventory.
I have also been speaking with numerous other stores over the past few weeks that have dropped brands like HOF, David Yurman, and Rolex, for a variety of reasons. Unfortunately, we are only hearing about HOF because other retailers aren't as bold as Shanu to discuss these issues publicly, although many benefit, including the brands, from these candid conversations.
It would be nice if HOF would post a response here in this forum to clear up the concern and confusion surrounding this issue.

Jennifer Heebner - As you know, not every collection will work for every market. A good merchandiser will know which collections will be appropriate and which won't be appropriate.

The responsibility ultimately lies with the merchandiser because he or she is supposed to have specialized knowledge about his or her specific market and know what the price points of that market are.

If you look back on Shanu's other posts, sticker shock was one of the reasons Shanu suggested for the lack of HOF sales. It was not lack of value proposition. I am a firm believer that if something has value, we should do all we can to protect that value - which means avoid discounting and especially selling on ebay. This is what's eroding margins.

As far as not being able to meet price points, is HOF supposed to know this or is it not Shanu's responsibility to know her target market well enough to get pricing right? How was the feedback mechanism between Shanu and HOF? We do not know how closely Shanu and her HOF sales person communicated - which is of critical importance here. If Shanu did not provide her HOF sales person with constant feedback, how was HOF supposed to know sales weren't working out? How could they help if they didn't get an SOS signal?

Even in different parts of one city, the demographics could be so different. In a city like New York, for instance, the demographic disparities are very vast - as it is with most other cities.

At the same time, there are so many different products to choose from.

This is why pilot testing is so important because sometimes getting the right product mix in a store is a matter of trial and error.

As I said, no one knows the full details of the discussions between Shanu and HOF.

I just wish that more jewelers would take ownership of their business by owning the responsibility for both failure and success. Because in this instance, I feel Shanu really needs to own this responsibility.

And if she sees it as a lesson, then she can use it to accelerate future sales.

Of course, not every brand will work in every market. Which is why it is prudent and ethical for brands to know something about potential markets so that they are not just pocketing the lump-sum buy in of the jeweler and then essentially saying, 'oh well, not my problem!' And since HOF's response to all of this is no response, what are we to think?
And correct, we don't know what exact conversations transpired between Shanu and HOF, which is why a response from that company in this forum would be most helpful to clarify concern and confusion. Seems like you might have an in, there, Anonymous! Help us out. Alternatively, I would be happy to speak to HOF offline about this and I can be reached at 267-481-4120 or at JHeebner@reedbusiness.com.

Just an update--I have done an email blast letting our customers know who have HOF on their wish list it is 30% off, each employee has called their own customer's as well. Because it is not good for my market and the pieces are not selling I figured Xmas is the time I will get some money out of it and rid of the line. We have just sold another diamond remount--the repetoire because of the 30% off. I chose Ebay because I want to liquidate. If other jewelers out there are doing well and want to buy the product from me give me a call. HOF left me a voicemail saying those exact words--in post one. They gave me a run around for two months and wouldn't respond to my emails requesting an RA. I have to do what is best and get whatever money I can out of the line. Regarding my marketing--that is one of several--yes we have a full bar and the men love it--you don't do parties for men? So we boast about our bar and guys watching the game while their wives shop--because of that we now are selling men's diamond bracelets. The campaigns are working because sales prove it! We also have did a "rock for love" contest which I don't know how to post a recording yet. We are starting bridal events. HOF was a part of every advertising campaign--it just hasn't sold here and we did our best so anyone out there doing well with--GOOD FOR YOU!

PS--I provided constant communication with my HOF REP and even said you all forced me to take all these hearts and we don't sell any--the made me keep them because "our numbers show they are popular and the most selling pieces." I've had lots of problems with HOF--in the beginning I was supposed to receive the merchandise in SEPT 07 and I was to have to pay 4 equal payments of 25K starting DEC--they SAID WE ARE NOT SENDING THE LINE WITHOUT A DEPOSIT two days before my grand opening--WHEN I WAS WAITING FOR IT AND ALL MY MARKETING GRAND OPENING MATERIAL HAS HOF ON IT--WE even gave away a heart hof neclace at the grand opening as a giveaway--because I was stupid I sent them a check--so there is so much more to this HOF story..........The bottom line is they are not taking it back and I am going to discount the hell out of it to get my money back--100-105K is way too much for a line that's not moving

