RAPAPORT... "Your future success is going to depend on your ability to think, specifically to outthink your competition,” stated Martin Rapaport, chairman of the Rapaport Group. “You can’t keep polishing your showcase and think everything is going to be fine. But you can think your way above a recession,” he contended.
Because of the economic crisis, the U.S. is “transitioning to a new socio-economic reality,” Rapaport stressed. He sees generational and fundamental changes in the way people relate to money and their value systems, which he says will last for the next 30 to 40 years.
“It may look bad in the short term but actually it’s very healthy,” Rapaport explained. “A new reality means that we can go back to something real and no longer use all kinds of phony-baloney, subprime concepts.”
Rapaport urged everyone in the industry to identify the emotional needs of diamond consumers. “The new ultimate luxury today is emotional and financial security. That’s what people want. If you can get your product into that window, you’re a winner.”
When a man gives a woman a valuable diamond, “what a statement he is making — that he prioritizes her and she has something if the world gets wacko,” Rapaport observed. He attested that, despite all the things that De Beers has done for the marketing of diamonds, the real diamond dream predates De Beers. The real diamond dream of emotional and financial security is “the essence of what this business always was and always will be,” according to Rapaport. “If you package those things together, you cannot miss.”
“Recessions are not bad if you know how to take advantage of them,” Rapaport said. He urged the group to ask themselves “How am I going to take advantage of the fact that all my competitors are hiding under their beds?” Those who have “some guts and brains and direction” will be thriving in a few years when the business is booming again, he reasoned.
Rapaport had strong warnings about interest rates. “If you guys think that interest rates are going to stay at zero very long, you’re nuts. It’s just as unsustainable as giving all those people all that money for their houses. Don’t get scared. Just keep your eyes open and get out of debt as fast as you can.”
Recognizing the problem of high rough prices, Rapaport explained, “The diamond trade has been conditioned to continuously push prices higher and rely on higher prices to create inventory profits. That’s been going on for 50 years. It’s very hard to get that out of the system and that’s why today we see unsustainable rough prices.”
The future of the industry belongs to “free, fair, transparent, efficient, competitive diamond markets,” Rapaport declared. He asserted that in a free market, the trade must find ways to profit whether prices go up or down. “Do you think that McDonald’s only makes money when beef goes up in price?” he asked the room. “Your inventory, it’s between your ears,” he concluded.
Article from the Rapaport Magazine - October 2009. To subscribe click here.