It’s been an interesting year for the jewelry industry since the last JCK Show ~ Las Vegas.
Last June the industry expected the biggest news of 2005 to be the long-awaited launch of the GIA diamond cut grade. But the news of the GIA diamond-grading scandal (first reported on JCK‘s Web site last October) overshadowed the cut grade, which did, in fact, finally launch.
Rife with rumors, speculation, accusations, and fears about the impact it might have, the news of the grading scandal rocked the foundation of trust our industry is built on. Not surprisingly, the drama—and ongoing diatribes about it—attracted the attention of the mainstream media. The Wall Street Journal has done multiple stories about the issue, and the scandal also has been addressed by the New York Times and the London Times, among other newspapers. Not the kind of publicity we want, for sure.
Speaking of bad publicity, let’s not forget that social issues remain very much alive and seem to have kicked back into gear this past year. While the Kimberley Process has greatly reduced trade in conflict diamonds, it isn’t 100 percent foolproof, and the nongovernmental organizations are not going to let the industry lull itself into a false sense of security. At the same time, rising global awareness of environmental issues in general has put gold-mining practices under scrutiny. And the explosive growth of jewelry manufacturing in India, China, and other emerging nations has spurred new questions about child labor and factory working conditions in places that don’t always have the same protections for workers as industrialized nations.
But if there’s such a thing as good news about bad publicity, this past year also saw the birth of the Council for Responsible Jewellery Practices, a global consortium whose mission is to promote ethically, socially, and environmentally responsible practices in every sector of the industry from mine to market. It comes not a moment too soon—and let’s hope every member of the industry understands how critical it is to adhere to these principles so that its goal won’t be slowed down or hamstrung by industry politics.
Retailers continue to regard the Internet with fear and loathing; meanwhile online sales of jewelry and diamonds just keep growing. While still a small percentage (approximately 3.5 percent) of overall jewelry sales, its growth rate (more than 20 percent) is far higher than most brick-and-mortar stores can report. The implications aren’t hard to figure out: Consumers want the product but don’t necessarily feel compelled to buy it from a jeweler.
Think that doesn’t mean your store? Think again. Two recent market research studies prove you scarily wrong. The retail landscape study conducted on behalf of the Diamond Promotion Service reveals that consumers want to shop where it’s fun—and the typical jewelry shopping experience is far from fun. Respondents to that survey complained that jewelry store salespeople were often pushy, aggressive, or just plain snooty. Meanwhile, research conducted among wealthy consumers by Harrison Group, a market research firm, titled the Worth-Harrison Taylor Study on the Status of Wealth in America, concludes that rich people do feel comfortable buying a big (very big!) diamond at Costco. Retailers know that Costco and online merchants can cut margins to a sliver because they make it up in volume or in other products, but all the customer sees is that the price of a 5.00 ct. D Flawless certified diamond is about half of what they might pay at a luxury jewelry store. They’d be willing to shop in the store if the experience added enough value—but frequently, the studies show, it doesn’t.
Our industry is at a crossroads. Our traditions are important and provide the foundation upon which to build, but we’re at a point where we’re in danger of allowing tradition to hold back progress. To rehash a timeworn example, the great American railroad companies of the 19th and early 20th centuries failed to recognize that they were in the transportation business, not the railroad business. We don’t need to point out what happened to them. Let’s not let it happen to us.
On a separate note, this month it’s my pleasure to welcome three new columnists, all esteemed experts in their fields. Liz Chatelain of the market research firm MVI, which runs the Jewelry Consumer Opinion Council, offers valuable market information; watch industry veteran Steven Kaiser has tips on building your watch business and working with your suppliers; and renowned bench jeweler and technical expert Mark Mann returns to JCK, which, when combined with longtime contributor Alan Revere, makes us the leader in at-the-bench information in a retail magazine. Happy reading!