The Great Akoya Debate

During the past year there have been several articles and letters to the editor of JCK magazine on the topic of akoya pearls. A recent article in another publication stated that an executive of a major store was shocked when he learned that the nacre thickness of akoyas purchased for his store was less than 0.5 mm.

On its own, this “shocked” reaction is laughable. It’s reminiscent of the scene in the film Casablanca when Claude Rains as Captain Renault announces the closing of Rick’s Café with the immortal line, “I’m shocked-shocked to find there is gambling in this establishment,” just before he’s handed his winnings for the evening.

The real issue in the akoya controversy isn’t greedy Japanese producers. Nor is it wholesalers who provide retailers with product. The real issue is the demand made by the top management of large purchasers to “push suppliers to the wall” on price. The object is to secure a desired retail price point, but the consequence is variable quality or smaller margins for suppliers. Buyers are caught in the middle of the never-ending pressure to lower prices and raise margins. Suppliers are caught in the middle, as well. If they don’t supply the desired product, someone else will. Circles, anyone?

Quality akoyas are available from many pearl sources. But you have to be willing to pay the price. Pearls that take three to five years to cultivate will cost more than those that are ready in six months.

This problem isn’t limited to the pearl business. It’s endemic to virtually every jewelry category. Did you see the Super Bowl commercial that presented a 6-ct. diamond line bracelet for $699? At wholesale, that’s about $60 per carat, assuming a keystone markup. Yes, Virginia, they’re diamonds, but are they any better than akoyas with a 0.5-mm or less nacre thickness? Heirlooms? Hardly.

The same situation applies to colored gemstones. Price point is the only consideration. Every flier, every catalog, every television and radio promotion screams price, price, and price. Where are the merchants who sell quality-and the product sizzle that comes from selling quality? In today’s large-scale retail environment, there is only one unique selling proposition. Price.

While shopping during the Christmas season, I saw a sign in a shop that read, “We price our merchandise fairly. If someone else charges less for a similar product, they must know what it’s worth.” In other words, you get what you pay for.

Retail jewelers, particularly independent jewelers, have an opportunity to develop quality as a unique selling proposition. Doing so requires product differentiation. That means selling akoyas whose nacre thickness is objectively stated, and diamonds and colored gemstones whose qualities are clear and demonstrable to the consumer. All it takes is a knowledgeable, well-trained sales staff and an advertising effort that focuses on the positive distinctions at every price point.

The same reasoning applies to wholesalers and manufacturers. If you’re sick of the price chop/chop, and tired of the demands that you maintain both quality and price point at the expense of your margins, stop complaining and do something about it. Start cultivating the kind of business that recognizes the importance of quality.