RAPAPORT... Speaking to an estimated 200 diamantaires in Antwerp on November 18, Martin Rapaport, chairman of the Rapaport Group, addressed the current economic situation and the opportunities it presents for the industry. “When there’s a crisis, there are always opportunities, right?” he asked. “But this isn’t a crisis we’re dealing with; it’s a fundamental change of values we’re going through now. When you’ve got a flat tire, that’s a crisis. You do all you need to get things back to normal and then you go on with your life. But this is different. There’s no going back to what it used to be. So how do we manage to adapt? And if this isn’t a crisis, are there still real opportunities out there?”
External economic forces that are beyond our control are impacting the world in general and the diamond and jewelry industry in particular, according to Rapaport. There seems to be a fundamental shift in social, economic, political and generational values. The idea of values is essential to understand at this stage. There’s a reason Barack Obama’s electoral speeches referred to what he called “a new generation of Americans.” What has happened confirms that, Rapaport explained, “people are not going to buy diamonds the same way they did in the past.”
Hit By a Virus“The events that started spreading their effect beginning in September 2008 are like a virus that hit the richest people,” Rapaport told the audience. “Everybody lost between 30 percent and 50 percent of their wealth. So you have a lot of people who were used to believing that they were all set, that they could rest on their laurels and who ended up overnight half as rich. Do you really think their purchasing habits could remain the same? In addition to the rich people, other social groups also have been affected. Even the DINKS — double income, no kids — who are traditionally more inclined to spend can’t avoid the problems. With the increasing layoffs currently occurring and the many more expected, we’ve come to a stage where everybody has a friend or coworker who lost his job. In such a circumstance, it’s rather difficult for anyone to really consider buying a diamond — not to mention that those same people are well aware that the same thing could happen to them at any minute.”
The Change Curve that the industry is going through was described by Rapaport as follows: a shock followed by denial, then blame, followed in succession by anger, uncertainty and acceptance phases. Acceptance seems to be the stage we’re in currently and Rapaport suggested the next and final phase of the curve should be “planning and action. That’s where our industry is really going to show to what extent it is able to rethink itself.
“People are not going to buy things anymore without taking into account what’s happening around them. The mentality has been jolted. This, added to the fact that America is stuffed with stones, means that its ability to absorb diamonds will stay low for a long time. The good news is that this whole radical process acted as giant therapy on the world and that everybody, small as well as big guys, went through it.”
“Even the big companies who were controlling us are burnt,” said Rapaport. “It’s one of g-d’s ways of reshuffling the deck. The game is now open again to everyone. You can’t advertise, produce or sell your way out of a recession, but you can think your way above one. Smart people won’t just survive the recession, they will reposition themselves as winners.” More than ever, Rapaport said, the big question essential to your business is “Are you adding value to the world today?”
“What does ‘adding value’ mean today? In a period when people are beginning to think in terms of ‘we’ rather than ‘me,’ nobody really knows. That’s where everybody’s equal — we’re all equal when it comes to facing the challenge of determining what exactly is and will be adding value to the industry.”
Know your customerRapaport said it is time to “Stop just selling. The time has come to transcend your product and to figure out what exactly it is that your customer wants. What’s your customer thinking? Sometimes your customer doesn’t really know what he really wants, but even then you have to guess what it is.”
In an attempt to answer this difficult question, Rapaport suggested a few directions. “Marriage rates are up — people want to have something to hold on to. People are caring more and more about the nature and the strength of their relationships, whatever they may be. They’re beginning to understand that relationships are the only things that last. So, do you love your customers? The ‘new reality’ is not just about money; it’s about values. What’s the new luxury today? Neither cars, nor boats, houses or diamonds. Security is the new luxury, and not only financial security, but emotional security foremost. Today people feel poor and attacked by uncontrollable and unpredictable forces. The more you manage to find answers to this feeling, the better you’ll do. It’s not for nothing that in India, the buy-back guarantee has enabled the retail sector to boost sales. They’re not just selling diamonds, they’re selling security and trust.”
“If money was once for spending,” concluded Rapaport, “it’s now for saving. By the way, marketing is not about creating needs, but identifying existing needs. We’re back to the caveman period. We must manage to marry the ideas of emotional gifting and financial security. That’s the ultimate generic diamond brand…. The good news is that everybody can play!”
Article from the Rapaport Magazine - December 2009. To subscribe click here.