Letters

IT’S THE COMPUTERS, STUPID

As a wholesale colored stone dealer, I have the opportunity to interact with both ends of the jewelry industry: as a buyer of rough and finished stones and as a dealer selling loose stones to jewelers. Over the last several years, I have seen an increase in hand-wringing and furrowed brows among suppliers, dealers and jewelers. They are all pretty much saying the same thing: “Business is OK but I am working three times as hard and making less profit. What has happened to the good old days?” The good old days they are referring to were the late ’70s through the early ’80s. Old days?

The large expenditures the last two or three generations have incurred remain pretty much the same: a house, car, educations, clothes, food and entertainment. Competition among jewelers, though up, remains fairly consistent. I do not believe “the other jeweler” is the reason for lower sales.

The new competitor is the relatively new computer industry. Aggressive computer advertising sells the thrill of participating in this new technology. The jewelry industry’s potential clients are spending their discretionary income (the income we all count on) on things much less romantic. That is where all the money has gone!

Faced with the decision whether to buy jewelry or a computer or software for graduation, anniversary or birthday, consumers are supporting the computer industry. The thinking is that for children, wife or husband to get the upper hand in school or business, a computer is more likely to be of immediate benefit than a piece of jewelry.

If we agree that this new industry is our real competition, then our job is to focus our efforts on retaking the discretionary income from the computer giants. This is not an easy assignment, but not futile either. As an industry, we need to identify the weaknesses of our competition and exploit them.

Economic and industry analysts see a softening in the computer industry that may signal a weakness of this giant. The computer is a tool; jewelry is from the heart. I think this is where we need to focus our attention. The recently launched International Colored Gemstone Association ruby promotion is an excellent beginning.

I hope over the next few months that through letters and some brainstorming sessions, enough ideas can be put forth to help us all mount an aggressive advertising campaign to win back our dollars.

Josh Hall Vice President Pala International Inc. Fallbrook, Cal.

JUST SAY NO

I have followed the ongoing discussion in JCK regarding the diamond industry profits and the Rapaport list (“Letters,” pp. 30 in April, p. 38 in May, p. 30 in June, pp. 34-40 in July and p. 30 in September 1996).

The letters have complained about these and other issues with the Rapaport list, and the industry asks “What can we do?” Is the answer so simple that no one can see it? If the list is not performing to the highest standards, then stop using it. We do have choices in society, and diamond price lists are not unique. Of course my letter is biased because I publish The Guide, an alternative diamond price list (excerpts from The Guide now appear monthly in the “Indicators” section of JCK). However, to be fair, there are several other diamond price lists available, including the Diamond Value Index and the Diamond Market Monitor to name just two.

The Rapaport list gained its stronghold on the industry because it was first. It is now time to take a closer look at the reasons it is hurting the industry. The industry complains that profits are squeezed when rough goes up, but the Rapaport list does not respond to the full increase. Manufacturers complain because they must hold prices down until the Rapaport list responds. When the discount changes, jewelers are left in the dark not knowing there is a change and then they still expect their big discount. When will the industry wake up and realize that a unified effort will send the message that jewelers cannot rely on this list with a standard discount. Manufacturers should tell jewelers they are basing price on the cost of rough plus an honest profit to make a living. Work from the bottom up, not from the top down. Prices may be going up, making it difficult for jewelers to sell, but the industry can return to making a reasonable markup. However, it will take some work and, most importantly, some ethics.

Richard B. Drucker, G.G. Publisher of The Guide Northbrook, Ill.