U.S. online jeweler Blue Nile experiments with brick and mortar

Wed Jul 30, 2014 1:46pm EDT
 
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By Jeffrey Dastin

(Reuters) - Diamond rings on display at Nordstrom's flagship Seattle store are not for sale. Shoppers can try them on, inspect the gems' quality up close, but to buy them requires a visit to Blue Nile's website.

The arrangement is a departure of sorts for Blue Nile Inc, the company that pioneered the sale of jewelry online at steep discounts. It is the first time the company has turned to brick and mortar in its 15-year history, showcasing products in two Nordstrom stores.

To be sure, the move is not a dramatic shift - it is an extended test to attract new customers to its site. But it comes at a time when most national chains have established Web identities, eroding some of Blue Nile's allure and leaving it without the benefits of a chain of physical stores.

"Now everyone is online," said Morningstar analyst Paul Swinand, shortly after dropping coverage of Blue Nile in June because his clients lacked interest. "What they do is less unique."

LACK OF NAME RECOGNITION

Analysts believe the company may have a place in the more crowded field, especially thanks to rapidly growing sales in China. But they say it must spend more to build its brand in the United States and more effectively compete with big national jewelry chains and the likes of Amazon.com.

"People recognize Kay Jewelers. People recognize Jared more than they recognize Blue Nile," said Stephens Inc analyst Rick Patel, referring to two of the biggest U.S. brands. "That's not a very easy situation to tackle."   Continued...