Rapaport Magazine - July 2019

VOL. 42 NO.7 JULY 2019

SHOW ME THE MONEY

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ANALYSIS

RETAILRAP

INSIGHT

STYLE

LAB-GROWN DIAMONDS WERE THE TALK OF THE TOWN AT JCK — AGAIN

DO YOUR CUSTOMERS REALLY CARE ABOUT GRADING REPORTS?

APPEALING TO THE FIVE SENSES CAN HELP CLOSE A SALE

ALL THE BLING OUR JEWELRY INSIDERS SPOTTED IN VEGAS

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CO N T E N TS Page

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STYLE & DESIGN 43 Jewelry Connoisseur

Victorian styles still find expression in contemporary designs.

44 Style Chains were ubiquitous at JCK and Couture, with layering, colored gems, and lab-grown among the shows’ standout trends.

48 Designer With a whimsical new category and a rainbow of hues and materials, the Couture Design Awards had plenty of wonders to display.

COVER 24 Cover story

IN-DEPTH

How can the trade pull out of what many say are dire financial straits?

14 News

Industry: Stop buying rough.

Retail: China luxury set for growth spurt.

Mining: Gem bids goodbye to Ghaghoo.

Movers & shakers: Celebrating new beginnings, honoring the departed.

20 News analysis The synthetic-diamond section at JCK is growing, a reflection of the category’s performance in the market.

28 Auction report Sotheby’s and Christie’s Magnificent Jewels sales in Geneva and Hong Kong: The trends, highlights and results.

RETAIL 38 Retail profile

22 Show report An expanded GemGenève features rare gemstones and a focus on craftsmanship.

40 Retail insight A multisensory store experience can enhance a jeweler’s appeal to clients and help boost sales.

42 RetailRap How important are lab certificates to customers?

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The Met’s exhibit on American jewelry showcases immigrant mementos, indigenous stones, transformable pieces and more.

54 Colored gemstone Under-the-radar rocks like garnet, spinel and moonstone gained ground in Las Vegas, where transparent sourcing was a hot discussion topic.

Estate pieces and limited-edition watches are the purview of Provident Jewelry in Florida.

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52 Legacy

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MARKETS & PRICING 57 Trade report 59 USA 64 India 65 Israel 66 Antwerp 67 Hong Kong 68 Diamond data 73 Price List 85 RapNet price list 90 Directory 94 Calendar 96 The final cut DIAMONDS.NET

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Note from the publisher

IMAGE: BEN KELMER

T

CHOOSE A SIDE

here is a line being drawn within the diamond industry. The question is — which side of it are you on?

Your answer matters to your customers, to your suppliers and to your future.

If there is one good thing synthetic diamonds have brought to the natural-diamond industry, it is self-reflection. It has forced us to confront the ethical and environmental essence of the diamond business.

When lab-grown-diamond manufacturers launched their marketing blitz several years ago, they had the naturaldiamond sector on the back foot with their brash, bold statements spinning lies and disinformation about their ethical and environmental credentials. But though a lie will travel the world while the truth is putting on its sneakers, the message is finally out there that synthetics are neither environmentally friendly nor an ethical alternative to natural diamonds.

If synthetics overtake natural diamonds in the minds of millennials, it will devastate the income of artisanal miners and destroy the economic prosperity of Botswana, which has been a shining example of how diamonds can impact

not only the lives of people and communities, but the fortunes of an entire country. The wealthy people who own lab-grown-diamond factories will become wealthier, while millions of people in the poorest regions of the world who rely on artisanal diamond mining will lose the ability to earn a living. Hardly ethical, by anyone’s standards.

However, the fact remains that the unscrupulous sourcing of stones is the biggest threat to the diamond industry. That is why Martin Rapaport, speaking at the Rapaport Breakfast at JCK in June, said the industry must “split the market between known-source diamonds and those that do not identify the source.” This is the line that is being drawn. Consumers believe in social responsibility, and they want to know where their diamond came from. They want to be 100% confident their diamond is an ethically sourced natural diamond.

