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HRD Antwerp Targeting Jewelers to Spur Growth
Q&A with Serge Couvreur - CEO of HRD Antwerp
Jul 6, 2014 2:51 AM
By Rapaport News
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RAPAPORT... HRD Antwerp is an international gemstone grading laboratory based in Belgium with additional labs in Mumbai and Turkey. Since being hired as CEO in 2013, Serge Couvreur has undertaken to rebrand HRD in the consumer space to complement its historic strength in research and equipment. Couvreur recently spoke with Rapaport News about the company’s growth strategy, challenges and expansion plans:
Rapaport News: What is your background and how did you come to be CEO of HRD?
SC: I have a degree in marketing and commercial management. After my studies I worked for 12 years in the entertainment industry. Initially, I worked as a distributor for Warner Brothers in the Benelux market and then became managing director at the Polygram record label. I subsequently worked for the Kinepolis Group, which runs movie theaters in Europe. Then I moved into retail within the music and movie sector, which has proven to be very useful experience for my current job at HRD.
I came to HRD in March 2013 during a time of major change – all media had gone digital and most jobs in the music and film industry had disappeared.
By chance I heard that HRD Antwerp was searching for a new CEO. I grew up in Antwerp so I naturally knew people connected to diamonds. My father worked for a diamond company between 1973 and 1981 and had dealt with HRD grading reports.
I think they chose me because they were looking for someone with strong sales and marketing skills, which were lacking at the company. Previously, we focused mainly on technology but we have since broadened our outlook to be much more customer oriented, which required a change of mentality.
Rapaport News: What is the function and structure of HRD Antwerp?
SC: In 2007 the Hoge Raad voor Diamant (HRD), which is Dutch for the Diamond High Council, was split into the Antwerp World Diamond Centre (AWDC) and HRD Antwerp Institute of Gemmology. Today, the AWDC – Belgium’s industry umbrella organization – owns 99 percent of HRD Antwerp. While the AWDC is managed as a non-profit organization, HRD Antwerp is a corporate entity that should make a profit and must pay taxes. However, in spirit we act more like a non-profit. We don't have a shareholder focused on short term, so our profit can be fully re-invested to support growth.
HRD’s mission is to enhance consumer confidence in diamonds and jewelry based on scientific expertise and know-how through certification, education and equipment.
My mission is to ensure that when consumers around the world buy a diamond or jewelry with an HRD report, they know it is trustworthy and reliable. We fight every day for consumer confidence and to make sure that we are not swayed by people that want to influence grading results. Essentially, our reports are based on a scientific rather than commercial approach.
Rapaport News: Do you feel that confidence in diamonds and grading reports has been eroded by the differences in grading standards at the various labs?
SC: I am very surprised by the many strange things I see in the world of grading laboratories. A grading report should be made as easy to understand as possible for consumers. Consequently, one would expect that industry stakeholders would form a body to decide on a universally-accepted standard. The International Diamond Council (IDC) was created years ago to ensure that all labs were working with the same transparent standards, but its standards have not been universally implemented.
There are some smaller, more local-level labs that follow IDC standards, but the only international, world-renowned lab that follows these rules is HRD Antwerp.
We have to understand how these different grading standards between the labs developed. Some labs found that the quickest and easiest way to make a nice profit was to give better grades and results than were warranted, which benefited various parties but not the end-consumer.
To create the highest level of consumer confidence, all the important labs should sit together and agree on the same standards. That would create a level-playing field so that each lab would gain or lose market share just by utilizing elements that are part of the marketing mix, such as how you treat a customer, your turnaround time and the different services you offer.
Rapaport News: Is the issue of undisclosed synthetics the biggest challenge facing the labs today?
SC: Synthetics are not a problem as long as they are disclosed. However, we have to consider that not all lab-grown diamonds will be disclosed. Therefore, it is a very important task for labs to screen and detect diamonds so consumers can be confident that their diamond is natural. That task is not a problem for a lab with the right equipment and the right knowledge.
Screening a diamond means you tell the owner whether it is natural or not. Detection goes a step further to tell the owner whether the diamond is a Type IIa or not and if it might be synthetic. In that case, you have them bring the stone to a lab where the stone can be examined in greater detail.