d like to have a conversation about what’s working and what’s not, I encourage you to have it with me. There’s no reason to guess about what’s working, I’m happy to share it with you. While there are many HOF dealers who are thrilled with the line, there isn’t a brand in the country that works for everyone, period. We have two clients, both of whom are HOF dealers, by the way, who gave up Rolex this year based on the lines performance in their stores. In each case, they needed to feed their HOF inventory (and others) as those lines were performing whereas Rolex was not. Another client decided to give up Mikimoto last week – sales do not warrant their inventory levels. You seem to be taking Shanu’s decision to close out HOF very personally; do you feel the same sense of antagonism toward the jewelers who sold off their Rolex or Mikimoto inventory? You either work for a HOF retailer or work for the company, either way, we’re all very happy that you feel the brand has such ‘value’. Not everyone shares your opinion. Those are the jewelers who are questioning the continuation of the brand in their stores – some after many years of affiliation with the brand, and each for their own reasons. We deal with dozens of multi-million brand driven stores; at least two of them have also given up on HOF this year. Would you like to make snide comments about their stores as well: About them not ‘getting the right inventory mix’ or about them not doing the right marketing? These people must be STUPID! Or, are they? You can blame the retailer, but you should know that other retailers are asking the same questions about these lines that Shanu has. Many well established retailers have decided to brand themselves; creating their own house signature brand and selling Hearts & Arrows makes for far less money without being dictated to. You seem to have a problem with that. You mentioned that Shanu should take responsibility for her decisions, which I found to be a fascinating statement. She IS taking responsibility for her mistake by turning the line back into cash! If every jeweler had been doing what Shanu is doing now, our industry wouldn’t have the cash flow problems that we do. It’s the INACTION of dealing with the non-performing inventory that is the problem. Of the $125 million of inventory we have in our database, 40% or $50 million is at least one year old! Shanu won’t be having any of that in her store. I applaud Shanu for her gumption, for recognizing the brand was a mistake in her store and for pulling the trigger in a timely manner in order to use her resources in other, more productive areas.
;

Anonymous, Part of the above post was cut off. It started with, We analyze the sales and inventory for roughly 10% of all Hearts On Fire doors in the United States, so if you’d like to have a conversation about what’s working and what’s not, I encourage you to have it with me.

Anonymous continues: "And the basic issue here seems to be one of merchandising rather than the HOF brand itself. Shanu has clearly purchased pieces from the HOF line that do not fit in with her client's ideal price points. Is this HOF's fault? Shouldn’t Shanu accept this as her responsibility first and foremost? Shanu knows which price points her clients are comfortable with. Why didn’t she take this into account? Right now, the reality may be that for whatever reason, Shanu needs to liquidate her HOF inventory. However, why spend so much time posting about it when she could be using the time out in the real world to do something both constructive and productive for her business?"

Anonymous - Ironic that you mention getting the right price points in the store, as developing a comprehensive merchandise selection across ALL price points is fundamental to our strategy. In an email to one of our clients Glenn Rothman, founder and CEO of HOF said that our advice, which it appears you agree with, is a very poor business practice. In fact, he said, it would lead to "disaster". In fact!, he went on to say that jewelers should be carrying HOF diamond exclusively as consumers will only want to buy the best in these difficult economic times; that they ASPIRE to own a Hearts on Fire diamond! Well, all evidence to the contrary. So which is it? Comprehensive selection across all price points, or carrying only the 'best', aspirational merchandise? You choose. Please check in with Glenn before you answer. Oh, and Shanu is spending so much time posting about it, primarily to respond to all of YOUR posts!

MORE ANONYMOUS - "Aside from commenting on the fact that I have chosen to post as Anonymous, no one else really had any other objections to the facts that I included in my previous post. Right now, it's Shanu's word against HOF." Anonymous, so, you like "facts", great, that's what we deal with every day. Please let me know what facts you'd like me to post. We track about 50 of the 500 or so HOF doors in the country, so we have a pretty decent set of data. Would you like to know what the average HOF turn is? Average ticket? GMROI? GP? AGED INVENTORY!!! (It's 40% aged in case you were curious). Since WE deal with facts, I'm happy to share them here. All of our client's data has been aggregated into a single file, so it's simple for me to report on this supplier. Our industry needs more transparency... just ask away.

I am definitely not a HOF employee. In fact, when I first heard about HOF, I was really quite skeptical about them. However, over the years, they have proven themselves and I now definitely feel they are doing so much good for this industry – either for the majority of HOF retailers who are doing well with the line or for being an inspiration and role model for others.

Like Jennifer Heebner, I wish they would post here.

I am not a HOF employee and I cannot speak for them. However, I do feel it is unfair that this one-sided discussion is taking place so publicly. And I feel it is unfair that Shanu is blaming it all on HOF when it seems she took a year to decide to return that inventory. Now that is not quick action – nor was it done in a timely manner. At the same time, it would be reasonable for HOF to explain their position on this.

Abe Sherman – Are you a HOF competitor? I do believe you sound much more bitter and antagonistic than me. If you feel compelled to share data, I encourage you to do so. You need not ask my permission for it. However, since you only track a small percentage of HOF doors, I think your data would not be a true reflection of HOF’s total business. If you post this data here, I ask you to place a disclaimer on it that the sample you are basing your data on is a small sample and may not necessarily reflect HOF’s true business. And while you’re at it, why not post the data from Rolex or Mikimoto as well? $125 million might be a large inventory for one or two stores, but it is certainly a very small piece of the pie, so don’t presume that that is a lot of inventory and make it sound like it’s the entire market because it isn’t. What you present may seem like facts according to you, but those ‘facts’ could very well be biased.

What I meant about the price points was that Shanu should have considered which price points her clients would be comfortable with prior to ordering the HOF pieces she wanted in her collection. This does not detract from the aspirational aspect of the brand. Price does not equal value. And value is much broader than price. With other luxury brands, there are always pieces with lower price points that are designed to be debut pieces for first-time buyers. I’m sure this must also be the case for HOF.