And if you cannot guarantee this, you will be on the wrong side of the line.

John Costello PUBLISHER john.costello@diamonds.net DIAMONDS.NET

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N EWS ANALYS IS

GROWING INTEREST In its second year, the synthetic-diamond section at JCK has nearly doubled in size — an indication of the category’s performance in the market. By Jennifer Heebner

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t JCK Las Vegas, lab-growndiamond exhibitors have mushroomed nearly as much as opinions about the stones themselves. To accommodate growing market needs, organizers debuted the Lab-Grown Diamond Neighborhood at the 2018 edition of the trade fair.

“There may have been exhibitors that had lab-grown in the show in earlier years, but they weren’t grouped together in a neighborhood until 2018,” says Sarin Bachmann, event vice president for JCK and Luxury. “Lab-grown diamonds 20 JULY 2019

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are a growing segment, and it became important for our buyers to have clear delineation of the category.”

This is why the show added a 6,400-square-foot designated section for 29 lab-grown exhibitors to display both loose stones and finished jewelry last year. It’s also why the area increased its footprint by 40% this year, with nearly double the number of participants.

‘THEY’RE NOT GOING AWAY’ Proponents of lab-created diamonds see opportunities for the stones to share case space with mined ones, as lab-grown

constitutes another way for consumers to spend discretionary dollars on jewelry as opposed to other product categories.

Indeed, lab-created diamonds helped fourth-generation jeweler Pia Aiya’s family business stay afloat during the recession.

“Lab-growns came out of need but grew into something more,” says the Aiya Designs director of operations. “They are another avenue or tool.”

Raj Vaidya, owner of six-month-old DiamSpark Lab Grown Diamonds, agrees.

“They’re not going away,” says Vaidya, whose parent company has been in the mined-diamond industry for 25 years.

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“THERE’S LESS RESISTANCE FROM CONSUMERS AND MORE FROM THE INDUSTRY”

The biggest impetus for sales?

Lightbox. Before the De Beers labgrown jewelry line emerged, many merchants were hesitant to embrace this product category. Now sales are heating up, as is evident from the expanding LabGrown Diamond Neighborhood at JCK. At press time, JCK Las Vegas was still finalizing plans for the section’s further growth in 2020. Blank has already requested a booth double the size of this year’s.

“Lightbox really opened up the market,” affirms Mody.

Fenix, another lab-grown company, used virtual reality at its JCK booth to present the gems as a product that offered consumers a choice. In a five-minute experience, retailers could see the growing and cutting processes for themselves — the latter carried out at a factory in India.

“We’re not looking to pick a fight about what’s better or not,” says brand-builder Andrea Hansen, who aided Fenix with its campaign. “But we are well-equipped for volume, from 30 points to 3 carats and more. Lab-growns could dominate the fashion space.”

“The affordability of lab-growns has increased the public’s awareness of them,” he adds. “And the industry is actually buying them in large-scale quantities — like 1,000 at a time. They are not on memo.”

Price may be the biggest factor in customers’ purchasing decisions — synthetic diamonds can cost a third of what natural ones do, according to interviewees — while sustainability and transparent sourcing are close behind.

Evolv, a division of longtime manufacturer Joseph Blank, dipped its toes in the lab-grown-jewelry waters in 2016, though sales have been slow until recently. Now the business is every bit as viable as mined diamonds.

“There’s less resistance from consumers and more from the industry, though we continue to get gradual increases in requests for them,” explains CEO Douglas Blank. “Our company is 100 years old, and lab-growns are keeping me busy and our phones ringing.”

Of course, the individual purchase figures can BIGGER AS THEY GO look disappointingly low That speculation paves JCK’s Lab-Grown compared to natural. the way for the inevitable Diamond Neighborhood “We just sold a 3.50question of what’s next for increased its footprint carat lab-grown stone for synthetics. Many are saying by 40% this year $13,000 that would have bigger pieces of finished been $30,000 in a mined jewelry, and definitely more diamond,” he relates. sales — though how much more is anybody’s guess.

