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Winter 2003 Truly Charming

By now you’ve seen the charm bracelet that’s a coast-to-coast craze. From grade-schoolers to grandmas, women are spending big bucks on them, sometimes hundreds of dollars each. No one-time buy, women fill and refill these bracelets with their charms of choice—some cute, some elegant—that reflect or even spell out who the wearer is and what she loves.

The bracelets are made of stainless steel links; the individual charms are 18k gold, some of which are set with semi-precious stones and cubic zirconia. Unlike traditional charm bracelets with charms that dangle, these bracelets—known as “modular link jewelry”—are something like mosaics: think of the charms as “tiles” that the wearer sets into the bracelet. No jeweler needed, and a snap to change.

They’re “the hottest concept out there in specialty retail today,” says Limongello. Women of all ages are buying them, spending an average of $86 per visit on charms in the form of symbols, letters and words that reflect their personality and interests. In less than a year, the company sold tens of millions of dollars’ worth of charms, despite the soft economy. And that’s just the beginning, he says. He believes the company has barely scratched the surface in terms of market penetration.

Imported trend

Ever wonder where a new fashion craze like this comes from, how it gets started and how it takes off? That’s usually hard to pin down—but not this one. This one has provenance.

“I grew up in the cart/kiosk business,” says Limongello. He worked in temporary retail for more than 15 years, specializing in demonstration products such as toys and airplanes. But he found that sales were totally dependent on the demonstrator’s ability to captivate and sway the audience. “I was tired of products [for which] you have to have demonstrators.” So for several years he was on the lookout for a product that sells on its own merits rather than on a salesperson’s charisma.

In the fall of 2000 in Italy, Limongello noticed that many fashionable Italians—men and women—were wearing unusual bracelets. Turns out those bracelets were one of Europe’s hottest jewelry products, which débuted in Italy in 1988. Not having seen anything like them in the US, and recognizing them as an untapped import opportunity, Limongello brought a sample back to show Paul Cappola, his business partner. After they determined that there was only limited distribution in the US at the time, the two partners went to Italy to look into Unodomani, an Italian jewelry manufacturer. What attracted them was Unodomani’s quality craftsmanship and solid reputation. They had hoped to negotiate an exclusive distribution agreement. Instead, they came home with ownership of half the company, partnering with Mathis Riibis in Italy.

Limongello points out that their company, Unodomani USA, doesn’t just import bracelets “and stamp our name on the back,” as other companies might. Each Unodomani charm is handcrafted: the18k gold letters, words and symbols are soldered onto stainless steel links, and stones are individually set. “The bracelets are produced in Italy, but we own the molds and designs,” he says. “We also hand-set our stones and use a higher gold content than other companies do.”

Before importing the jewelry for the first time, Limongello and Cappola had to Americanize many of the charms for the domestic market. They added words like “Mom” and “Sis,” and a wide variety of images and symbols appealing to homegrown interests, from Thanksgiving to baseball and beyond. “We have a symbol for just about every activity,” says Limongello.

That done, the partners set out to introduce the bracelets to the American market, and to develop a devoted following of repeat buyers. The Italian charm-bracelet phenomenon that started in 1988 spread across Europe slowly, and reached its all-time high in Italy in 2002. That slow migration and14-year arc suggest to Limongello that it may take a while for bracelets to catch on nationwide here—but as a fashion statement, it’s here to stay. “People on either US coast are wild about the bracelets, but folks in the Midwest are just hearing about them. The northeast and California are the hottest spots right now, so we expect good longevity with these products as they reach other markets.”

Linking up

As Unodomani USA, the American side of the company (the name means “one tomorrow” in Italian, invoking a sense of harmony), Limongello and Cappola began importing bracelets in February 2002, placing them in high-traffic kiosks. “Part of our distribution strategy was getting high-profile mall locations such as the Fashion Show Mall in Las Vegas, and the Garden State Plaza in Paramus, New Jersey—top malls in large metro areas,” he says. “From there, the company expanded into a total of 10 temporary retail sites in Las Vegas, metro New York/New Jersey, Arizona and Florida.” Four of those 10 kiosks are company-owned; six are joint ventures with local retail partners.