Neither you nor I know which pieces Shanu selected for her HOF line, but from what I could tell, merchandising seemed to be a big part of the problem because Shanu mentioned “sticker shock” as the primary reason for lack of HOF sales. So wasn’t Shanu the one selecting the HOF pieces?

Suppose we have a certain demographic that would be willing to purchase $3000 pieces. If all the pieces Shanu had in stock were above this – say $4000 or above, then she is actually decreasing her chances of making a sale when the consumer walks in the door.

What I would have done with the inventory was to ensure that there were bread and butter pieces under every brand I carry. This would mean that I would get in HOF studs, bridal, hearts, crosses, etc. within that $3000 price point. I would then do a pilot test and present pieces with higher price points via a catalogue to gauge whether those higher price points could sell or not.

That’s really all I have to say on this matter. And though my opinion is not popular, it certainly has a lot of merit.

Abe Sherman - please clarify if that $125 M inventory you refer to is only HOF or if it includes other brands.

Shanu, decisions like yours are never easy and bound to be controversial. You have to watch out for your self interest, no one else is going to, but you'll have to deal with the fallout. I googled your store name and this very article came up as the third listing. So any customers interested in perhaps patronizing Guliani's or prospective vendors could very well read about the whole affair and be impressed in whatever way they are going to be, good or bad. You might want to consider the longer term ramifications. As an independent myself I often consider the advice of a lifelong jewelry salesperson (old school is still relevant I believe) who mentored me when I was just starting out..."

Shanu, decisions like yours are never easy and bound to be controversial. You have to watch out for your self interest, no one else is going to, but you'll have to deal with the fallout. I googled your store name and this very article came up as the third listing. So any customers interested in perhaps patronizing Guliani's or prospective vendors could very well read about the whole affair and be impressed in whatever way they are going to be, good or bad. You might want to consider the longer term ramifications. As an independent myself I often consider the advice of a lifelong jewelry salesperson (old school is still relevant I believe) who mentored me when I was just starting out..."

(continued) lifelong jewelry salesperson (old school is still relevant I believe) who mentored me when I was just starting out..."Be everybody's best friend". While you can't and won't please all the people all the time, you can strive to please the people who affect your business materially, customer and supplier alike, while striking a balance with your own interests. All might be better served if the discussion was moderated so perhaps JCK will take up the issue.

s on anyone. Shanu will likely tell you that HOF chose the inventory for her opening order, as do many of the brands, because ‘they know best’ about what sells. Now, you say you don’t work for HOF, which means you work in a retail store and from your perspective, HOF works great for you; we all cheer your success. I spend my days on the phone with jewelers around the country going over their data and their problems, much of which is cash flow related and much of the cash flow related problems have to do with inventory. One or two jewelers a DAY have been calling over the past month as they are concerned about Christmas – and because HOF inventory is among the highest of any brand they carry, and because lots of stores have been experiencing a slow down of the product, whether due to their multiple price increases, the lack of entry level prices (I’m talking about $700, not $3,000 as entry level), or the slow down in the economy, the fact is that things are slowing down and jewelers are concerned. I am more than happy to have them call you so you can speak to their marketing and merchandising issues and help them fix their problems. It should be noted that the stores that carry lots of other brands are not just concerned about HOF, or Rolex, or Mikimoto or Yurman, but the general slow down of all brands. I had an email from a client yesterday who has seen Rolex sales off by 75% in November compared with 2007. Maybe he has the wrong inventory or his marketing is weak… ya think? This isn’t personal for me, as it seems to be for you, as I have no dog in this fight other than the health and well-being of the Independent retail jeweler. I decided not to drink the Kool-aid a long time ago: When we analyze a jewelry store, there are no sacred cows. Shanu didn’t ‘take a year’ to give up the brand, she ‘gave’ the line a year and decided it was wrong for her store and to move on. HOF had the opportunity (and as far as I know it is par of their ‘promise’) to buy back the line ‘after’ one year of the jeweler carrying the product. Shanu said she offered to return it and they declined. If you feel that’s one sided, please get in touch with the good people at HOF and either ask them to post their side here or you can continue to speak for them. But the innuendo that Shanu is not being completely honest is offensive. ;

Anonymous--HOF picks out your pieces for you for the opening order and are very hesitant to trade out pieces until you've kept them for one year. I wish HOF would respond too. I even told them I would be posting a blog b/c they were not helping me. I understand folks are doing well with the line--I am not blaming HOF entirely--JUST FOR SAYING THEY WOULD TAKE BACK THE MERCH BUT THEN DECIDE NOT TOO BECAUSE I DON"T OWE THEM MUCH MONEY.

This is the beginning of the above post. Anonymous - we don't compete with any supplier, as we don't sell jewelry, we analyze the data of the stores. The $125 million is the total inventory we have in our system, at cost. HOF is $11 million of that inventory and, at last count $4.5 million of HOF was aged. Insofar as that being too small of a sampling, as I said in an earlier post, that represents roughly 10% of all HOF doors in the country, some of whom do 7 figures with the line. If you don't think that's statistically viable, so be it. If you think our data is biased, I invite you or anyone else who is concerned about various brands or cash flow to upload your own data and I'll give you the unbiased results. Perhaps after seeing your own data, you then post here about whether it is biased or not. Calculating Key Performance Indicators can't BE a biased process, its just math. Insofar as this being a one-sided argument, that's nonsense. YOU have taken up the other side and anyone is free to post here in support of their favorite brand. The reason I offered to post the data on HOF and not the other brands is we work with far more HOF stores than any other brand. The programming is being done now to aggregate all vendors in the system automatically so we will be able to report the KPI’s on anyone.

