Jewelers have to compete more ferociously in the current environment to survive, price sheet publisher Martin Rapaport declared in a seminar on “The Business Business.”

“Get ready for some serious marketing that will shake you to your boots,” he said. “Right now, Town and Country magazine is being attacked by advertising. The industry’s marketing spend will increase dramatically. The market is getting much more aggressive. You have to sharpen your pencils. You can’t sit back. You have to fight and get out there.”

He continued: “Ask yourself: How is my product different from that sold by the guy down the street? If you don’t add value to the products you sell, you are a glorified, expensive showcase. So the Internet hasn’t killed you-yet. A million other competitors will. You have to be something other than a creep flipping `certs’ that the Internet can do more effectively.”

Part of the problem, he said, is the industry’s continued reliance on memo, which he said is “like a drug.”

“Your grandfather bonded with a product,” he said. “But you sit there, and you have the same other product as 17 other stores, and none of it is yours. And then you worry about some little Jewish guy in New York underselling you, because you are fat, you are lazy, and you don’t have the guts to own your own goods.”

He also said that jewelers should be careful about their expenditures, because no one is sure where the economy is going in the months ahead.

“You jewelers believe your own B.S.,” he said. “You have to think about what you are selling and lay a strategy, lay a plan. If you don’t have the money and don’t need the goods, don’t buy them.”

Rapaport noted that a lot of the changes in the industry are being led by De Beers, which, in addition to opening up a retail chain itself, is pressuring sightholders to boost their marketing.

“De Beers controls people, and if they don’t give you rough, you die,” he said. “Whatever they want you to do, whether it’s stand on your head, or juggle matzoh balls, you’ll do. And they want more marketing.”

He noted that the thinking behind De Beers’ retail alliance with LVMH is that it will increase jewelry advertising overall. He cited the example of vodka. When Absolut began advertising, Smirnoff followed suit, and advertising and the overall market increased.

“De Beers wants the jewelry industry to kill each other in advertising,” he said. “The De Beers brand won’t kill the retailers, but it may just get everybody excited to start chasing each other’s tail. It will create a change in the weather, and if you don’t get off your butt, you’ll die.”

He said the industry should not fear the changes at De Beers but should think about how to stand on its own two feet.

“You have this big company that everyone in the industry thought was God,” he said. “But De Beers is no longer your big daddy.”

“I always figured we could make money in this business, because De Beers was owned by people who didn’t know the jewelry business,” he continued. “But the big change is that De Beers has become intelligent.”

He said that the changes at De Beers were probably inevitable. “The culture of De Beers became more about being a monopoly than making money,” he explained. “The shareholders said: `Who needs this company?’ “

He said the company is on “the slippery slope to legal legitimization.” He noted that the investigations by the European Union-on the LVMH deal and De Beers’ “Supplier of Choice” strategy-should help this along.

“De Beers has to clean house,” he said. “They must become legitimate. They do not want to become a monopoly anymore. In the future, De Beers will not be there out on their own but will stand straight in front of the world.”

Rapaport also touched upon the conflict diamond issue, predicting more NGO actions and demonstrations.

“We are going to take it on the head,” he said. “We are going to get rocked.”

But he added that the “NGOs are right” and said the industry should support a revised version of “The Clean Diamonds Act” legislation sponsored by Rep. Tony Hall (D-Ohio). “I am personally [ticked] off at the people in this industry who do not support reasonable legislation,” he said.

Rapaport is a member of the World Diamond Council, the industry body that is backing alternate legislation, although he stressed that he was speaking only for himself.

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