Is the diamond system broken?

Broken DiamondRob Bates from JCK wrote a very good article titled “The Diamond Selling System Is Broken. Can It Be Fixed?

The focus of Rob’s article was very much on the relationship between mining and manufacturing, and the possibilities of developing possible variations of the rational way the two interact. Whether it’s a site, a tender, a cost plus method, increasing credit terms and outright negotiation on each purchase etc. etc., the article concluded correctly that information is so readily available and so quick to get to the market that this in itself impacts on prices, and therefore the need for greater transparency by miners to the market about how they price could go a long way in improving the status quo.

At the start of Rob’s article he touched on a fundamental issue, and I quote, “If I had to sum up the industry consensus on how to escape the current mess, it is: First, demand needs to be increased”. I don’t profess to have the knowledge nor experience to appreciate all the levers which will fix the relationship between miner and manufacturer but I do have a healthy understanding of what we need to do to increase demand. Most will be aware that I have been intimately involved with the World Diamond Mark, an entity created by the WFDB to reignite ‘generic marketing of diamonds” and fundamentally its sole purpose is to do exactly what Rob has called for – to increase demand.

Under the Chairmanship of Alex Popov, a small but dedicated team has worked tirelessly to build relationships, put on exhibitions and run joint marketing campaigns in Dubai, Turkey and Italy with every single event achieving successful results. And yet, whether for political or due to the “every man for himself” mindset, the industry cannot come together as one on this issue and really make a serious attempt to give this entity the resources to show what it can do.

Why are we so naive to think that this gemstone will go on infinitum as the premier symbol of love and choice of the engagement ring? Wait till the young man comes into the store and is shown a diamond, smiles and says “yeah my grandmother had one of those , I’m looking for something cool or more contemporary like a green stone that matches my girlfriends eyes”.

Yes we have all heard it before , but we keep selling diamonds for now. Maybe a bit less and maybe we make a little less, and just like the Kodak store who sold film we will close our stores when the little less doesn’t pay the bills.

Yes the key diamond miners created the diamond producers association to initiate a fund for this sort of marketing, but read their guidelines and they also are more about creating a unified voice for diamond producers, and a number of other goals. This is great and commendable but right now we need a single purpose vehicle to increase the demand for diamonds. The entity should do nothing else. The WFDB understood its mandate to its members, just like it was instrumental in setting up the World Diamond Council. Once again it is looking to help the entire industry, and at great expense set up a separate unit to just focus on marketing diamonds and creating greater consumer awareness. The World Diamond Mark is that vehicle; it stands with open arms for all stakeholders to be involved.

Let us be blunt: demand needs to happen at the coal face, the jewellery retailer. There are tens of thousands of jewellery retailers who sell diamonds. We all need to have a model that everyone can, will, and (the operative word) want, to contribute, because everyone benefits.

The diamond system is not broken, it has been disrupted severely, and time is running out. Some will be ahead of the game but it will be Pareto’s law that kicks in, and 80% will suffer and 20% will adapt.

What will it take to create synergy? The WFDB’s mantra is that we must be “inclusive not exclusive”, and that together we will rebuild an exciting and vibrant diamond industry.

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