A fact that seems to have been forgotten by everyone. Didn't HOF say they'd talk to you after the first of the year? This is our industries busiest time of the year, is it so hard to believe that they are saying they need some time to sort it out.

Anon, you need to go back and read Shanu's original posts. She decided to close out the line after months of getting the run around. Someone just posted on Polygon's business channel having had a similar month's-long experience with HOF.

Following is re-printed with permission from a Polygon post on this subject. "We too, had great difficulty getting our money back from HOF. Promises,
promises, promises and stories from one person that would be repudiated by someone else, all within their organization. After a lot of effort and dozens of calls we got it back in about 3 or 4 separate payments. I feel extremely lucky." Dwight Belew, American Jewelry, Mt. Juliet, TN.

Abe - (I'm smiling as I write this), there are those who will be quite surprised, I'm sure - but on this one, you and I are in COMPLETE agreement! We, too spend our days working with retailers throughout the world, dealing with every variety of operational issues. We have seen countless problems with the 'predatory brand' aproach taken by HOF and others over the years, and we, too have had many clients drop the line. In fact, I personally have worked with no less than 3 clients in the past quarter who have been battling with HOF just to get them to honor their commitment to buy the line back (or to actually send the money, even after they have the returned goods). My company had been associated with HOF since very near their beginning, and while I applaud their Hurculean effort at brand building, I have personally been very concerned with their underlying disregard for the overall health of the retailer's business. As a point of irony... HOF has somehow managed to position itself ad an 'icon' of business management - instructing retailers (through their University and Owners Forums) in everything from client development to hiring solutions, invenory management to financial strategies and succession planning. Does anyone else find it odd that this 'icon' is now the company that cannot honor its commitments?

(Continued)
What most retailers don't understand is that HOF targets the stores they want in the markets they want, and they dictate the product you put in. Yes, for many retailers, the line sells, and sells well. In my experience, however, many retailers are a bit short-sighted in their analysis. How much of the sales success is attributed to the heavy concentration of marketing dollars? How much to the prime store positioning and large 'real estate' commitment they are required to make? How much to the dictum that the product must be shown to every customer, represented clearly (though some may argue inaccurately) as "

(Continued)
What most retailers don't understand is that HOF targets the stores they want in the markets they want, and they dictate the product you put in. Yes, for many retailers, the line sells, and sells well. In my experience, however, many retailers are a bit short-sighted in their analysis. How much of the sales success is attributed to the heavy concentration of marketing dollars? How much to the prime store positioning and large 'real estate' commitment they are required to make? How much to the dictum that the product must be shown to every customer, represented clearly (though some may argue inaccurately) as "

Kate, We have been recommending to our clients that they NOT send merchandise back to the manufacturers IF THEY ARE EXPECTING A REFUND since no one knows how long those refunds will take. The store should make as much margin as they can, as Shanu is doing, and use the sale of the product this season to drive customers in their doors. I wrote a newsletter about this subject; "The Blogger and the Brand", based on Shanu's experience.

Sorry - previous post got cut off.
How much to the dictum that the product must be shown to every customer, represented clearly (though some may argue inaccurately) as "The World's Most Perfectly Cut..."? How much to the heavy investment the retailer is required to make in getting their sales staff to 'drink the Kool Aid'?
Most importantly, are the HOF sales truly incremental increases, or are they made at the expense of other, similar owned inventory - which salespeople tend to ignore because: (1) There is no added incentive for selling it like there is with HOF and (2) It's very tough to show other product after you've already presented one brand as the very best?
Keeping in mind that the real success of the HOF brand from the very beginning has been tied to their positioning within market-leading stores, could these retailers be getting a far greater long term benefit from building their own brand, investing to the same degree in marketing, real estate, display, training and associate incentives?
Maybe - maybe not... but I think the real problem lies in the fact that more often than not, in the apparent glow of 'everyone is selling it', the the questions are not even being asked - until it's too late.

Abe - that makes perfect sense - and Shanu, I too applaud your willingness to put the health of your business ahead of what appears to be our industry's version of 'politically correct'. For those who worry that the actions you're taking somehow damage the brand, I might point out that a brand irreparably damages itself the minute it begins to compromise its integrity by failing in the commitments it makes to its retail partners.

Kate wrote: As a point of irony... HOF has somehow managed to position itself ad an 'icon' of business management - instructing retailers (through their University and Owners Forums) in everything from client development to hiring solutions, invenory management to financial strategies and succession planning. Does anyone else find it odd that this 'icon' is now the company that cannot honor its commitments? - - - HOF appears to follow the age-old business adage, "Do as I say, not as I do."

