A matter of value

Images: Borsheims; RDI Diamonds

What factors do you consider when buying polished diamonds?

The main factors we consider are beauty, value and salability. We spend time with our sales team, focusing on their needs and the needs of their customers. We try to be anticipatory rather than reactionary. We also listen to our suppliers when they tell us a certain shape is going to be in demand or is falling out of favor, or that they envision a shortage or surplus in a certain area.

Borsheims has only one location, in Omaha, Nebraska. How does that influence your buying?

The main advantage of our single location is that the sales floor has direct access to the buying team at any time of day. For instance, if one of our buyers wants to meet with a client to discuss their specific needs, we have that ability. This really increases our collaboration and communication.

To what extent does seasonal demand affect your buying decisions?

Having more inventory for holiday seasons and special events is fundamental, but staying on top of our day-to-day requirements is just as important. We strive to have a consistent inventory on hand by constantly looking at our sales and replenishing our inventory. Customers walk in daily, so we also know that any given moment is important.

Seasonal shifts are significant to us. The Berkshire Hathaway shareholders meeting, for example, is a big selling event that takes place during the last week of April. We must be perfectly inventoried for such occasions, and still try to avoid them clouding our ability to see other mild shifts in seasonality.

How do you manage the price volatility that the market has seen recently?

Well, that is what’s so great about our single location. We are able to be nimble on this topic. If the market goes up or down, we can adjust quickly. It doesn’t affect our buying, because we know we need to replace the goods. Even if we buy and the price is a little high, this need not worry us, because we can make the adjustment, sell quickly, and later replenish at a lower cost.

When prices are low, we take the opportunity to replenish more frequently, just to stay on top of the supply that’s coming into the store. And even if we don’t find those good-value pieces, we’re not afraid to spend a little more if we know we need the goods. The main goal is to satisfy the client, and to have the right inventory on hand.

Is there a particular range of diamonds that you focus on?

I would say rounds of 0.50 to 5 carats, F to J color, and VS1 to SI2 clarity are where our focus lies. Second to that would be the fancy shapes that are trending. Right now, we’re paying close attention to ovals, emeralds and cushions. And of course, we keep an eye out for exceptionally beautiful stones that we know we can sell if we have them in stock.

What compliance and social responsibility factors do you consider when purchasing polished diamonds?

We’ve always been compliant with the Kimberley Process. Of course, the hot topic today relates to Russian goods. We’ve talked with our suppliers, and they’re all aware of the sanctions and adhere to our requirements.

We carry our Kalahari Dream Diamond collection, which gives back to the community in Botswana, and our exclusive Borsheims Signature Diamond collection is branded with diamonds that are ethically sourced in Canada. We’re very concerned about compliance and social and environmental responsibility, and quite aware of those factors in our decisions to do business with the right vendors and buy the right product.

Is it becoming more difficult to fill your inventory requirements, considering the sanctions on Russian goods?

It is harder to find the assortment we require when we are searching for a particular article. Many providers are quiet about the details on Russian goods. Apparently, there are a lot of people who don’t know what to say or how to say it. I also think there are quite a number who don’t necessarily know from whom or where their goods have come. So sometimes it’s a tough discussion.

What advice do you have for diamond buyers in the current market environment?

Continue to educate yourselves, keep open lines of communication, talk to everybody, and learn from others. Know your suppliers, know your competition. And respect your suppliers by paying them on time. That’s something that’s lost on a lot of retailers. If you pay, you get the goods.

The supplier’s view

Andrew L. Rickard, vice president of operations at RDI Diamonds, speaks to Sonia Esther Soltani about his company’s sourcing process

What do you consider the most important criteria for selecting diamonds?

Diamond selection is dependent on a number of different criteria. We most frequently look for the right combination of quality and price to provide our clients with the best value. Every diamond we purchase brings something to the table. Sometimes it’s about the cut, sometimes the color, perhaps a “bluffy” clarity. In our position, it’s impossible to stock everything, but we certainly try to!

What is your biggest challenge currently?

Supplies have become inconsistent. Quantity, quality and price are all over the place, so you really have to be patient and thorough to find what you need. We have had to reject proposed goods at a higher rate than at any other time in history for many varied reasons.

How and where do you source your diamonds?

From many sources and channels throughout the mining and production world. We have never done a significant amount of business through the Russian diamond network, so that hasn’t particularly impacted us, but it is certainly applying pressure to overall market availability.

How has the buying process changed over the years?

I would say it is harder to find and purchase consistent value. It often takes longer and requires seeing more goods to find the right values for our customer base.

Is price the driving factor?

Price is always a factor, but never the only one. Quality and sizing of goods, inventory mix, and product availability must all be factored in along with price to make purchasing decisions.

How does seasonal demand affect the buying process?

We buy consistently every month to try and avoid seasonal disruptions and shortages.

What advice would you give to independent retailers?

Make sure your team is prepared to discuss what end consumers see online, and make sure your retailers can address the challenges the industry is experiencing, from inventory shortages to grading disparities, as well as pricing. If your team is adequately prepared, it will succeed more often than fail.

Article from the Rapaport Magazine - May 2022. To subscribe click here.