Diamonds Are Strong Black Friday Sellers

Black Friday—the traditional start of the holiday shopping season—got off to a good start. Consumers were in a spending mood and in the early going it looks like sales are on track to hit the National Retail Federation’s prediction of 5 percent growth over last year.

Women’s Wear Daily reported strongest demand for toys and electronics (no surprise there), followed by handbags, diamond jewelry, cashmere, party dresses, and gift cards.

Apparel (presumably apart from cashmere and party dresses) was softer. According to the WWD article, executives at Macy’s, Lord & Taylor, Boscov’s, and Wal-Mart all cited diamond jewelry as a strong performer on Black Friday.

The article also made an interesting observation: A lot of the shopping this past weekend was for self, not gifts. Though the article didn’t break down self vs. gift purchases by category, nor did it interview any independent jewelers, it’s clear there is a demand for diamond jewelry this season. Even with a plethora of ads for the Blood Diamond movie.

Obviously, so far the ads have not prompted much, if any, hesitation among shoppers to buy diamonds. Still, that’s not a sign for jewelers to heave a sigh of relief. The movie is purportedly going to be discussed on Oprah (and we know what that means!) so jewelers certainly shouldn’t dismiss possible ramifications on diamond sales.They do need to be ready with answers if it gives customers second thoughts.

But there are other questions they’d better be ready for, too. Reading the conversation between Rob Bates and Emma Trossarelli (see “Fabrikant, GIA—A Busy Weekend, plus accompanying comments), and remembering my own recent experience overhearing two investment bankers talking about diamond prices, it sounds like even if shoppers do understand that the Sierra Leone war horrors happened in the past, they think De Beers’ control of diamond prices is very much in the present. Even if they don’t blame De Beers by name, there is a perception—helped along by the mainstream media—that diamonds have no intrinsic value beyond an arbitrary price set by the jewelry industry.

Then, when some jewelers steadfastly refuse to show prices while others hawk diamonds at enormous discounts, the perception that the price is artificial gets reinforced.

One could argue about basic economics and the law of supply and demand—or that anything is worth whatever someone’s willing to pay for it—but the fact remains that even if your house is ridiculously expensive for what it is, you still need to live somewhere. And if other factors make that particular neighborhood the place you want to live, you’ll pay whatever it costs to do so.But when a customer believes the price of a diamond is what it is just because someone in London or Johannesburg or even Main Street USA decreed it so, they don’t have to buy.

“Question Authority” is no longer just a T-shirt slogan, it’s becoming a way of life. It’s certainly a way of shopping, and woe to the retailer who doesn’t have satisfactory answers when the questions come.