The biggest challenge in this regard is in detecting lab-grown melee diamonds. Many in the industry are working hard to solve that problem. The HRD equipment department, for instance, will present a prototype of the M-Screen machine for detecting synthetics in parcels of melee by the end of the year.
Our machine will allow the user to avoid the need to send goods to the lab and will screen the whole parcel of melee at once, rather than each stone individually. We’re confident it will be accurate from at least one pointers [0.01 carats], which is a problem with other machines right now. All the machines currently on the market are accurate beginning from five to six pointers.
We want to ensure that the M-Screen is affordable for the market, that it will be fast and have the ability to screen and accurately detect synthetics. Too many rushed to put machines on the market and now they have equipment that does not work properly.
Rapaport News: What has driven the boom in grading reports in recent years?
SC: Diamond demand as a whole is growing because there is a tremendous rise in the middle class in emerging economies like China, India, Brazil and Russia. A new vast group of people is coming to a financial position where they can afford to buy a diamond.
Simultaneously, the world is becoming more and more transparent for the end-consumer, which is why labs are so successful nowadays. The end-consumer is much more informed and they know it is recommended to buy diamonds with a reliable grading report from an impartial, third-party lab.
Rapaport News: Has HRD capitalized on that growth? Has your intake increased in tandem with the market?
SC: We definitely grew in the past year but we are still running a bit behind the other important labs. We are behind in terms of our geographic presence, but not in terms of our reputation.
I am convinced that we should have begun expanding much earlier than 2012 when we opened our first loose diamond lab in Mumbai. But since then we have hired new teams to focus on sales and marketing. We are working hard to re-position and redesign our brand, and we’re implementing a much more customer-oriented approach.
For years, HRD worked top-down with manufacturers, diamond traders, jewelers and then consumers – in that order. I changed that strategy and now I am working bottom-up. Our primary focus is at the jewelry retail level.
A jeweler’s core business is diamonds and we want them to buy loose diamonds with HRD grading reports. Through jewelers, we will effectively reach the end-consumers. This is the strategy that I am implementing now and it is already proving to be quite successful.
Rapaport News: Which geographical regions is the HRD targeting?
SC: We’re targeting any area where you have retail jewelry chains with a large number of stores. More specifically, we are focusing on China, India, the Middle East and Far East regions. HRD has never focused on the U.S., but that is my next challenge. We feel that we have a very strong story to tell jewelers and I’m quite convinced that it will not take too long before we convince U.S. jewelry retailers to create a partnership with us.
We have a lab in Antwerp and Mumbai, and a jewelry lab in Turkey. My strategy now is to consolidate and build up the business to get more volume out of our operations before we establish new labs.
Rapaport News: So there is no plan to open labs in Surat, Israel or anywhere else?
SC: We opened an office in Surat that serves as a showroom to promote all HRD equipment, and provides a drop-off window for diamond traders and manufacturers, who do not have an office in Mumbai, to send their goods for certification. In addition, very soon our Surat-based customers will be given the option of sending their goods to our labs through the Rapaport Laboratory Services’ drop-off window.
Our intention is to make our labs more accessible through these drop-off windows. We are proud of this partnership and believe that it shows how strongly Martin Rapaport and his team believe in HRD.
Rapaport News: What trends are you seeing in the diamond market in terms of the type of diamonds that have been coming into the HRD labs?
SC: The new middle class in emerging markets is starting to buy diamonds, but mainly smaller stones. So there has definitely been an increase in 30 pointers to 50 pointers. In terms of global market trends, we think that people will start to ask for grading reports for 15 pointers to 20 pointers.
As a lab we traditionally focused on bigger stones, but we want to attract more volume and we are working hard to gain market share. In the back office we are working hard to improve our supply chain and product flow. I believe that with increased efficiency it will be feasible for us to grade much smaller stones.
Rapaport News: Where do you see HRD Antwerp in five to 10 years?
SC: The Gemological Institute of America (GIA) will remain number one because they have done very well and have strong marketing. However, in five years, HRD will be strongly positioned as number two in the market and HRD will be known as the most consistent and high-quality lab in terms of its grading. It is very important to maintain our high-end position. We don't like the quick and dirty approach because diamonds are much too precious and valuable to be treated that way. Diamonds deserve respect.
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