While kiosk sales are generally based on the total number of shoppers who visit the mall each day, that rule doesn’t necessarily apply to Unodomani’s product, he says. “We’ve done well in good mall locations and bad”—which supports his contention that many shoppers come specifically for the bracelets. Sales on a typical Saturday at one of the kiosks can run $2,000-$3,000 from an inventory of 2,000-3,000 charms. On a Saturday before a holiday, the numbers can go sky-high. Open for business in February 2002, they promptly experienced tremendous sales around Valentine’s Day. “Valentine’s Day was huge for us,” says Limongello. “But then Mother’s Day was just as big.” Five locations sold more than $8,000 each on the day before Mother’s Day—despite running out of “Mom” charms. And on that same day, one of Unodomani’s wholesale accounts sold more than $17,000.

Despite the weakening economy, sales continued to thrive. Just one month later, “we couldn’t make enough graduation caps [charms] in June, and [sales] were strong through the summer.” What that proved to Limongello is that “this is a season-proof, recession-proof product. If you have the right item, the economy doesn’t matter.”

Limongello expected the bracelets to be a hit, but they’re even more popular than he had hoped. “The product just exploded while we were still working on the American charm designs,” he says. In just a few months, Unodomani USA became the second-best performing kiosk concept nationwide, and established 800 wholesale accounts within jewelry stores and gift shops, including Hallmark stores. This year, the company expects $3 million in revenue from its 10 retail units, and $22 million from its wholesale business.

Charmed

The average bracelet has 18 spots for charms, and the typical charm is priced between $16 and $40… which means a customer can spend anywhere from $288 to $720 to completely fill her bracelet. Fortunately, she has approximately 1,800 different charms to choose from, with another 100 new designs added each month. Among the most popular are individual letters for initials or spelling out a name. Also at the top of the list: “Mom” or “#1 Mom”; symbols such as crosses, Stars of David and hearts; sports images such as soccer balls and footballs; ballet slippers; seasonal and holiday symbols; and animals, especially cats and dogs. “A bracelet becomes an expression of yourself,” says Limongello.

Unlike in Italy, women are the predominant market for the bracelets in the US. “We have three demographic groups buying from us, from pre-teens to senior citizens,” he says. “There’s the soccer mom who’s 22 to 40 years old; the daughter, who’s anywhere from 9 to18 years old; and grandma, who’s over 40.” Many women first receive charms as gifts, which then inspire them to fill the rest of the bracelet themselves. A recipient is often so delighted with her gift bracelet that she later buys one or more to give someone else. “Every time someone buys a new bracelet, we get four new customers,” says Limongello. “A mother may receive one, and then she turns around and gives one to her mother, daughter, sister and friend.”

And that, of course, translates to the product’s popularity, which in turn spells sales. The company expects sales to grow 30 percent in 2003, mainly through word of mouth. “Every customer becomes a great advertiser,” Limongello says, which is why the company’s marketing costs have been proportionately low for the sales growth.

The word-of-mouth process sets the Unodomani bracelet apart from other kiosk products. “Usually kiosks feed off of people already at the mall, but not with these bracelets,” he says. “This is a ‘destination product.’ People leave the house specifically to buy charms.” In fact, increasing numbers of customers are calling local malls to ask where they can purchase an Unodomani bracelet.

While the bracelet’s quick entry into and adoption by the US market is due to a quality product with style, the company’s rise to the top is largely due to the quality of customer service on the wholesale side. “We process orders in 48 hours,” Limongello says. “Shipping quickly has enabled us to go from zero to number two in market share in such a short amount of time. Turning orders around quickly has given us a competitive advantage.”

“I’ve been looking for a product like this my whole life,” says Limongello with enthusiasm. He expects 2003 sales to top $30 million—even without adding temporary retail locations. Limongello has good reason to be optimistic. With a wide demographic of impassioned customers, a built-in customer-referral process and low marketing costs for a fun, fashionable, recession-resistant product, Unodomani USA has the market under its spell.


Marcia Layton Turner

MarciaLaytonTurner.com -- Turner writes frequently for business publications. Her work has appeared in Business Week, Business 2.0, MyBusiness and numerous trade magazines. She is also the author of Emeril! (John Wiley & Sons, 2004).

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