The Client
A fourth generation family business, Mednikow Jewelers
was founded near the end of the 19th Century in 1891
by Russian immigrant Jacob H. Mednikow. The succeeding
generation established Mednikow as a luxury jeweler that
fabricated proprietary, high quality diamond and gemstone
jewelry in the company’s own workshops. The next
generation modernized the Mednikow business, extending
company branded lines to include Swiss watches as well
as adding new lines of fine
jewelry and designer name brands, further
increasing the luxury jeweler’s appeal to both new and
old customers.
Harvard Business School educated, Bob and Jay Mednikow
continued to grow the family business through innovation,
modernization, and expansion. In 1995, the company
opened a second store in Atlanta, GA, located in the area’s
elite Phipps Plaza, where the business prospered until
2008 when the recession materially reduced the demand for
discretionary luxury products like fine jewelry. The severe
decline in sales in the Atlanta market caused us to question
the viability of our store in the Phipps Plaza.
The Gordon Company Assignment
To assist Mednikow’s management in closing the Atlanta
store and liquidate the store’s inventory. The scope of
The Gordon Company’s assignment included:
- Assisting Mednikow’s management in identifying and
evaluating appropriate, high-end inventory for liquidation
in the Atlanta market
- Developing a new sales and cash flow generation strategy
for the disposal of high-value, luxury jewelry in the
face of a severe recession
- Designing, producing, and delivering in-store communications
collateral material, print, and where appropriate radio,
and TV advertising material
- Preparing sales, media and staffing budgets along
with the requisite daily, weekly, and monthly financial
objectives
- Managing and controlling the sale in order to optimize
results
Considerations:
- Spending by high-end luxury consumers declined materially
after the financial crisis
- Consumer traffic was significantly down in Phipps Plaza
- The Mednikow brand was not typically promoted off-price
- Mednikow’s management wanted to retain opportunity
to reenter the Atlanta market at a subsequent time, which
meant the sales program had to achieve the cash flow
objectives, but ensuring the continuing good will of
former customers too
The Gordon Company Solution and Accomplishments:
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1. |
Leveraged the high-quality Mednikow brand
to keep discounts low and maximize sale profitability |
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2. |
Rewarded former customers with private sales to maintain
strong customer franchise |
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3. |
Exploited local market media opportunities and public
relation resources to maximize the sale event’s exposure
to value conscious, luxury buyers |
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4. |
Established the Mednikow store as a shopping destination
through word of mouth and media, mitigating the effect
of low traffic at Phipps Plaza |
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5. |
Actual sales increased more than two and one-half
times (2.5X) over the original sales projection, generating
an increase in gross margin over the plan |
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According to Jay Mednikow…
“ The fee I paid to The Gordon Company yielded
one of the best returns on investment that I have
ever had.” |
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