We have long recommended that the jeweler not allow HOF incentives be paid directly to the employee, but rather to the store. To your point about incremental business, the answer is no, the heavy-handed brand-push cannibalizes the rest of the store's business. Unfortunately, what we see is an increase in the store's average ticket and a decrease in their number of transactions - which over several years, leads to a decline in customer base and overall sales. The employees get so dialed in to getting POINTS toward prizes, that they stop showing generic merchandise. It's the combination of the investment in real estate, marketing, University (Kool-aid) and every-increasing inventory demands that causes an under-inventory situation for other, generic merchandise. In this economy, that can be a disastrous cycle.

We were one of those seven figure companies. As we were successful, our competitors wanted to carry the line and we were not protected. HOF kept opening accounts and several began discounting in order to steal sales from each other. We had my seven doors with two chains, and three more independent doors in a market of 2.5 million people. We also noticed how the stock requirements continued to increase to a point where we could no longer get the 2x stock turn which made the line work for us. Another problem was the shortened payment terms. Let's project out. If the line gets a two time stock turn, it covers itself every 180 days, but they can only fund net 90-120 terms

Integrity… lives are built on integrity… businesses are built on integrity. Susan and I have spent the last thirty years committing our integrity and energy to making a positive difference in the lives we touch. Our professional focus and all of our resources have been exclusively dedicated to the growth and financial success of the world’s most accomplished Independent retail jewelers. The results speak for themselves: 2007 retail sales exceeding $350million… In Store Magazine repeatedly reporting Hearts On Fire as the number one or two selling brand. LGI market research reports Hearts On Fire as the number one or two product sold in Independent Jewelers carrying the Hearts On Fire brand. In all data collected, the Hearts On Fire brand provides the best overall margins and highest gross profit dollars of any brand in our industry. In other words, I am proud of our profitable contributions to over 700 Independent retail locations in 32 countries across the globe.

Hearts On Fire’s historical contribution to our industry has been recognized repeatedly by the trade press and the financial press, including: Fortune, Forbes, Wall Street Journal, WWD, CNN, CNBC, with likewise recognition from the consumer press, fashion press, television, and many other independent sources too long to list in this Blog.

Susan and I have been honored with many awards of recognition for our philanthropic work, our leadership and innovation, but most important to both of us, our integrity and values. (2008 Winners of the American Gem Society Prestigious “Shipley Award”).

This public dialogue initiated on Ms. Guliani’s Blog has questioned the integrity of the Hearts On Fire Brand and in turn the integrity of Susan and Glenn Rothman. Why?

It is because a young, anxious retailer frustrated by an inability to execute in what may be the most difficult retail environment since the 1930’s, wants cash and wants it fast, even before the important selling season begins. Hearts On Fire is a brand, not a bank. At no time did anyone at Hearts On Fire speak the dirty word “no” to Ms. Guliani. Was it too much for Hearts On Fire to expect from a new retailer in whom we have invested up front many thousands of dollars… in-store training, displays, owner’s forum, heavy subsides in regional training and HOFU… to work with the brand through the most crucial holiday selling weeks?

Our response as reported by Ms. Guliani was “We can further discuss our partnership in January”. Obviously, the delay was not a satisfactory answer and has lead to Ms. Guliani discounting, posting on eBay, and attacking our integrity. Since her first negative Blog, Ms Guliani’s language has deteriorated into “that we wouldn’t take the product back”. This is patently not true. I am sorry we did not satisfy her immediate needs for cash, but I challenge anyone participating in this Blog to find any brand, vendor, or supplier that will give any money back under similar circumstances. In January, as previously communicated to Ms. Guliani, our team will contact her to resolve her inventory issues.

I am confounded by Ms. Guliani’s intent to harm the brand; to harm her neighbors in Charlotte who are carrying Hearts On Fire; to harm her future relationships with other brands. We only asked that Ms. Guliani and her team give it their best through the Holiday season. Let me quote Ms. Guliani’s own words from her Blog entry, “What Keeps You Up at Night” on February 25th, 2008:

I have never been so impressed by a company before. The CEO (Glen), the COO (Mark), the CFO (Bill), Executive VP (Peter), etc. are all from others backgrounds besides jewelry so they each brought different perspectives to the table. We work with so many vendors but I’ve never felt any one vendor to go out of their way. Yes I have some wonderful reps who go out of their way to help me sell their brand but I haven’t had a partnership like we do with HOF—at this owner’s forum we didn’t talk about HOF the entire time but instead we talked about us and our business. Many topics of huge interest came up and we all commented and brought up our own problems and solutions. The next couple of days I’m going to Blog about many topics that we talked about at the Forum that either never crossed my mind or did but I knew no way in hell how to deal or implement a solution. (Guliani; Feb 25, 2008; What Keeps You Up at Night?)

Ms. Guliani, you reach the heart of the issue with your quote above by saying, “I knew no way in hell how to deal or implement a solution”. Execution, execution, execution, is always the challenge. In our short time together in Boston last February I found you to be both intelligent and determined. I take your failure with Hearts On Fire seriously and truly wish you success in finding a future formula of retail profitability. Our future vision lives with the Hearts On Fire brand, its meaning and its emotion. We know that discounting and price selling a commodity in an internet world is a broken business model. Frankly, bricks and mortar can never be the lowest cost provider. We will miss you from the Hearts On Fire family, and only regret that you didn’t achieve success before you gave up.

