It's not an easy position to be in, but as she opens Tiffany's first foray into this new market today, experts are agreeing with her—cautiously. "This is a way to get Tiffany to many parts of the country that just couldn't handle a flagship store," says Standard and Poor's analyst Marie Driscoll. "Good retail space is becoming available, so there will be nice locations for them." Some of the space opening up is being vacated by hometown, family-owned jewelers, which have had an especially tough year. Kenneth Gassman, head of the Jewelry Industry Research Institute, says that whereas 500 such establishments might close in an average year, the number in 2008 will likely be closer to 1,000.

Gassman says Tiffany's strategy may not tarnish the company's brand—as long as the company doesn't start dropping prices and trying to go mass-market.

"If they start bringing price points down, if they start carrying what we would call commodity goods, they will destroy the image they have created over the last hundred years," says Gassman, who estimates that the new stores should be able to do better than the approximate $2.5 million in annual sales of the typical high-end jeweler and the $1.5 million in annual sales of the average mass-market jeweler. "Having said all of that, the aggregate sales from these stores will not be meaningful for the first few years." Indeed, Tiffany's 2007 net sales were $2.9 billion.

Over the last two years, Canavan and her team have been creating and tweaking the design of the new stores in a New Jersey warehouse. She says the primary advantage of the more casual setup is that women will be exposed to more products than they would in the traditional store formats. "There, we merchandise our product by metal type," she says. "So a woman might come in for a pendant, and she might see that it comes in silver, buy it, and leave. She might never travel through the store to find out that it comes in yellow gold or could be adorned in diamonds." In the new stores, products will be grouped by style, and "sales stylists" will be on hand to make sure a customer sees all the available options.

One option that won't be available is the Tiffany diamond engagement ring. The absence of the brand's longtime hallmark is the most notable difference between the traditional and small-store formats. This was one of the tenets of the shopping experience Canavan dreamt up for "a fashion-forward woman—a woman of many ages—shopping for herself." In other words, a woman browsing for herself isn't in the market for a proposal-worthy rock—so why have them around?

"The truth is, we all love diamonds, so I don't think engagement rings get in the way," Canavan says. "But in this new environment, there's no distraction. They will be uninhibited. This store is there for women. There's many men in our stores and we love that, but it's going to be a place first and foremost that a woman loves to shop."

It's all very fashionista-empowering, but what about the woman who wanders in to browse engagement rings—or the man who's prepared to buy one? How does Canavan want the new concept explained to them? She pauses. "I'd want to tell them, this is a new store for Tiffany, and it's focused on our more contemporary collections. If someone says, 'I'm here to look at engagement rings—I can't believe you don't have any,' we'll say, 'No, we don't, but our Pasadena store is very close, may we have someone take you there?' We'll make sure that we have a car service at our access."

"What we won't do," Canavan says, "is apologize for not having them there."