Mr. Dallahan’s claim that the branding of diamonds is bad for the retail jewelry business raises needless alarm. (See “Branding Again,” JCK, July 2003, p. 38.) We are in a unique place in our history, facing unique challenges and opportunities. It is important that we see clearly.
Who would deny that branding has fueled demand for nearly every product consumers love to consume? Branding raises perceived value and creates product categories that would not otherwise exist. Did you even know you needed a five-dollar cup of coffee before Starbucks promised to make you one? I love my $250 Maui Jim sunglasses—they’re so light! Would anyone bother to manufacture sunglasses with such care were it not for branding?
De Beers has shepherded the role of diamonds in our culture with relative wisdom over the years. What makes you think they have suddenly lost their marbles?
Many retailers remain nostalgic for the day when “the brand that was the store” entirely defined a diamond’s quality. The retailer’s word was its value assessment. Today a Tiffany diamond, perhaps, remains a Tiffany diamond, but most retail brands have given way to a language that is more universal—the language of laboratory certificates. That which is understood and accepted by everyone has more weight in the marketplace. Inevitably laboratory certificates replaced local store brands as the way consumers would express their needs and make their value determinations.
This trend had both positive and negative effects for our industry. On the one hand, a universal language increases understanding and appreciation for value. Laboratory certificates fueled demand. But a simplistic value assessment creates a commodities market. Demand remains high, but the low-cost provider sets the value. Branding offers an alternative, a universal language that does a better job of communicating value.
Well-branded products simply speak to customers in ways that address their needs. Branding expands product categories, increases desire, touches us in places we hadn’t thought about before, and—most importantly—sets our estimation of value.
Not so long ago customers were demanding one-carat diamonds from me for $5,000 in qualities that would cost me as much as $4,500 at wholesale. Recently I sold a one-carat Hearts On Fire diamond for a retail price of $15,000. My customer knows he could have purchased a similar diamond for much less. Heck, he could have bought a similar diamond from me for much less. But he had something very important he wanted to say to someone very special to him. He thought the global brand, the brand recognized throughout the world as one of the finest diamonds ever crafted, presented him with his best opportunity to do just that.
Retailers fear a loss of control. But I didn’t feel particularly in control when the value of a diamond was entirely defined by a piece of paper. My company’s 60 years in business didn’t seem to count for much. The certificate knows all!
Fortunately, there remains a final frontier. We have yet to quantify cut (despite our best efforts). The AGS has a system for rounds but not for fancies, while the Gemological Institute of America takes a different approach. Various technologies purport to measure the light returned from a diamond in various ways. There is room for art. The cut of a diamond defines its beauty, its mastery over light. We can create brands that will fulfill consumer needs in ways we have yet to imagine.
But of course most brands will fail, not because consumers won’t respond—we already know consumers will respond—but because executing a brand strategy over the long haul is a difficult undertaking.
The measure of a brand is twofold: the integrity of its purpose (its USP) and its faithfulness (consistency). Few brands have both attributes along with the financial backing required to sustain excellence over the long haul. But the success of even a handful of brands will unquestionably benefit our entire industry.
Every brand seeks to enhance its perceived value by limiting its distribution. Thus, not everyone gets to be a Rolex dealer. So what? The desire for Rolexes increases the demand for watches in general. A market for $2,000 stainless-steel watches is sustained to a degree by the fact that Rolex can sell one for $4,000.
For most retailers, “the brand that is the store” is defined in part by the brands one chooses to keep. Advertising a national or global brand simply identifies a retailer as a destination for a certain category of goods. The marketing support the retailer receives adds weight to his message.
Tell me again why identifying myself with a globally recognized brand is a bad thing. I am still at liberty to sell any diamond I choose, to meet my customers’ needs with any of the many products I can offer—including, perhaps, my own store brand. Department stores have demonstrated that house brands function best when positioned alongside national brands. The umbrella effect of a brand that has a life beyond the four walls of the retailer lends credibility to the retailer’s other marketing efforts.
Why shouldn’t the diamond industry take full advantage of marketing strategies that have proven effective in every other product category in the world? When did we decide that fueling demand, increasing desire, and elevating the perceived value of diamonds somehow represents a loss of control? No one controls the consumer. We can only hope to motivate him. I’d like to motivate him to spend money rather than to save money.
Branding has been proven to do that.
Bart Marks, Vice President, Rogers Jewelry Co. Quincy, Mass. (Mr. Marks formerly worked as a paid consultant for Hearts On Fire.)
Retailing Thrives on Branding
In response to the JCK July 2003 Counterpoint “Branding Again” by Frank Dallahan, I agree that jewelers should take control of their diamond business. In fact, the best way for them to embrace a prosperous future is to climb aboard the brandwagon.
The truth is that modern retailing thrives on branding. In the jewelry business, branding is clearly important at all levels. Jewelry stores are branded by their name, reputation, and professional affiliations. Jewelers, gemologists, and salespeople are branded by their expertise, service, and credentials. Most jewelry products are differentiated by brand names associated with consistency of quality. A true quality brand raises the perception of the store brand itself. Successful brands generate passion.
Why should diamonds be any different?
Take a look around any marketplace. Products sold as commodities do not command strong prices. Generic and store-brand products don’t either. None of them drive “good” margins. The bulk of a jeweler’s gross-margin dollars will only come from diamonds that are sold at non-discounted prices with significant margins. Therein lies the true beauty of branded diamonds.
But, successful branding eats money!
Branding your own store eats money. It takes enormous resources to rise above the crowd. Through partnership with a strong diamond brand, a retail jeweler has the competitive advantage of the critical mass necessary to build and sustain a healthy diamond business.
Why would a jeweler choose to go it alone? Jewelers become well known by the brands they keep. True brands offset the costs of advertising, training, stock balancing, strategic planning, and product development. Far from destroying the jewelry business, this synergy enables jewelers to sell more products, at better margins, for higher profit—while attracting new customers and retaining old customers.
The whole point of branding is that the retail jeweler gets to make more money, attract new customers, and capture market share. Above all, the jeweler becomes free to focus on the real objectives of his or her business: creating a strong sense of desire and fulfilling each customer’s emotional needs by providing them with the ultimate jewelry buying experience.
Everyone wins—the consumer, the retailer, the sales associate, and the global brand.
Glenn Rothman, CEO, Hearts On Fire Boston, Mass.