As for Abe Sherman quoting me directly on this Blog…. first and most importantly, Abe and I share many of the same goals. We both have an unyielding determination to create prosperity for the Independent retail jeweler. Hearts On Fire works relentlessly every day to maximize our retail partners’ profitability, talent, and overall health. It is who we are, what drives our motivation, and what will create our future.

I publicly extend an open invitation to Abe Sherman and his team, at Hearts On Fire’s expense, to put our intellectual resources together for the purpose of reviewing Hearts On Fire’s Menu for Success and BIG’s approach to Financial Management and success. These are unprecedented times, requiring new strategies of business management. Together we can “white board” our strengths and weaknesses; we can pool our efforts to support the well being of our beloved retailers; together we can analyze risk, and identify opportunities. My offer includes a full day of learning facilitated by Benson Shapiro, Harvard Business School’s world renowned Professor of Sales, Marketing, and Pricing.

Abe, please accept our invitation for a stimulating and fascinating day of learning in Boston to build our knowledge and strategy in support of our retail family. After all, people’s lives and livelihoods are at stake.

Now for my last comment on this long Sunday afternoon Blog… Hearts On Fire has never before discussed matters concerning our relationships with our current or past retailers in a public forum. This type of “He said, She said” in a public forum does not pass my personal integrity test. In my humble opinion, it provides only partial realities based on perception not fact…..based on uninformed outside participants who may have a

(CONTINUED FROM ABOVE)
In my humble opinion, it provides only partial realities based on perception not fact…..based on uninformed outside participants who may have alternative agendas.

So I ask myself why Jennifer Heebner, a journalist and professional, jumped into the fray without so much as a single conversation on the matter with anyone at Hearts On Fire. Isn’t it Ms. Heebner’s inherent responsibility to make a sincere attempt to get the facts straight before attaching her name to a public Blog sponsored by her publisher? In my thirty years of dealing with the press, I have never experienced such unprofessional behavior from a journalist. Other brands beware! I can only guess that Ms. Heebner thought our lack of response to this Blog activity was some sort of admission that we acted unprofessionally or without integrity. In fact, our entire team has been focused on twelve hour work days, six days a week, to maximize the support of our retail family.
We did not have the luxury in peak season to be dedicating proper thought and words to this Blog. So after all the postings, I find myself spending Sunday afternoon writing my very first Blog and hoping with all sincerity, that the discourse can now focus on the positives. Hearts On Fire will continue to dedicate all of its resources to creating a future of success for the Independent Retail Jeweler.

Glenn Rothman
CEO
Hearts On Fire

Glen--Yes I am extremely impressed with HOF. I have never denied that. You all are marketing a product that has sold in many stores for as much as double when other AGS triple zeros are priced at retail stores for 1/4 to a 1/3 of HOF's price--you must be doing something right but unfortunately the line isn't working for me. The owners forum was awesome--but I also couldn't say things I trully believed about the company because I was carrying the line--I couldn''t say your company is like all others in that when I needed help to change out items back in Feb after the forum your company wouldn't approve it. "Ms. Guliani, our team will contact her to resolve her inventory issues."--not so TRUE AT ALL. Kim said you were working with people selling the line and if I wanted to discuss then we can talk in January. I asked Kim will you take back the line otherwise I will begin to discount and go to my peers for help of how to turn the line--she said I cannot say yes--well WHAT DOES THAT MEAN? I have to do what is best for Guliani's and discount the line to get my money. Did I want cash fast--YES I wouldn't want what happened to others to happen to me...others who had to wait 5 to 6 months for their money. I can't and won't do that--I'm discounting it and getting my money that way. If you all said you would send me a CHECK in JAN I would have held onto the merchandise and not discounted it. You all ignored my calls and emails for TWO MONTHS--you can't disregard--that's just nasty. If you want to even give me a check in January and come and take the line FINE--GREAT PLEASE DO. I would love that--SO TO LET OTHERS KNOW this is the first time HOF posted and they still haven't contacted me about the line. Come on GLEN. The point of this blog was to ASK my peers if a line is not working for you and the company is not taking it back what is the best way to get cash for the goods that have not turned in a whole year? We all know the reality of selling goods that haven't sold in the first year? I wanted to go to my peers and ask for their help because HOF was not helping me. To those of you selling the line--great and good luck. I'm will continue to discount it 30% and sell it on ebay unless HOF is willing to send me a check in January BUT i will not send merchandise back without funds in HAND. I have talked to way too many jewelers whom did not receive their money for at least 6 months.

Glen-"Since her first negative Blog, Ms Guliani’s language has deteriorated into “that we wouldn’t take the product back”. This is patently not true." Why hasn't HOF contacted me to say they are taking back the line then??????????????? My phone number is 704-542-2980. Do you want my cell too? Kim has it.

If it's not turning do whatever you can to get rid of it. Take advantage of the holidays. Glenn and Eurostar whom aren't taking any responsibility only care about their retailers when they want money. They are like all brands and force retailers to take on more product otherwise threaten to open doors nearby. Do what you have to.

