In part two of her report on De Beers’ Forevermark initiative,
guest blogger Randi Molofsky, a longtime jewelry editor and author
of A Girl’s
Guide to Buying Diamonds, looks at what retailers stand to gain from
the program:

A few weeks ago, I wrote about
a
trip I took to London and Antwerp in mid-May to learn more about the
Forevermark, De Beers’ new inscribed brand of diamond, sold only through
authorized retailers. The facilities and the training sessions were impeccable,
but I couldn’t help feeling that I had been skewed toward the De Beers way of
thinking. Yes, the company’s labs are impressive (and address many of the certification
issues brought up by JCK senior
editor Rob Bates in this blog post), but what do retailers
actually have to gain by taking on the Forevermark?

There’s an exact answer to that
question, according to Charles Stanley, president of Forevermark U.S.: about 10
percent in margin. “There really is no trick here,” Stanley says. “It’s a
simple business model that builds value and allows you to sell your core
diamond product at extra margin points.” He contends that in-market experience
from Asia points to a 10 percent to 15 percent premium that is more than achievable
here in the States. “From the consumer standpoint, this is an infrequent
purchase,” he explains. “It gives them a clear and easy choice and takes away a
lot of the angst involved in a major investment.”

Stanley points to three reasons
why De Beers can actually command the markup: history, technology, and access.
The years of support De Beers has given the diamond industry through
advertising dollars is invaluable and no doubt continues to influence this
generation of buyers. New proprietary technology at the Forevermark lab,
including a color grading machine, means that De Beers is continuing to spend
money to make the industry a safer place for diamond buyers. Finally, a
practiced understanding of how to capitalize on advertising, red carpet
placement, and celebrity endorsement means that the project was blessed before
it even began.

What’s more, De Beers seems to be
embracing transparency more than ever. Forevermark CEO Stephen Lussier acknowledges
that treatments, enhancements, and synthetics are becoming more of a threat
every day. “A big part of our plan going forward is investing in the science of
diamonds, and we feel we must do this for consumer confidence,” Lussier
explains.

Does it all sound too good to be
true? For many retailers, it will be. Before the start of the JCK show in Las
Vegas earlier this month, De Beers had identified only 11 retail partners who
are actively buying Forevermark goods. Although a sales team is currently reaching
out to retailers who they feel meet the profile to sell ultra-premium diamonds,
the club is still invitation-only.

Aiming for a fourth quarter 2011
launch, the product strategy remains focused on the core categories: bridal, solitaire,
and classic. Design-neutral jewels will be shown in advertising, and each
retailer will work with its chosen diamantaires to place Forevermark stones in
its best-selling products, whether private-label or for inclusion in
semi-mounts.

For those retailers who are invited
in, the coveted De Beers ad dollars that come with being a Forevermark partner
are tough to turn down. “We are offering the advantage of a margin premium and
a national advertising campaign,” Stanley says. “Who else will be supporting
you in the core diamond category?”

Who else, indeed?

Rob Bates

JCK News Director