Is ‘Conflict’ of Interest?

Maybe it was the story on 60 Minutes. Or the one before that on PrimeTime. Or the demonstrations held in New York, Chicago, Boston, and a Washington, D.C., suburb. Or the twin pieces on ABC’s World News Tonight, the articles in Newsweek, Time, and VanityFair, or in newspapers throughout America. More likely, it’s all of the above. Whatever the cause, consumer awareness of conflict diamonds is inching upwards, although so far it has affected only—to paraphrase the industry line—a small percentage of the overall market. When JCK queried jewelers last September, hardly a handful had heard conflict comments from consumers. But a new JCK survey of more than 200 retail jewelers found that 14% of them had had consumers “mention” the issue.

“Awareness is up, but it’s still low,” says Matthew A. Runci, president and executive director of Jewelers of America. “The issue is definitely registering in a way it hasn’t previously.”

No one knows if all the noise is dissuading consumers from visiting diamond counters, but most believe it isn’t. A survey on the fallout from 60 Minutes found that despite the beating the industry has received in the media, 63% of respondents agreed with the statement, “The diamond industry has products I wouldn’t hesitate to buy.” Among 60 Minutes viewers, the number falls off a bit: only 56% endorsed this statement.

The program seems to have taken the greatest toll on its whipping boy, De Beers. Only one-third of viewers agreed that “De Beers is a reputable company,” although 54% endorsed the seemingly contradictory statement, “De Beers is a company whose products I wouldn’t hesitate to buy.” That statement received nods from 70% overall.

Cheryl Pelligrino of the Diamond Information Center, which commissioned the study for De Beers, says the industry is weathering the storm remarkably well. “The bad publicity is not something we should be complacent about, but the American public has seen enough of these exposés to realize there are two sides to every story,” she says, noting that only 11 million people watched the 60 Minutes report. “Our research indicates that the diamond is extremely resilient and continues to be a product people want. We’ve been doing a whole push for the Oscars and have never gotten as much positive diamond coverage as we’ve received recently. And it hasn’t been an issue with the celebrities or the entertainment press or anyone else.”

Similarly, jewelers say that even when consumers broach the subject, they rarely go away empty-handed. “I don’t think it’s made the difference between getting a sale and losing a sale,” says Dan Van Sweden of Van Sweden Jewelry in Kalamazoo, Mich., who’s dealt with the topic. “I have heard of people who say ‘I won’t buy any diamonds,’ but those people probably wouldn’t be buying diamonds in the first place.”

Even jewelers are amazed at the apparent apathy. “It’s really surprised me how little we have heard on the subject,” says Alexander Rysman, of retailer Romm and Co. in Brockton, Mass. “Some of the things that are going on over there are really horrifying. If it weren’t Africans [being] treated that way, I wonder if people would be so cavalier about the whole thing.”

Handling comments. While the damage may be minimal so far, many worry that continued media coverage or a well-run campaign orchestrated by nongovernmental organizations could take its toll. “If it happens to the oil business, no one’s going to quit driving their cars,” says David Kelley, Kelley’s Jewelers, Weatherford, Okla. The media show no signs of letting the issue go: A conflict-related piece is scheduled for Dateline NBC, and there are stories coming up in National Geographic, The Nation, and Wired.

So what can you tell a consumer who’s worried that her diamond may be related to a child’s arm being amputated in Sierra Leone? Jewelers generally defuse the topic with two points: First, they inform customers that conflict stones make up only a fraction of the overall diamond supply—less than 4%, by the industry’s estimates. Second, jewelers assure customers that they have sent notices to suppliers requesting that they not be sold conflict stones. (See sidebar.)

Others go further, noting that African nations like Botswana and Namibia depend on diamond revenue, which means that shunning diamonds would cause more problems in Africa than it would solve. Generally, expressing concern and sensitivity is enough. “The consumers are checking how knowledgeable you are,” says James Siegel, Siegel’s Jewelers, Grand Rapids, Mich. “If you give a professional response, that’s all the customer is looking for.”

Todd Michael, a jeweler in inner-city Detroit with a large African-American clientele, has probably heard about the issue more than most. His response is to cite the 4% number and stress that there’s more to the story. “I tell people that if they want to be an informed consumer, they should spend some time researching this subject,” he says. “Most of the time, people just hear something at the hairdresser, or on the news. They think they know what’s going on when they don’t.”

He admits the issue may have cost him a diamond purchase or two, but it hasn’t yet hurt him at the cash register. “The ones that get turned off by diamonds, you can usually rotate into something else,” he says. “In a couple of cases, I ended up selling them other things like colored stones, and you make more money on that anyway.” All in all, past exposés have proven a far bigger headache: “Every time some clown on TV in New York switches a stone, you hear about it for three weeks.”

John Haynes, owner of Goodman Jewelers in Madison, Wis., also has fielded his share of inquiries, particularly since Madison is a political town—home to a university and the state capital. But most consumers leave pacified. “Once we explain to them that we’ve sent a letter to our suppliers, they’re satisfied with our explanation,” he says. “Occasionally, someone won’t buy diamonds at all, because they saw something on TV about De Beers and their monopoly. So they go with rubies or sapphires or some other engagement ring.”

Denise Harned, Raymond Jewelers, West Hartford, Conn., also has heard an earful from consumers, particularly visitors to her Web site. “We get consumers looking at me with these puppy dog eyes and saying ‘What’s with these conflict diamonds?’ ” she says. “The very graphic photographs they show strike home with a lot of people.” But she adds, “I haven’t seen any kind of fanaticism or boycott attitude.” And she has an airtight solution: She sells diamonds certified as mined and cut in Canada. “I think the issue is grabbing people’s attention,” she says. “It has the potential to be something wicked for the industry if legislation isn’t put into place.”

That ominous potential is the reason industry leaders have tied themselves in knots trying to put this fire out. But so far, the issue has proven to have surprisingly little impact. “Maybe it’s to blame for the current state of business,” Siegel says. “But I’m more likely to blame the stock market and all the other problems.”

Have any of your customers mentioned conflict diamonds?

Source: JCK Retail Panel
14.3% Yes
85.7% No