Shanu, I have been anxiously reading this blog to see where it goes, and especially to see how you would respond to Glenn's sincere response. As an observer, I must admit you have completely destroyed your relationship as a retailer, and other brands that view this blog will be hesitant to let you represent and sell their line(s) in your store. Furthermore, I see you have edited your last comment since last night, including specific remarks to Glenn blogging "A BIG FAT LIE" and the "arrogant e-mail from Peter Smith". What made you take those down? Did you realize you might have dug yourself into a hole? You are rude, and you are causing an uproar in the industry and for an innocent brand for no reason whatsoever. Again, you have made a mockery of yourself and your brand's reputation. I wish you luck digging yourself out of this one.

*correction - you have destroyed your reputation

Observer-Brands give to stores that are selling--we all want to make our business grow. I took out the word lie because I am upset by Glenn's lies or you can call it miss communication with his staff. I asked bluntly to Kim if they would take back the line in Jan and if so I WOULD NOT discount it she said I cannot say yes--SO I TOLD THEM IN AN EMAIL I am posting a blog to ask for help from my peers. Last night I was angry but at least I am talking about it and not hiding from this ordeal--many other jewelers are scared to stand up to their brands or tell them NO i can't take on more product. I have brands and do well with the ones I have. Peter has in my opinion been arrogant--When I went to the owners forum he said, "The reason your not selling HOF is because you carry other diamonds. HOF should be the only diamonds in your store." That's arrogant--I love brands but can't only force my customers to buy only those--I wouldn't be in business. I am writing blogs on brands right now and wanted to save that for then--but observer this is for you--no I have articulated why HOF hasn't worked for me. Wrong product mix that they wouldn't fix. Plus my customer's were sticker shocked and yes I couldn't sell them too. I only sold a few pieces myself. HOF didn't work for me but other brands do. Many of you have lines that didn't work and are stuck with the product--I want to work with other jewelers on how to solve this--do I get frustrated and pissed off yes--but we need to help each other. I'm not a big fan of dumping on EBay but if that's what it takes then fine. Why can't we all buy from each other? What about remerchandising which I just did last night? I don't have any other ways of getting rid of the product and am asking you all for ideas because many others are in this situation--if saying this is ruining my reputation so be it. You are not the first one to tell me not to blog so openly and "put it all out there."

Continued from above:
Those doing well with the line Great! I have said this a zillion times but what about others who are not? GOT ANY IDEAS ON HOW TO MOVE THE LEFTOVERS?

Brands will still open in your store as long as your selling it. I said it before they all only care about money.

Observer wrote: "As an observer, I must admit you have completely destroyed your relationship as a retailer, and other brands that view this blog will be hesitant to let you represent and sell their line(s) in your store." Observer, that's a REALLY naive statement. Shanu has destroyed nothing; she's earned the respect of hundreds of readers and has shown retailers that THEY are in charge of their businesses and that they shouldn't be bullied by anyone. Insofar as brands being hesitant to sell her... well, I don't think you're paying attention to what's been happening in our industry the past 18 months. If she pays her bills, they will open her. Why is it that those taking the opposing view never signs their name?

Abe Sherman - Shanu might have earned your trust, but her behavior is the epitome of what is wrong with our economy.

We as a collective are becoming increasingly passive aggressive. It is difficult to accept responsibility for what has ensued, but if you ask me, the signs were there all along. If she thought that the HOF merchandising was all wrong, why didn't she stand up to that in the first place? Why stand up to it now?

You may claim that she is standing up against "

Abe Sherman - Shanu might have earned your trust, but her behavior is the epitome of what is wrong with our economy.

We as a collective are becoming increasingly passive aggressive. It is difficult to accept responsibility for what has ensued, but if you ask me, the signs were there all along. If she thought that the HOF merchandising was all wrong, why didn't she stand up to that in the first place? Why stand up to it now?

You may claim that she is standing up against "bullying," but no one has bullied her. Ironically, in her own way, she has become a bully. She is being unfair to HOF and unfair to HOF retailers everywhere. Her blog is very clearly designed with revenge in mind.

There is a serious disconnect here. On the one hand, Shanu is claiming that she is "extremely impressed with HOF," and on the other, she is selling it on ebay.

As hard as it is to accept, the problem was clearly in the execution.

Come on, independent jewelry retailers everywhere. Looking at external factors and projecting blame on those factors is not going to take anyone to the next level. The sub-prime mortgage "victims" blamed their problems on "predatory lenders." Let us not blame our issues on "predatory brands" where there aren't actually any.

Anon-You can be impressed by a companies strategy but the strategy might not work for you. You are not an HOF retailer so don't realize they pick your products for you. I stood up in the beginning--but you are right probably not enough. I was scared in the beginning scared that they were such a large company scared of brands in general. Thought to be able to keep the brand I had to do what they said--but I DON'T. If it's not selling and they aren't willing to change out product then I had to do what was ultimately right for the store. We grow everyday--I'm not scared now and don't want to make these kinds of mistakes in the future. I'm not denying I am angry but this blog is not meant with revenge in mind. I want to work with retailers and help change our industry--we need to start with our educational programs and licenses for being an appraiser and vendors willing to help their retailers when we aren't doing well with certain products, etc, etc. Let's change the industry together. Why can you get into GIA without two years work experience? Getting and MBA requires that? Why can any JOE BLOW appraise jewelry?

