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Retailers Must Drive Confidence, Value, Authenticity

Lussier: Can't Make Diamonds That are Billions of Years Old

May 30, 2015 5:32 PM   By Jeff Miller
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RAPAPORT... Two separate panel discussions on the opening day of JCK Vegas were designed to  help retailers expand their view of natural colored diamonds and branded diamonds, the first of which was hosted by the Natural Colored Diamond Association (NCDIA) and the second by De Beers.

NCDIA stated that natural colored diamonds are the highest growth segment for the jewelry business and retailers can achieve  "unprecedented profit" from colored stones in its "How to Capitalize on the Growing Consumer Desire for Natural Color Diamonds" seminar.
 
Pratima Sethi of Sethi Couture said that there is no "typical customer" for natural colored diamonds, but in general, consumers are far more sophisticated about jewelry and therefore, they desire uniqueness, not mass-produced designs. To ensure future interest  in colored diamonds, she often first introduces customers to champagne diamonds and then  progresses into other colors over time.   "Jewelry is an expression of self that no one else has," she said.

Sean More of Borsheims shared that while there is not a large demand for colored diamonds, the greatest number of requests from the retailer's customers fall under the category of pink and blue diamonds. "However, there is definitely growing interest in all color," he noted. Retailers must educated customers on the differences between color ranges and price points and  "have the goods in the store. If you invest in the goods and have them to show, consumers know you are serious" about selling, he said. Still, Moore acknowledged the need to keep inventory costs down and that not all consumers can even afford natural colored diamonds in the first place. Therefore, he suggested that retailers determine their marketing and buying strategies to design their best return on investment.

On the supply side, Jordan Fine of JFine Inc. told retailers that the wholesale pipeline for colored stones is extremely competitive. In addition, the panel members agreed that it was most important to build relationships with reputable suppliers, dealers and designers and it was imperative for the entire supply chain  to disclose treatments, as it is critical to the future growth of the industry.

To further educate retailers on colored diamonds, Thomas Gelb of the NCDIA said that the organization along with the Gemological Institute of America (GIA) was in the process of developing educational programs for retailers. Meanwhile, he noted that the NCDIA does offer seminars for members throughout the year.

Confidence in the Diamond Pipeline Will Ensure Growth

Later in the day, a panel of De Beers executives discussed opportunities and challenges facing the diamond sector. In his opening speech (read full transcript), De Beers Group's CEO, Philippe Mellier, said that the U.S. demand for diamond jewelry will continue to expand, driven in large part by affluent households, the number of which is expected to expand 10 million by 2019. Furthermore, De Beers projects that tourism from China will flourish in the U.S., growing by 20 percent at a compound annual growth rate by 2019, presenting an opportunity for diamond retailers, given that Chinese tourists typically spend on luxury goods overseas.

De Beers recognizes that challenges exist across the pipeline, but in terms of what retailers face, Mellier pointed out that "consumer desire for diamonds is the only true source of value in the diamond industry, so their confidence in their purchases is vitally important to our future success." Retailers must ensure that diamonds are authentic and that they are selling value along with a diamond jewelry purchase.  
 
Due to ever-evolving technology, consumers are playing retailers off each other, using  the Internet to  identify price ranges for a diamond they may buy, he said.  "While the consumer may not appreciate the intricacies of diamonds and may not really understand the premium inherent in a stone with better proportions, for example, this is of no consolation to the retailer who wants to secure a sale," he said. The solution lies in branded offerings, which create new choices for consumers who are willing to pay more for a differentiated product. "Brands also help generate greater consumer traffic in-store as the differentiated offerings provide a new point of interest with a distinct marketing approach," he said.

Generational research by De Beers also indicated that younger consumers -- primarily millennials -- increasingly want to be "shown, rather than just told" by a retailer how a product is ethical. Mellier said that this consumer need  will increasingly drive the difference between making a sale and watching  consumers abandon diamonds for a different product.

"Forevermark also plays an important role in this area, in the way it is positioned to meet emerging needs from a new generation of consumers. With its brand promise of diamonds that are beautiful, rare and responsibly sourced, Forevermark is one of a number of young and rapidly growing brands that are well-placed to meet changing consumer desires. But we all need to do our part to bring millennials with us on our 'Diamond Dream,'" he said.

Just as De Beers invests in capital improvements, Mellier told retailers to broaden their view of how to secure growth.  De Beers takes "a long-term view" on market dynamics, earmarking billions of dollars that may not even realize returns for several years. "Alongside this, we also have activities across the value chain that  enable us, perhaps, to see a wider view of what is happening," which includes the Forevermark brand and a retail joint venture with LVMH -- De Beers Diamond Jewellers.

In response from the moderator, Rob Bates of the JCK Talks series, on how man-made diamonds effect the retail landscape, Forevermark's CEO,  Stephen Lussier, said that "consumers continue to believe in value and consumer confidence in naturals is imperative. We focus on what is special about  natural diamonds and their inherent attributes. You can't make a natural diamond that is billions of years old; it is forever. Synthetics are not rare and have no enduring value; they are two separate products and operate in different worlds."

Lussier added that branded diamond firms are popular in the U.S. because they differentiate their product and have strong marketing plans. "Diamonds are more than the 4Cs; that is what we need to develop (across the industry); even Forevermark is still learning as we go."

 

 

 


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Tags: brands, colored diamonds, De Beers, education, Forevermark, JCK, Jeff Miller, marketing, natural color diamonds, retail, seminar
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