Can Moissanite Regain Its Mojo?
When moissanite was first introduced, about ten years ago, I was among the skeptics. It was billed as a diamond-imitation, but it wasn’t as cheap as a cubic zirconia, and didn’t have the cache of being an actual diamond, like lab-grown diamonds. It wasn’t even a natural stone.
But moissanite surprised me, and many others. It reinvented itself as a fashion item aimed at female self-purchasers that didn’t rely on its resemblance to diamonds. In 2004, JC Penney picked it up, followed by big names like Helzberg’s and Finlay, and sales soared. It was touted as a success story.
And now it’s a few years later, and we are looking at a troubled company. Its CEO has resigned, it’s in a legal fight with a former manufacturer of its product, sales are down, and it faces delisting from NASDAQ. (Here is a good summary of the company’s current options.)
What went wrong? After talking to people and reading quite a bit, here is some of the main chatter:
- Moissanite’s growth spurt led to some over-optimistic projections. Production increased too rapidly. This became a particular problem when some majors who tested moissanite decided not to go with it.
- The marketing, while sometimes effective, was inconsistent. Moissanite still has low public awareness.
- Some think moissanite may have done well being sold direct to the consumer online.
- It was a fashion item. And, like most fashion items, it ran its course.
And now, moissanite is trying to turn itself around again. The company has called in consultants and is trying to rechart its course. The problem– and this goes for all the troubled companies we discuss here – is this is a particularly bad time for any company to turn itself around.
In this environment, the best hope may be if moissanite is sold as a value product, at lower price points (a big issue – many people say it’s too expensive.) What do you think?
Rob Bates commented:
I was going to write this up as a part two blog post, but since we
have some good comments here, I figure I'd leave it here. Since I
wrote my post, I've also heard the following points, regarding
moissanite:
- It was sold as a self-purchase item. Which is fine, but a lot of
people feel the company stressed self-purchase customers too much,
and should also have looked to the gift market.
- Its main business became the big chains, and we all know how well
they are doing. They are also the toughest in terms of demanding
things from companies.
- Moissanite, whatever its benefits, isn't a staple. And in tough
times, retailers cut back on things that are not staples.
By the way, just about everyone I spoke to think moissanite is a
worthy product with a place in the market. But it's also a victim
of the forces that are hurting everyone else. (By the way, to put
comments, you have to type the verification letters in all caps.
Don't ask me why.)
Deirdre A. Lehner commented:
There is some truth to all of these comments, but I think that the
problem stems from the fact that Charles and Colvard did not take
the opportunity to hire their own designers that would come up with
unique and fresh designs. They didn't understand the jewelry
industry well enough to take matters into their own hands.
Therefore,they went the route that most stone sellers do--they
looked for companies that would mount their stones and then sell
them that way. I believe that had they hired some good consultants
to lead them by the hand and show them the "
Marvin Bankoff commented:
I think that the CEO of Colvard is a genius. It's amazing it was
able to stay in business for 10 years selling a diamond substitute
that was so expensive when one could purchase well cut cubic
zirconia at a fraction of the price. So what if it wasn't as hard.
You could probably replace the stone about 80 times over if it
degrades. After all the customer is wearing it not using it to
drill hard surfaces.
Design Guy commented:
While I think everyone here is making some great comments and good
observations...I think a part of the problem (from what I know) is
that Moissanite is more expensive than diamonds in the small, melee
sizes. I had heard from a manufacturer of the Moissanite product
that the centers were Moissanite, while the melee was genuine
diamonds. If this is correct, then it will be hard pressed to
compete against the more popularly priced "
Hedda Schupak commented:
To D Deans' point--white sapphire never had the brilliance and
sparkle that moissanite does, so perhaps it went out of fashion
because it was just fundamentally unappealing? Being sapphire, it
had the cachet of being "precious," but the material I saw never
was all that attractive. D, you're right that retailers need to
focus on mounting moissanite in less-costly metals, either the new
metals on the market, or in sterling silver. I still believe that
if the finished product is attractive it will sell--maybe not in Q4
2009, but when things pick up again it will--but it needs to be
positioned (and priced) for what it is: bridge. And future product
designs need to make good use of smaller stones.
D Deans commented:
Some white stones do fall out of fashion; white sapphire comes to
mind. Moissanite's appeal has always been to middle class consumers
who cannot afford the same look in quality diamond merchandise, but
would not think of owning CZ (or 'better' CZ) merchandise. With the
rise in precious metal pricing, the incentive for purchasing
moissanite has been lost: karat gold jewelry with moissanite is no
longer affordable/desirable. Retailers wishing to maintain this
revenue stream would be better served by mounting their moissanite
into the new metals on the market; perhaps karat platinum, mixed
sterling/gold mountings, or paladium. It still remains that Rob may
be right and that the moissanite fad has run its course.
Hedda Schupak commented:
While Rob is right about fashion trends coming and going, I don't
think that's the problem. We're talking about the company that
makes the stones, not the settings. With a basic white stone, it's
never out of fashion--it's the setting that makes it fashionable or
unfashionable. I think moissanite has a good future if it can
compete in the space where Swarovski crystals and better CZ's are.
Rob is right in that it should come down in price. It doesn't have
to be a Wal-Mart level product, but it does have to recognize what
space it really belongs in, and that's fashion and bridge jewelry.
That said, with the prices of fine materials where they are, more
jewelers are adding fashion and bridge, so there's opportunity. The
other issue I saw is that moissanite looks best in smaller sizes
but I saw a lot of designs using big stones, and they just weren't
as appealing as they could be. With a design re-think and proper
positioning, I think the category still has legs.