Have you put anything up yet on Ebay? What is your sellers name?

Anon I - So, THIS is what's wrong with our economy? The people who were SOLD sub-prime mortgages are to blame, but not the people who were doing the SELLING? Are you sure you want to go down that road? And how do you KNOW that no one 'bullied' Shanu? Were you in the room? Where you on the phone calls? And now you're saying that SHE is the bully? Remarkable. You may want to go back and re-read all of her posts from the beginning. As I've said several times, she IS taking responsibility and turning non-productive inventory into cash. If our entire industry had been doing this for the past 10 years we wouldn't have the cash flow problems with have now.

We carry Hearts on Fire and they do not pick our product for us. They recommend certain items based on their top sellers, but ultimately the owner and buyer make the final decision on the order. We have also stock balanced throughout the year on old pieces that we haven't been able to sell. They have always worked with us to get the right product in our store.

Anon I says "Let us not blame our issues on "predatory brands" where there aren't actually any." This is perhaps the most naive statement made so far, but I'll cut you a break. If you haven't heard about brands dictating to retailers; telling them what OTHER brands they can and cannot carry; dictating position and real estate, inventory levels, etc, then you are completely removed from what's happening in our industry. Specifically, I point to the watch brands who are the most guilty of this practice. While THIS discussion started with and is often about HOF, the issue is brands in general, and unless you work in a heavily branded store, you wouldn't understand the pressures. Only then could you make such a naive statement.

HOF retailer--why no name? They picked my opening order and were not willing to change out pieces unless I kept the items for 6 months or so. The hearts they picked out in the beginning at the opening order I called before the order was shipped and said we do not really sell hearts but they said those are the "proven best seller" so I wasn't allowed to take those off the order. I am happy you are doing well with the line! Good luck--I think we have a tough next two weeks.

Well, Shanu, I do wish you the best. It does take a lot of courage for you to put yourself out there like this. However, as HOF Retailer pointed out, it is ultimately the owner or buyer who makes the final decision on the order. Thank you for stepping up and clarifying this, HOF Retailer. Well done.

Abe Sherman, also see HOF Retailer's comments, which confirms my belief that no bullying took place. And you were also not in the room with Shanu, so you equally don't know whether she was bullied or not.

It is this belief that small business owners, or individual consumers for that matter, have an innate need to be "protected" that I have a strong objection to. I sometimes catch myself doing this and if we can all overcome it, nothing but good could come from it.

Many people go through life thinking that other people owe them something. We often take the short term perspective instead of looking at the long term. We often feel we were pressured into making a decision. However, aren't we giving away too much of our own power by looking at our circumstances as something forced upon us rather than as something which we can play a very proactive role in defining? We have almost become collective victims and this is what I'm disputing.

And it is because Glenn Rothman refuses to accept the status quo that makes the HOF success story such a compelling and inspirational role model for the industry. And yet, he remains very humble and open to learning and adapting. We all have a lot to learn from his integrity and his spirit.

And Abe Sherman, I hope you do realize that if the whole industry were to do as you say and now try to liquidate their inventory for cash, we would have a subprime jewelry crisis, now don't you.

I have no trouble admitting that I do believe it is the people who make a promise to pay a creditor for a loan and then fail to do so that is causing today's crisis. Though the banks get a bad reputation, I genuinely feel that individuals must also accept that it was their choice to take out these loans.

Ultimately, the people who eventually fail to pull their weight end up pulling down everyone else. We may have differences of opinions, but we are all looking out for the good of the industry in our own ways.

Abe Sherman, I do not appreciate you calling me naive. Perhaps the watch brands may be guilty of being predatory, but don't forget we are talking about HOF. It all depends on the brand, doesn't it. Let's not be brand-ist.

Anon I says "Let us not blame our issues on "predatory brands" where there aren't actually any." Forgive me, but that's just naive, or if you'd like, uninformed. Either way, it's inaccurate.

Abe - I agree completely. My company is fortunate to work with a number of companies representing branded product lines who truly do work to form mutually beneficial partnerships with their retailers. That's not what we're discussing here. There are genuine partnership brands and then there are predatory brands, which, in my opinion, often employ highly manipulative bullying tactics an a single focused effort to advance their own agenda.

Abe - I agree completely. My company is fortunate to work with a number of companies representing branded product lines who truly do work to form mutually beneficial partnerships with their retailers. That's not what we're discussing here. There are genuine partnership brands and then there are predatory brands, which, in my opinion, often employ highly manipulative bullying tactics an a single focused effort to advance their own agenda.

I am really curious to see the posts someone mentioned that Shanu posted and deleted

I am really curious to see the posts someone mentioned that Shanu posted and deleted

Comments for this topic are now closed. While acknowledging this discussion has been both interesting and controversial, JCK believes it especially has emphasized the need to address the issue of brand-retailer relationships in a broader editorial forum, rather continue to debate what did or didn’t happen in this particular instance.

We therefore will be addressing the brand/retailer issue in print shortly, and request that both everyone who has posted on here as well as all retailers and brands who have dealt with a similar situation, to please contact us offline. Please contact me directly: Hedda Schupak, JCK editor-in-chief, hschupak@reedbusiness.com, or (646) 746-6440.