Spotlight-Stories in the Stones-August 2011
In 1933, millionaire Henry Graves, Jr., commissioned a one-of-a-kind, multiple-function watch; 66 years later, it was sold at auction for $11 million. Thanks to a Burnsville-based company, you can get it for $149.
Not the original watch, of course, but a replica that Minnesota firm Stauer calls the Graves ’33. It’s now the bestseller among all the watches that Stauer sells, nearly all of which are replicas of existing timepieces.
“Anything that’s been around for 75 years is considered fair game or considered open market,” Stauer president Mike Bisceglia says. “We’re also very big believers that some of the best watches ever made were made in the 1910s and 1920s. That was really the Golden Age of watches. And that matches perfectly well with us.”
According to IBM Coremetrics, online jewelry sales were up 17.6 percent on “Black Friday” of 2010, compared with same day a year before; that’s expected to go up in 2011. Stauer certainly felt the shift, as its sales increased 45 percent during the 2010 holiday season over the 2009 season; in its first three years, it was the fastest-growing watch company in the U.S. Founded in 2002, Stauer now brings in $200 million in revenues.
“Through the financial downturn, when everyone else was really suffering, especially in 2008 and 2009, our business was up double digits both years,” Bisceglia says
Bisceglia credits Stauer’s success through the recession to quick response time: “As soon as we saw the market was turning down, we got much more aggressive on prices, we got much more aggressive on our promotions, [while] a lot of other retailers and direct-marketers sort of stuck their head in the sand and tried to do less advertising.”
So who buys replicas? As Stauer has discovered, a lot of people. About 65 percent of its customers are men, mostly Baby Boomers, who are either buying for themselves or (more likely) for the chief woman in their lives. According to Bisceglia, these guys don’t like shopping at malls or your typical jewelry stores (though that’s where they usually go), because men don’t like shopping generally (though they like giving gifts to their ladies). Men also don’t like the selection at most jewelers, Bisceglia says. Stauer’s sweet spot: jewelry items with “stories” behind them, like the Graves ’33 watch, but selling at much lower prices than the original.
“Our average customers tend to be married for a long time, living in the same place for a long time,” Bisceglia says. “There are a lot of companies out there that sell engagement rings. We’re selling the 25th anniversary ring, the 50th anniversary ring.”
Stauer itself is coming up on its 10th year in business. It is now owned by Burnsville-based AMS Holding, which also operates a direct-marketing coin sales business. Bisceglia repositioned Stauer in 2005 to emphasize replica jewelry. Two years ago, Minneapolis venture capital firm Stone Arch Capital came on board to help finance the merger of Stauer with AMS.
Stauer now offers some 1,800 different items. The business is currently 50 percent jewelry and 30 percent watches; the remaining 20 percent includes leather goods and eyewear. The top 100 items are where Stauer butters its bread. Its Graves ’33 watch, boasting 27 lab-created rubies, has sold more than 200,000 units. On the jewelry side, more than 100,000 three-stone DiamondAura anniversary rings have sold. (DiamondAura is a lab-created gem that the company says is hard enough to cut glass.)
In 2009 and 2010, Stauer says that it sold more than 8 million carats of emeralds. Its gemstone jewelry is strongest in large-carat, medium-grade precious gemstones—mainly emeralds, rubies, sapphires, and tanzanite, stones the company buys in sizes up to 50 carats. There’s also a wide variety of lab-created and semi-precious gemstone jewelry. Stauer says that it sources its inventory from all over the world, buying Murano glass from Italy, high-end gold from Istanbul, fine silver from Thailand, and emeralds from Brazil.
A few years ago, Stauer produced a replica of Princess Diana’s sapphire wedding ring. So the day Prince William proposed to Kate Middleton last fall, Stauer sent an e-mail to its best customers to gauge interest in a Kate engagement ring. The media told the story, and Stauer sold thousands of its lab-created sapphire replica ring—for $99 apiece.