Good News, Bad News

It was only a matter of time before the national media picked up the GIA lab story. First, the New York Times broke the story, and then the Wall Street Journal followed up, in its Dec. 20, 2005, issue. The fact that both stories appeared a few days before Christmas is indeed unfortunate, but it could have been worse. The story could have run much earlier, followed up with insight and opinion. The impact could have been much worse at a critical time of the year.

But the industry is not out of the woods yet. The next step likely will be for the television media to pick up the thread and bring the consumer more angst in the purchase of jewelry.

So far, GIA has done a good job in handling the problem, with the notable exception—in my opinion—of Tom Yonalunas’s resignation. GIA has been transparent and available to the media in stating their case and answering questions. The GIA situation, however, may spill over into questions for the other laboratories. The accuracy of grading reports, we know, is based on the grader’s opinion and evaluation of the diamonds they grade. One lab’s opinion of a diamond might be an I1 or I2, while another lab will grade the same diamond as an SI2 or SI3.

The situation is a wake-up call to the industry in general, the labs in particular, and retailers. For retail jewelers, the importance of education and professional certification of staff members in diamond grading skills is greater than ever. A jeweler who accepts at face value the opinion of any lab makes a serious error. Only by having competent staff that can evaluate the quality of diamonds, and other gemstones as well, can a jeweler speak with confidence about the product. Think about the commodity approach Internet sellers of diamonds now have in the face of the laboratory scandal. That third- party endorsement of an expert lab grading report is now in play if not in question.

The value of training and education in this environment is huge. The situation brings into focus the qualifications and selling skills of the person behind the counter or the jeweler whose name is above the front door. The jeweler who has the qualifications and education and whose employees are technically trained and qualified has a significant competitive advantage.

The same point also applies to chain jewelers and mass merchants.

One final thought. The notion that grading reports are commonly called “certs” is something that needs to disappear from the industry’s vocabulary. A grading report is just that, and it needs to be explained to the consumer that it represents a grader’s opinion. The value of a grader’s opinion depends on his or her training, experience, and skill. The consumer press glossed over this point in reporting the “scandal.” It is an opportunity for the jeweler with a competent staff to fully explain the reality of grading reports and then sell his or her own grading credentials and competence.