10 Things Rocking the Industry

1. Sales

Not many people are griping about the 2010 holiday ­season. ­Comments from ­retailers (see “Holiday 2010: Mood Up, But Not Prices”), plus ­jewelry sales reports from SpendingPulse—showing gains of up to 8.4 percent—paint a pretty picture. The economy seems to be on the mend, but that’s not the only reason sales are up. A plethora of ads from players big and small—from Zales and Helzberg Diamonds to three-store New York chain Caze­novia Jewelry (who could resist the adorable Gizmo, the canine star of their popular commercials?)—melted hearts and drove shoppers through store doors. And while most ticket prices were low (beads and ­silver sold best), Jacob & Co.’s $1 ­million ­emerald ring sale made someone’s Christmas very merry indeed.

2. Oprah

During the final season of The Oprah Winfrey Show, Oprah has given away everything from gourmet mac-and-cheese and Sound of Music DVDs to iPads to (of course!) jewelry: Dana Rebecca diamond ear pendants, limited-edition Philip Stein watches, Judith Ripka Eclipse earrings. Her latest gift: “O” necklaces featuring pink Argyle diamonds in white gold—6,000 of them. The talk-show diva announced the giveaway at the taping of Oprah’s Ultimate Australian Adventure in Sydney in December. The country’s own Rio Tinto–owned Argyle mine is supplying the stones—and no doubt reaping the rewards of being anointed by the Queen of Daytime TV.

© RIO Tinto

3. M-Commerce

Shoppers who walk into your store futzing with their phones may not be texting friends. A poll found that 30 percent of customers check their phones to find a better deal, and 40 percent use them to compare prices. Meanwhile, in the online jewelry sector (whose holiday sales rose 11 percent), more than 25 percent of Blue Nile’s traffic now comes via smartphones. And in one particularly arresting survey, consumers—by a 73 to 13 margin—said they’d rather receive sales information from their phones than from sales associates.


4. Watches

The six-year legal battle between Omega and Costco is over—but the issue rages on. Omega sued Costco in 2004 over the retailer’s sales of “gray market” timepieces (i.e., watches sold by unauthorized dealers at a discount). Unlike past battles over the secondary market, the watchmaker claimed copyright infringement: Since Omega watches all bear its icon, the company says selling them without authorization violates its rights. Costco won the first round, but Omega won the second. When the Supreme Court agreed to hear the case, many expected the decision to set a precedent. Yet the court split 4-4 (Justice Elena Kagan sat out because she had argued the case as White House solicitor general). So Omega is technically the winner, but without a definitive ruling, the question could resurface.

5. People

The industry lost a giant on Nov. 27 when Allen Brill, ­president and chief executive officer of Rolex Watch USA, died of cancer at his residence in New York City. Brill, 64, devoted just about his entire life to Rolex: He came to the company in 1978 as area sales manager; in 1999, he was promoted to executive vice president of sales; and in 2004, he became head of the U.S. division. “There is no way to measure his love for Rolex and its employees,” read a company statement. “It was his life and his home for over 30 years.” Replacing Brill is yet another company vet—Stewart Wicht, who joined Rolex in 1975. Most recently, Wicht ran Rolex’s intellectual property department in Geneva.

Oyster Perpetual Day-Date II; $55,400; Rolex, Geneva; 800-36-ROLEX; rolex.com

6. Labs

The heat (and pressure) is on at the Gemological Institute of America. The number of undisclosed high-pressure/high-temperature–treated diamonds submitted to its lab has risen dramatically: Flagged stones range from 3 carats to nearly 20 carats, in colors from D to J, mostly with high clarities. The vast ­majority were submitted without informing GIA in advance. (The lab is weighing whether to notify law enforcement or trade groups.) In any case, GIA says it’s “confident” it can identify virtually all the treated stones—but the news underscores the importance of double-checking what you buy and dealing only with people you trust.


7. Promotions

Even though “it never snows” on Christmas in Wilmington, N.C., Perry’s Emporium owner Alan Perry decided to take a chance on a seasonal snowfall promo, placing a teddy bear in his window with a sign: “My polar bear tells me it’s going to snow in Asheville on Christmas. If it does, all jewelry purchases made from Nov. 26 to Dec. 11 are free.” Six inches of snow fell in Asheville on Dec. 25. Perry and his insurance company are paying out an estimated $400,000, but the promo paid off for him as well: Sales were up 34 percent, his story made headlines around the world, and he landed on the Today show. Now he wants to boost February business with a similar stunt: “If it snows on Valentine’s Day, purchases will be free,” Perry says.

8. Diamonds

The diamond world has a new king—for now. In 2009, during the heart of the recession, De Beers, the gem business leader for decades, slashed production 49 percent to 24.6 million carats. But Russian diamond producer Alrosa continued to mine. That year, it unearthed 32 million carats, making it the largest diamond miner in the world for 2009, with a 29 percent share of the market. And while De Beers ramped things up in 2010, it still fell short: The South African giant’s 2010 production hadn’t been officially announced at press time, but a spokeswoman pegged it at 31 million. Alrosa topped that with 34.3 million. This year, De Beers watchers are forecasting a 40-million carat output to Alrosa’s 34.4 million carats—meaning the longtime leader will likely regain its crown.

Courtesy of De Beers Group

9. Advertising

It was a long time coming, and not unexpected, yet news that De Beers’ U.S. advertising account (including the Diamond Promotion Service and ­Diamond Information Center) has been dissolved dramatically upends the diamond industry. Sources tell JCK that beginning this year, De Beers’ entire U.S. marketing budget will be devoted to its Forevermark brand. De Beers has already set up a Forevermark USA office in Stamford, Conn., headed by De Beers vet Charles Stanley. At press time, the ­remaining members of the De Beers team at the JWT ad agency were ­considering ­joining that new entity. All of this spells the end for recent campaigns like Everlon (that will now be run by De Beers’ trade partners)—not to mention De Beers’ 70-year support of generic diamond jewelry advertising.

Courtesy of De Beers Group

10. Stats

“If you look at the year overall, we see evidence of a recovery, certainly ­compared to 2009,” says Dione Kenyon, president of Jewelers Board of Trade, noting that increased JBT ratings outpaced decreased ratings in 2010, for the first time in three years. She adds that while business closings were down only 3 percent year-over-year, in 2009 they shot up 51 percent. And while openings were up about 14 percent, most of those businesses were retailers; new wholesale openings sank 18 percent. “The supply sector is still licking its wounds,” Kenyon says. “But the retail sector seems to be stabilizing.”

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