'Luxury shame' creates concern about product origin, impact
Las Vegas--The economic downturn has reduced the demand for diamonds, eliminating players at all points along the supply pipeline, from the mines to the stores.
But a thinned-out pipeline can only mean opportunity for those who remain, according to two seminars given on Thursday in Las Vegas amid the JCK and Couture jewelry shows.
In the first seminar, "Top Five Diamond Issues," speaker Rob Bates, a senior editor at JCK magazine, detailed how the downturn has impacted all segments of the market, from high-end retailers such as Tiffany and Co., where same-store U.S. sales dropped 34 percent in the first quarter of 2009, to mall jeweler Zale Corp., which saw same-store sales slide 20 percent in the third fiscal quarter of 2009.
"I don't want to portray too negative of a portrait, but we are in a serious situation that's impacted a lot of people," he said.
The outcome of all of this, Bates said, will be greater consolidation, pointing specifically to the example of the Richline Group, the Warren Buffett-owned entity that has been buying up distressed jewelry brands. Bates predicted that Richline could become one of the larger players in the industry in a couple of years.
In April, Richline purchased brands, including Krementz and Darling Diamonds, once manufactured by the now-defunct The Colibri Group. Richline bought the brands from online retail auction site Bidz.com, which purchased them at auction.
And in May, Andin International, a New York-based manufacturer and supplier of colored-stone and fine diamond fashion jewelry, joined the Richline Group.
In a seminar titled "The Diamond Pipeline" held in the afternoon, industry analyst Ben Janowski, of Janos Consultants, also noted the consolidation in the industry, particularly on the retail level, where the recession has reduced the number of U.S. retail jewelers by 1,500.
While that is bad news for those forced to close their doors, both Bates and Janowski noted a cultural shift that could benefit those retailers still open for business: Today's consumer is more socially and environmentally aware than consumers of the past.
Janowski said "luxury shame," a phenomenon where people are more hesitant to buy and display ostentatious pieces, is on the rise.
Today's consumers, he said, generally are more concerned with the origin and impact of the products they buy.
Bates said due to the recession, consumers are looking for "excuses" not to buy things, and the societal issues surrounding diamonds, specifically the issue of "blood" diamonds, might cause consumers to shy away from the stones.
This sentiment among consumers has led to the rise of products such as the branded "Made in Botswana" diamonds and presents an opportunity for retail jewelers to reframe the debate about diamonds and tell a better story about the stones to drive sales.
"We're experiencing a new era of the consumer mindset," Bates said.
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