Nat Hyman builds jewelry empire by finding good locations

ALLENTOWN (AP) — Nat Hyman is an American entrepreneurial success story, one that begins with a young man opening a single jewelry store and growing it to perhaps the most well-known costume jewelry empire in the United States.

But locally, he's known for something quite different. After engaging in a publicized dispute with the famous Donald Trump last year, Hyman today still gets kudos from strangers around the Lehigh Valley for going toe to toe with the casino and hotel mogul.

"I think if I was running for mayor back then, I would have won," he said.

The dispute was over agreements to place some Hyman stores, which mostly go by the name Landau, in Trump properties in New York and Atlantic City, N.J. Hyman claims Trump was trying to bully him out of good store locations. At the time, he said he didn't care whether it was "Donald Trump or Donald Duck," he wasn't going to "cower or run away."

Eventually, dueling lawsuits were settled out of court.

"To this day people are warm and supportive," Hyman said. "I think they respected me for standing up to him."

Nowadays, in the business's 15th anniversary year, Hyman is busy opening new stores, bringing the total to 72.

That's right. In a down economy Hyman is expanding.

The reason for expanding at this point reveals the core of his retailing philosophy: Focus on the real estate. Namely, get the prime location in the most posh retail venues.

Locations include Trump Tower and the Waldorf Astoria in New York, the Taj Mahal and Tropicana casinos in Atlantic City, the Forum Shops at Caesars Palace in Las Vegas and Copley Place in Boston. Offshore locations include an exclusive retail center in San Juan, Puerto Rico, and on Bond Street in London.

"He is absolutely focused on putting his operation in not only the best locations in the country, but the best places within those locations," said Marshall Felenstein, partner in retail real estate consulting firm Felenstein, Was and Associates of New York.

"He's very demanding, and he doesn't settle for a lot of second-best," said Felenstein, who figures he's helped Hyman negotiate about 50 real estate deals over the past five years.

"He wants the cream."

And right now, real estate cream in retail is cheaper than it was during the go-go days of the late 1990s. So it's a typical contrarian tack of buying when everybody else is selling.

His philosophy of securing the prime location started in 1987, when at age 24 he left the Lehigh Valley to open his first store in Palm Beach, Fla. Even then he didn't want only to be in a tony retail venue, he wanted the best storefront in the place.

His mother gave him the idea to sell high-end costume jewelry and helped choose what to sell.

Hyman confides he didn't really know anything about costume jewelry and didn't have a preference for what he sold, only where he sold it.

He couldn't afford a lot of merchandise at first. The store had about 85 pieces, compared with about 1,300 in a store today.

He worked in the store about 18 hours a day, seven days a week for seven years, he said. One reason for the long hours was a strategy of staying open late, sometimes until 1 a.m.

Patrons of a nice restaurant next door often left a little tipsy and feeling good. All the other stores around were closed, so revelers gravitated toward Hyman's jewelry store and made impulse purchases of costume jewelry, he said. His small apartment with a mattress on the floor and milk crates for furniture didn't bother him. He felt he was making strides toward his dream of creating a chain of stores.

The chain started with a second store in Boca Raton, Fla., where he agreed to buy a storefront in a luxury mall even though he had no money. He talked the owners into an eight-year repayment plan.

Eventually, Hyman moved back to Allentown, where he was born and raised. He opened a store locally, called NLH in the Village West Shopping Center in South Whitehall Township. Even though it's the only store not in a swanky location, it does well, he said.

Today, his stores do about $65 million a year in sales.

"He pushes himself to do the right thing, and he expects that the people who work with him will do much the same," Felenstein said.

"Of all the guys who started out in this business over the past 15 years, he has clearly risen to the top."

Getting the primo retail locations isn't cheap, but it's a strategy that works, Hyman said. And because costume jewelry is often an impulse purchase, Landau doesn't advertise, instead using its location as his main marketing tool.

The Hyman headquarters in downtown Allentown are in a three-story, 36,000-square-foot former textile mill. The company moved there in March from another downtown location.

It's a very different atmosphere than the glitter and glass of his retail stores. But Hyman said he prefers old buildings, and doesn't need fancy headquarters because no customers visit there.

And he feels a loyalty to Allentown, which is one reason he doesn't move. "I love it here," he said. "I'm a big advocate of the Lehigh Valley."

The headquarters is part warehouse and distribution, part back-office operations. For example, all inventory, mostly jewelry, is hand-inspected and shipped to stores, while another area handles sales data from all the stores.

Hyman makes a point of dispelling a common misconception about his main product, costume jewelry, which has look-alike stones, such as cubic zirconia instead of diamonds, and metal plating rather than pure precious metals.

Years ago costume jewelry might have been considered tacky. But Hyman says his customers are mostly wealthy, sophisticated, educated people who think the price of real diamonds, gold or pearls simply isn't worth it. They regard nice-looking jewelry as an accessory, similar to a nice handbag or scarf, not as a reflection of their self-worth.

He tells the story of a woman in Florida who would come into his shop regularly and buy thousands of dollars worth of costume jewelry. He finally asked her about it. She said that on each anniversary, her husband gave her $1 million to spend on jewelry for the year, and the money went further on look-alikes at Landau than precious stones and metals at Cartier.

Today's costume jewelry looks just as good, and even jewelers wouldn't know the difference with the naked eye, he said. And it costs a fraction of the price. A diamond bracelet that goes for $10,000 could be had as a knockoff at a Landau store for about $300.

"Our costume jewelry is so good that anybody who tells you they can tell the difference without a jeweler's loop is lying," Hyman said.

Jewelry includes such huge markups that it might take generations for it to appreciate at all, so those who call such a purchase an investment are deluding themselves, he said. And with faux jewels, you don't have to worry about insurance on the pieces and keeping them in a safe.

Still, some people will always pooh-pooh fake jewels.

"They look at costume jewelry like it's an indictment on their ego," he said. "To me, that's silly."

In Hyman's modest office, which eight months after moving in still has unpacked boxes on the floor, a piece of paper is taped near his computer. It's a long to-do list.

He feels like he doesn't have things running as smoothly as they should.

"Organizationally, I've fallen down quite a bit," he said. "After 15 years, we should operate more efficiently."

He needs to revamp the coding system for merchandise and try to get his jewelry on home shopping TV programs, for example.

Among his tasks is to develop an appreciation program for employees, about 320 in all and 40 of whom work in the Allentown headquarters. He doesn't just pay lip service about how employees are his most important asset. He has solid evidence that shows a good manager in one of his stores can triple sales.

While Hyman spends a lot of time on his stores' real estate and the merchandise that goes in them, he knows revenue ultimately comes from what he counts as the third pillar of his success.

"People are everything," he said.