For Peter Carl Fabergé, jeweler to the Russian Czars, diamonds weren’t forever. Following the 1917 Russian Revolution, the Bolsheviks ransacked his workshops and seized his iconic imperial Easter eggs, forcing Fabergé to flee to Switzerland where he died three years later. Struggling financially, his family sold the Fabergé trademark to an American perfumer for a meager $25,000 in 1951 — and the name began to crop up on low-end cosmetics and toiletries. By the time Unilever purchased the brand for $1.6 billion in 1989, consumers associated Fabergé — once the hallmark of imperial grandeur — with cheap fragrances like Brut.
Now Fabergé is being reborn. Pallinghurst Resources, a South African mining-investment firm, acquired the Fabergé brand in 2007. In a bid to restore the brand’s status, Pallinghurst sold nine of its 11 licenses (including the scented ones) and brought Fabergé’s descendants into the enterprise. On Sept. 9 the revived house of Fabergé unveiled its first jewelry collection in 92 years: 100 pieces ranging in price from $40,000 to $7 million. Rather than showcasing that lavish collection in a network of luxury boutiques — de rigueur in the world of high-end jewelry — Fabergé is courting the ultra-rich with an online flagship store, staffed 24 hours a day and in 12 languages, and will open just one “salon” in Geneva this November. “Our customers won’t need to appear outside of a store between 10 in the morning and six in the evening,” says Mark Dunhill, the company’s chief executive. “They can log on anytime, while sitting in their yacht, their chalet or their country home.”
(See pictures of diamond jewelry.)
In reality, the online model probably stems less from convenience and more from frugality: forgoing bricks-and-mortar investment will save Fabergé tens of millions of dollars in the short term. That makes sense, especially in the current straitened climate. By the end of August, the price of polished diamonds had fallen 16% year on year, and leading jewelers, such as America’s Finlay, had filed for bankruptcy. Consulting firm Bain & Company predicts that the luxury sector will contract by 10% globally in 2010. “This must just be a first step,” says Luca Solca, a luxury-goods analyst at Sanford Bernstein in London. “They’re testing the water with a low-fixed-cost strategy, and if the brand is successful I would assume they would open at least two more flagship stores.”
Dunhill casts Fabergé’s online venture as an opportunity to address the concerns of the superwealthy during the recession. “Inconspicuous consumption is increasingly important for our target audience,” he says. But will that audience spend hundreds of thousands of dollars on jewelry online? Other upmarket jewelers like Cartier and Graff allow customers to browse product lines but not purchase online. But Blue Nile, a Seattle-based firm which operates exclusively online, sold $300 million worth of jewelry last year — up 75% since 2004. Although Blue Nile sells five to 10 items in the $20,000 to $100,000 range on any given day, its 
 average transaction is only $1,700 — much cheaper than Fabergé’s least expensive item. Design may limit Fabergé’s online sales, too. Vendors like Blue Nile can describe their diamond engagement rings using straightforward criteria — cut, 
 carat size and clarity — but a Fabergé firebird brooch is another beast entirely. Says John Baird, Blue Nile’s spokesman: “The more fashion forward or exotic the piece, the more difficult it becomes to make that purchase online.”
(Read: “Faberge Eggs: The Fanciest Easter Gift Ever.”)
To mimic an in-store experience, Fabergé commissioned IBM to design its site, which connects salespeople with clients through text, phone and videoconferencing and boasts a zoom 10 times more powerful than a jeweler’s magnifying glass. Customers can study Fabergé’s red hibiscus bracelet ($560,000), which “captures the theatrical brilliance of the flower, smothered in over 2,300 stones.” The Sadko sea horse brooch ($320,000) comprises “alexandrites, green demantoid garnets, Paraíba tourmalines, tsavorites, shaded with violet sapphires, yellow and violet diamonds wrapped in white diamond seaweed.” Clients can even opt for a salesperson to fly in with selected pieces before consummating any deal.
(See pictures of jewelry by Michelle Ong.)
To generate sales, of course, Fabergé must drive customers to its site. Unlike Fabergé’s competitors, who invest heavily in advertising and search-engine optimization, Dunhill says Fabergé can rely on its compelling history and the buzz surrounding its relaunch to stimulate traffic. The curiosity is certainly there. Dozens of books have been written about Fabergé since 1917, and when Fabergé’s original works appear at auction, they routinely exceed estimates. In 2007, a pink, pearl-encrusted Fabergé egg with a clock fetched $18.5 million at Christie’s, making it the most expensive Russian art object ever sold at auction. “Despite 90 years in the wilderness, and its recent association with products for which it was never intended, the name Fabergé still evokes the world’s most famous jeweler,” Dunhill says. And that’s one luxury no amount of money can buy.
See pictures of a diamond’s journey.
See pictures of movie costumes.
ncG1vNJzZmismaKyb6%2FOpmaaqpOdtrexjm9tcXFobYNww86uo51lqaTCbq7UsmStoJmoenR%2Bj2lnaWWSp7ywr8dmpqekmaOycA%3D%3D