CONSUMERS DISCOVER THE OTHER ‘C’

E.A. Grebitus used to be the only store in Sacramento, Calif., selling Ideal Cut diamonds. As competitors battled over who had the cheapest commercial-cut diamonds, Grebitus stood above the fray with a striking product no one else had. But then another store in his area started carrying Ideal Cuts, and then another, and another. Now the store has lost its coveted niche.

This scenario is being repeated in many parts of the United States as the Ideal Cut bandwagon picks up speed. While Ideal Cuts remain higher-profit stones in some areas, in others they may be turning into a commodity. Many jewelers worry that price competition, and perhaps even discounting, can’t be far behind.

At the recent JCK Show in Las Vegas, Ideal Cuts were the biggest diamond news, with many diamond dealers – even those serving the middle and lower-middle markets – saying that retailers and their customers have become more conscious about quality and cut. A decade ago, such cuts were generally limited to American Gem Society stores and represented 1% to 2% of diamond sales by dollar volume. Today, they account for an estimated 5% to 7% of sales and are climbing.

The other Cs lose luster. Mark Moeller of R.F. Moeller in Minneapolis is a longtime Ideal advocate who says his Ideal Cut business has doubled in the past year, even though other stores in his area carry them, too. “The public’s not just hearing about Ideal Cuts from me, but from a lot of other people.” What they’re hearing is that cut is the main source of a diamond’s beauty. “In the past, the industry and consumers emphasized color and clarity, but consumers are learning that the other ‘C’ – cut – is more important,” says Allen Lipsher of Global Diamonds, Chicago, who recently began carrying Ideal Cuts.

How did word get out to the public? Several ways:

  • Many Internet diamond sellers and retail jewelers with their own Web sites extol the virtues of the Ideal.

  • The AGS certificate, which issues top cut grades to Ideals, is rapidly gaining popularity.

  • “Ultra-Ideal” sellers such as Hearts on Fire and Eight Star Diamonds have been advertising and gaining publicity.

However, many retailers who have long carried Ideals acknowledge the Ideal boom is a double-edged sword: Ideal Cuts are a boon to quality-oriented jewelers, but their relatively uniform make can be the last step in total commoditization of diamonds.

On the plus side, not only are some consumers now impressed when a jeweler trots out Ideal Cuts, but also a growing number come in looking for them. “We had an engineer come in last week who pulled down the Tolkowsky proportions from the Internet,” says Frank Ragsdale, owner of Jolly’s in Raleigh, N.C.

But that is also where the danger lies. With consumers increasing their cut consciousness – and more labs providing cut grades – many think the once-sacred “fourth C” is becoming commoditized. Retailers say more and more customers are coming in to their stores with specific requests such as an Ideal Cut G VS1. Many consumers get information about crown angles and proportion percentages off the Internet or from other jewelers and want to buy diamonds that way, without noticing the look of the diamonds, retailers say. Such buyers now want the AGS grading report because it gives a cut grade.

Of course, not every market is Ideal-savvy and falling into commoditization. “To our knowledge, we are still the only ones carrying them,” says Jane McElvaine of Maxon’s Jewelers, Springfield, Mo. – a point echoed by a number of retailers around the country. But Ideal dealers believe these pockets will eventually disappear.

A big reason is that Ideals are now popping up at the majors. Bob Speisman of Lazare Kaplan estimates that at least 25% of the United States’ top 40 chains now stock Ideals – including such big names as Fred Meyer. (Lazare itself recently signed a deal with a “well-known East Coast retail chain,” which it would not identify at press time.)

Savvy consumers. Joe Landau, a Los Angeles-based Ideal supplier, says his client list has doubled over the past year. The AGS lab, used mostly for Ideals, says it has 350% more business than the year before.

Long-time advocates like Moeller accept their increasing popularity but argue Ideals will never be mass-merchant merchandise. “There’s no way that a price discounter without a gemological background knows how to sell Ideals,” he says. “The people who buy them are affluent, college-educated. They want to know crown angle, pavilion angle. They aren’t simply buying on price.”

Those who disagree with Moeller offer the Japanese market as a case study. In that country, the bridal market has become bound to the “excellent-excellent” (Ideal) make measured by a “Hearts and Arrows” scope, which shows facets of diamonds so cut as a pattern of hearts and arrows. (A variation of that instrument has been introduced in the United States with the premium Ideal, Hearts on Fire branded Ideal Cut diamonds marketed by Di-Star of Boston.) Japanese retailers and diamond dealers complain the price competition in the “excellent-excellent” market has cut margins to the bone because there’s no longer any room for the retailer to add value by selling his or her knowledge and professionalism.

Nick Greve, owner of Carl Greve, based in Ideal Cut-friendly Portland, Ore., says this situation is probably inevitable in the United States: “It used to be color and clarity were equal and cut was the area people played with. Now with the combination of the three, nothing is left. The only difference is the mounting.” But he thinks the new trend is ultimately healthy. “It makes us just a bit more honest.” Georgie Gleim of Gleim the Jeweler in Palo Alto, Calif., agrees. “Even if [cut] does become a commodity, at least everyone’s on the same playing field and using the highest possible caliber,” she says.

Deceiving the customer. And with their popularity comes an inevitable side effect: deception. Those who overgrade color and clarity are just as likely to misrepresent cut if there’s money to be made.

“There are jewelers who say a stone is Ideal when it clearly isn’t,” says E.A. Grebitus’ Marlene White. “People always fudged on color and clarity, but they could never play the proportion game. Now it seems everyone’s jumping on the bandwagon.”

Jewelers also say they are hearing a lot more terms like “near-Ideal,” “superior” cut, “fine-cut.” Retailers say such terms confuse the consumer, especially when salespeople are just throwing out verbiage and showing diagrams. Some charge that certain labs are stamping stones as “Ideal” even when they fall outside Ideal parameters. Some worry that such practices will render the term “Ideal” meaningless in the future. Part of the blame lies with vendors, says AGS’s Bill Underwood of Underwood Jewelers in Fayetteville, Ark., who has worked to keep the organization’s tough diamond standards. “I have people call me almost every day claiming they have Ideal Cut diamonds. We give them a chance, and quite often their diamonds are clearly not Ideal.”

Despite this increasing competition, most long-time sellers of Ideal Cuts remain committed to them because they still provide retailers with a professional, quality image. As Fred Rubel, owner of Rubel Jewelers in Santa Ana, Calif., puts it: “Ideals are an expensive – and complicated – item,” and selling them requires “extensive staff training.” That’s why he isn’t worried if the store next door stocks one or two. “There’s been a lot of hype in the [trade] magazines, and maybe some people are picking up on it,” he says. “But unless you are committed to them, it doesn’t mean a thing.”