The Retail Impact

Randy McCullough, president and chief executive officer of Samuels, remembers going to a charity auction shortly after Blood Diamond opened. “At every table I sat at I got asked questions about conflict diamonds,” he says. Yet, when he examined his chain’s Christmas results, he was surprised that he didn’t see an impact—in fact, Journey diamond products were strong sellers.

McCullough’s experience was repeated throughout the industry. Sales were strong for most jewelers last holiday, and diamonds made up the same percentage of sales they usually do.

Despite heavy publicity about the trade’s least favorite topic, Blood Diamond apparently made only a minor impact on the holiday selling season. Even in Hollywood, the fallout seems minimal. Diamond Information Center director Sally Morrison notes that more women wore diamonds to the Golden Globes this year than in previous years.

People credit this to the trade’s unified response (see “Blood Diamond Fallout: The Trade Tells Its Side,” p. 106), the fact that the problem has diminished considerably, and the failure of the movie—as well as the conflict-diamond issue generally—to capture the public imagination.

No one is suggesting the industry has no more to fear from this issue. Some think the impact may be felt more this year than last. But for now people are breathing easier. “[The movie] doesn’t seem to have any discernible impact, beyond the fact that more consumers in retail stores are looking for reassurance for the product they’re buying,” Gareth Penny, managing director of De Beers, said recently. “That is a good thing, and we would encourage that and think the film has presented an opportunity to the industry to showcase the measures that have been put in place to give consumers that confidence.”

A recent survey of JCK‘s retail panel supports Penny’s assertion. The poll found that 78.5 percent of respondents believe the movie had “no impact” on diamond sales in their area, and only 35 percent received more queries this year compared with last year. (See charts, p. 104.)

The World Diamond Council found that two-thirds of jewelers surveyed said customers had asked them about conflict diamonds, but virtually all (97 percent) felt prepared to answer the queries, and 89 percent said they had trained their staff to handle customer questions about the issue.

In addition, 88 percent of the jewelers had asked for or received guarantees from their suppliers that their diamonds were conflict-free, WDC said. The JCK survey found that 77 per-cent had asked for the guarantees, compared with 48 percent in our previous survey. And 25 percent said the movie had spurred them to tighten up their policies on conflict diamonds.

Anecdotal surveys found similar results. “There was definitely an uptick in questions,” says Peggy Jo Donahue, director of public affairs for Jewelers of America. “Every retailer we talkedto saw increased interest. But the retailers couldn’t think of one situation that their sales associates didn’t reassure customers. Not one person could recall losing a sale. If you had done your homework and you really addressed the issue, you were able to reassure consumers.”

Donahue notes that certain themes seemed to resonate well with consumers. “People were surprised at how long ago the industry dealt with this,” she says. “They liked that we were not just doing this as a reaction to the movie. When they heard the Kimberley Process went into effect in 2002, that made a big impression among consumers.” She also said that consumers liked to hear “that the industry would stay committed to the issue and that ‘one conflict diamond is too many.’”

Overall, Donahue says, industry members “felt pleased they were able to deal with this.” She credits the site with giving retail members good background.

McCullough says the issue may even have netted a sale for his chain, which gives customers a packet that includes information on conflict diamonds. One customer didn’t mention the issue, but when he saw it in the packet, “he said seeing that just made him feel good so he quit shopping right there,” McCullough says.

Some took a more proactive approach, advertising their diamonds as “conflict-free.”

In a tactic the industry may have frowned upon at another time, stores like Mervis Diamond Importers in Washington, D.C., brought up the conflict issue in its radio ads. “We have a very politically active clientele,” says Ronnie Mervis, vice president of the three-store chain. “Washington has a lot of political action groups and nonprofits. So we let people know that we consider our diamonds conflict-free, and we are more than happy to discuss the issue with them so that they could satisfy their desires and their conscience.”

Mervis says many of his customers asked questions, but few asked to see Kimberley certificates, as advised by groups like Amnesty International. “They just wanted to get oral assurance that our diamonds were clean,” he notes.

He says the ads led to new customers, media appearances, and even some fan mail. “I don’t think the movie hurt us in any way. I think the industry did a very good job preparing people with a lot of information.”

While the movie may not have made much impact this year, some still worry about the future. “The one lingering worry is the undertone among younger people that diamonds are not for me, akin to fur, where a certain kind of person does not want to wear real fur,” Donahue says. “We don’t know the number of consumers who didn’t come in the door who might have bought.”

Indeed, Donahue says, the biggest danger might be any feelings of invincibility. “It will be a danger to assume that because the movie has come and gone, this issue is done,” Donahue notes. “This is akin to when the Kimberley Process passed and an awful lot of people said that’s over. This was a major public event. We had a lot more consumers become aware of this issue.”

“We need constant and ongoing vigilance,” says Donahue. “These issues are important, and now that we have real solidarity we have to continue to support them. We can’t give up on the System of Warranties. It will always be with us.”