Dr. Chuck Lein, president of Stuller, loves to talk about his company’s first Diamond Trading Company sight. After Lein and his comrades completed the DTC’s famously arduous applications, endured rejection on their first attempt, and received the nod on their second, they finally entered the DTC’s imposing headquarters in London as a full-blown sightholder last year.
“There was always this curiosity about what happens in London,” Lein tells JCK. “We are ushered into this little room to get our sight. We were just like kids in a candy store. I didn’t know if they’d come out with a wheelbarrow or a big huge box. And a gentleman comes in with a plastic box that’s like what a kid packs his milk in. And he takes out just these two little poly bags full of diamonds. Two little sandwich bags. And I said, ‘That’s it?’”
That’s the diamond industry for you, Dr. Lein. But sandwich bags or no, it’s an industry Stuller is determined to master.
This month, Stuller celebrates its first year as a DTC sightholder. The company is clearly proud of its place on the DTC’s most favored list, and DTC executives apparently are pleased with Stuller, since they increased the company’s allocation in January. But there have been adjustments, and the partnership between the DTC and Stuller is being watched as a test case of Supplier of Choice’s model of supplying diamonds to nontraditional “downstream” companies.
Even the people at Stuller admit their appointment surprised many. It’s a company that has seriously been in the diamond business for only a decade or so, having bought its first diamond of over a quarter carat in 1995. “At the time, the debate was whether we would ever get beyond melee,” Lein remembers. Stuller, based in Lafayette, La., is far from Antwerp, Belgium; Mumbai, India; and Israel, and not even especially close to New York. The principals of the company aren’t Indian, Jewish, or Asian. It’s not widely considered a diamond source but more a manufacturer of jewelry and settings. “We’re a gold company becoming a sightholder,” notes founder Matt Stuller. “How bizarre is that?”
So Stuller doesn’t fit the typical sightholder profile—that is, until the profile changed. Once Supplier of Choice elevated marketing experience and vertical integration to top criteria, Stuller—one of the industry’s most-respected marketers—decided it fit the bill.
To hear executives tell it, it was a matter of responding to changes in the industry. “The old way of doing things is you have the miners and you have the manufacturers and wholesalers,” says Joe Buttross, executive vice president of diamonds and gemstones. “We started out wholesaling diamonds like any dealers in New York. But now at some point you will see the dealers going away. We decided we didn’t want to become extinct. We needed to get closer to the source.”
Still, becoming a sightholder is a huge commitment, and Stuller people admit they’ve had a few surprises along the way. “It’s kind of like being married,” says director of public relations and trade shows Steve MacDiarmid. “You know what you are getting into when you are thinking about it, but once you get into it, there are adjustments to be made as you are going along.”
For one, the sights require a large amount of cash up front—cash that won’t be recouped for three or four months, when the goods are manufactured and sold. In the meantime, the diamonds keep coming. Lein compares it to the famous I Love Lucy episode with the relentless conveyor belt of chocolates. “It is almost like you show up in the morning and scratch your head and say, What are you going to do with all these diamonds?” says Stanley Zale, the newly appointed vice president of Stuller’s diamond business unit.
And the allocations continue all year—whether Stuller needs them or not. “The biggest surprise for me was it was the middle of the Christmas season and here we were purchasing rough,” says Buttross.
To process these stones, Stuller set up a company in Israel—where it already has a buying office—to contract the stones to local factories. Executives boast that they haven’t sold any rough on the open market—something De Beers has never been crazy about—but they have sold a small amount of polished. “We are different than most sightholders,” notes Lein. “Most sightholders sell a narrow band of goods to a very small group of customers. We sell all shapes, all sizes, all customers.” Currently, the company manufactures about 40 percent of its diamond needs, including rough other than the DTC’s, but clearly the company wants to increase that.
To celebrate the anniversary of its sightholder status, Stuller held a press event, featuring gobfuls of Louisiana hospitality and Cajun food. But for all their down-home charm, the people at Stuller are as ambitious as they come. Becoming a sightholder isn’t just about securing a steady supply at good prices; it’s about letting the world know they are serious about diamonds. “If you are a sightholder, you are a player in the diamond business,” Matt Stuller notes. And the diamond business is where the company wants to be. “I think there is an opportunity for diamonds to outstrip all our other sales in five years,” says Buttross.
To help develop its diamond business, Stuller recruited Zale, an unmistakably New York–accented “diamond guy.” The grandson of the eponymously named retail chain’s founder, he grew up in the diamond business—“We waited in January to have my bar mitzvah, because the season was the season, and that’s how life worked,” he says—and worked for years at sightholder Louis Glick. He says moving to Lafayette has required some adjustments (though “Zabar’s does ship FedEx”) but demurs when asked if he was recruited to bring in some 47th Street cred: “I think 47th Street could learn some things from Lafayette.”
Of course, selling Stuller’s bread and butter—mountings—is different from selling unique, hard-to-find, high-value objects like diamonds, as even the people at Stuller admit. And when American jewelers deal with sightholders, they generally want personalized service. “It’s a challenge,” Zale says. “Maybe it’s not the operation people are used to, but I think we can develop that and take it to the next level.”
For now the people at Stuller clearly relish their position as possibly the world’s oddest sightholder, and they say it’s been relatively smooth: “We’ve heard all the horror stories about the DTC,” notes Matt Stuller, “but our relationship with them has been excellent.” Not that they don’t have a gripe or two. Buttross won’t comment on how much he’s saving by going to the source, but says, “On some of the boxes the savings have been fairly significant, but most recently on a box there was very little.”
Louisiana accent or no, when you hear someone talk like that, they sound just like, well, just like a sightholder.