10 Things Rocking the Industry

1. De Beers

De Beers recently opened e-auctions conducted by subsidiary Diamdel to its clients—a major change, leading to speculation that the diamond giant plans to tender a larger part of its production. (Previously, the electronic rough sales were aimed only at non-sightholders.) Analysts predict the sales will become much more lucrative—despite the company’s insistence that the “overwhelming majority” of its stones will continue to be sold at the sights. “We are absolutely committed 100 percent to the Supplier of Choice process,” says Mahiar Borhanjoo, the Diamond Trading Co.’s director of sales and sightholder services. Yet De Beers must be weighing comparisons like one recently made by The Wall Street Journal. The newspaper noted that miner BHP Billiton’s diamond unit, which sells through a tender system, made $500 million in fiscal year 2009; that same period, De Beers posted a loss. And De Beers produces far more diamonds.

2. Legislation

The small-business aid bill signed by President
Obama on Sept. 27 will ­establish a $30 billion lending fund for small
businesses and provide $12 billion in tax breaks to encourage companies
to invest and hire. Extending the Small Business Administration Recovery
Act, the law also allows immediate write-offs of $500,000 in new
equipment, enables entrepreneurs to deduct the first $10,000 of startup
costs, reduces ­capital gains taxes to zero on certain small-business
investments, and makes health insurance 100 percent tax-deductible for
the self-employed.


3. Openings

Ralph Lauren, the king of American fashion, has launched a new flagship store just for the ladies at 888 Madison Avenue in New York City. Inside, patrons can shop Lauren’s luxury offerings for women, which include his eponymous line of fine jewelry and watches in a “richly exclusive” bespoke salon the brand is promoting as an integral part of its lifestyle concept (karat gold ponies, pearl strands, and all). Men’s merchandise will now be located across the street, in the original Madison Avenue flagship at No. 867, the Rhinelander Mansion.


4. Lawsuits

Jewelry designer Chris Aire is suing 17 watch brands and others over the term Red Gold, which Aire says is a trademark owned by his parent company, Solid 21. Named in the suit: Rolex; LVMH on behalf of Hub­lot and Louis Vuitton; Breitling; Richemont International SA on behalf of Baume & Mercier, International Watch Company, Montblanc; Ulysse Nardin, Inc.; Montres Corum Sàrl; Swatch Group on behalf of Blancpain, Omega SA; Franck Muller; Cho­pard; Makur Design, Inc.; Graham-London; Kobold Watch Co. LLC; Pierre Kunz USA Inc.; Ebel; Bulgari on behalf of Ger­ald Genta and John/Jane Does 1–200. “This is a classic David versus Goliath,” said Aire in a statement. “This brand is pro­pri­etary to us. We’ve worked ex­­tremely hard to make it famous.”

 Custom large Red Gold® Dog Tags with round brilliant diamond border; $12,400; Chris Aire Fine Jewelry & Timepieces, Los Angeles; 877-500-AIRE; chrisaire.com


5. Reports

Jewelers of America’s recently released Cost of Doing Business ­Survey ­evaluates how various segments of the industry performed in 2009. To no one’s surprise, it was not a good year. Overall sales at specialty jewelers were down by 4.5 percent. The news was worse at specialty chains, which saw a drop of 13.6 percent. With a decrease of 7.5 percent, independent high-end jewelers didn’t fare much better. Mid-range jewelers squeaked by with a drop of just 0.9 percent. The best-performing category? Designer/custom jewelers, who saw their sales increase by 3.1 percent.

 Custom ring by Greg Stopka; jewelsmiths.com

6. Executives

Signet Jewelers appointed Michael “Mike” Barnes as chief executive officer, effective Jan. 30, 2011, succeeding the retiring Terry Burman. Signet owns Sterling Jewelers, the largest specialty jewelry retailer in the United States, with Kay Jewelers and Jared the Galleria of Jewelry under its umbrella, in addition to two jewelry chains in the United Kingdom. Barnes, 49, previously was president and chief operating officer of accessory manufacturer Fossil, known for its watches, jewelry, handbags, and clothing. In his 25 years with Fossil, he oversaw sourcing and business development. He is also credited with helping the company diversify beyond branded and licensed watches.


7. Diamonds

The Kazanjian Red, a rare red diamond, is now on display at New York City’s American Museum of Natural History in the museum’s Morgan Memorial Hall of Gems. The 5.05 ct. short emerald cut was discovered in the 1920s in Lichtenburg, South Africa, and has a colorful history that includes a stint at Tiffany & Co. in New York City, theft by the Nazis, and possession by Louis Asscher and Sir Ernest Oppenheimer. It had been unaccounted for since 1970, but when Douglas Kazanjian, CEO of Kazanjian Diamonds, got an opportunity to buy it, he did his homework and realized it was the famed missing red. Kazanjian Diamonds’ chairman Michael Kazanjian (Douglas’ father) called his son’s discovery “the greatest accomplishment of his ­professional career.”


© Tino Hammidd, Los Angeles

8. Cadmium

California governor Arnold Schwarze­negger is doing his part to terminate the use of the toxic element cadmium in children’s ­jewelry. He signed a bill that bans the manufacturing, shipping, and sale of children’s jewelry—or any of the jewelry’s components—containing more than 0.03 percent (300 ppm) of cadmium as determined by a total weight test. (The law takes effect Jan. 1, 2012.) This will have a wide-ranging effect, predicts Peggy Jo Donahue, director of public affairs for the Manufacturing ­Jewelers & Suppliers of America. “Because California is such a large state, its laws effectively become the law of the land,” she says. Connecticut, Illinois, and Minnesota already have similar laws on the books. And there is also action on the ­federal level, including three ­cadmium-related bills in Congress.


9. Partnerships

Middle America meets ­Manhattan in a new and seemingly unlikely partnership between mass merchant ­JCPenney and publishing giant Condé Nast, whose magazines epitomize the more upscale side of fashion (see: The Devil Wears Prada). The two brands have joined in an exclusive licensing deal over the Modern Bride name, one that “resonates with young, ­stylish brides,” according to a Penney’s release. JCPenney will debut new merchandise, including fine ­jewelry—the first department to launch, in February 2011—in stores and on jcp.com. The concept will target 25- to 34-year-olds, and sales associates will receive specialized training to become Modern Bride professionals. It also represents something of a rebirth for Condé’s once-beloved bridal brand; MB magazine folded last year.


10. Stats

“The trends are okay, getting a little bit better,” notes Jewelers Board of Trade president Dione Kenyon. However, “the supplier segment is consolidating at three times the rate of the retailer segment.” And, she adds, “it was pretty quiet for most of August. Everybody felt in the first five months of the year that we were coming out of something and they were optimistic. When it flattened out, that made people discouraged.” Still, she’s somewhat optimistic about the holiday season: “There are some positives in the macro situation. I liked what one analyst said recently: ‘Americans don’t do austerity well. Sooner or later, they are going to spend money.’”


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