“The percentage of lab-grown sales may DEMAND FOR MORE just be 2% now, but if 2% becomes 3%, Of all the pros and cons, the most then we’ve seen a 50% jump,” says Kinish compelling argument for selling labShah, owner of Splendid Lab Diamonds. A created diamonds is that consumers are 27-year veteran of natural diamonds under buying them.

Surediam, his company began working in For Sehal Mody, chief operations officer synthetics three years ago. at GoGreen Diamonds, the proof is in the Of course, proponents of both types sales. His firm — a four-year-old division of diamonds exist and have “diamond of a 40-year-old natural-diamond-jewelry dreams,” according to Hiren Goti, CEO manufacturer — has gone from making of newcomer SkyLabDiamond. He says about two sales a month 10 years ago he doesn’t understand the negative to getting retailer requests for entire opinions about lab-grown. “I don’t know showcases full of both loose lab-grown why people are so worried. You can’t stop diamonds and finished jewelry. shoppers from buying what they want. It’s “Retailers are looking for bridal and their choice.” ◼ fashion basics,” he reports.

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LIGHTBOX LIAISONS

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embers of De Beers’ Lightbox team remained cool under questioning at JCK Las Vegas as they addressed a packed conference room about the company’s lab-grown-jewelry product. That included queries about those who might manipulate inscriptions on stones larger than 0.20 carats to deceive buyers.

“We’re not here to police the rest of the industry,” said chief merchandising officer Sally Morrison, “but we could maybe work with the International Grown Diamond Association [IGDA] to help create standards for the overall health of the sector and to not undermine consumer confidence.”

Lightbox CEO Steve Coe offered clear communication about the manufacturing process for the brand’s fashion-forward pink and blue colors, which come in basic styles like studs and pendants.

He also pointed to broader gifting opportunities like sweet-16 presents at retail prices ranging from $200 to $1,000.

In addition, the stones aren’t graded, which reinforces the fact that they’re manufactured like other mass-produced items.

“There’s not one that’s better or worse than any other in the lineup,” said Coe. Meanwhile, women of all ages and ethnicities have said they find the jewelry appealing and feel pretty wearing it, according to brand research and video testimonies. And Lightbox’s $94 million investment in a manufacturing facility in Gresham, Oregon, which is slated to become operational in early 2020, signals how important the US market is for Lightbox’s business.

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RETAI L INS IG H T

SENSE OF ENGAGEMENT Jewelers are taking a multisensory approach to enhance their appeal to customers. By Joyce Kauf

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lmost all jewelers describe their store ambience as “inviting…welcoming…like home.” Yet creating an environment that encourages people to buy may require more subtlety than a warm greeting or a comfortable place to sit. In fact, customers may not even be aware of the individual elements that set the stage for shopping. In an effort to drive business, jewelers are now embracing a multisensory approach incorporating sight, touch, hearing, smell and taste.

“We made an intentional decision to make all five senses part of our brand,” explains Dianna Rae High, owner of Dianna Rae Jewelry in Lafayette, Louisiana. “Generally, people buy jewelry to celebrate a special time in their lives. But that doesn’t mean it’s stress-free. Often, it’s an emotional and expensive decision. By touching all the senses, we’re trying to make it as pleasurable as possible.”

The décor at Erik Runyan Jewelers in Vancouver, Washington, has what owner Erik Runyan describes as an “Under the Canoe” theme (see box).

“It was a well-thought-out plan to include sensory marketing in our new store, which would also make it more interesting to a new generation of customers,” he says. “The canoe and the nautical ambience are 100% branding.”

Sensory marketing gives jewelers an edge. “I can’t compete on any level with a big-box store,” explains Runyan. “Yet I can swim in a different niche and do well.” To illustrate the point, he recalls how one young man who had purchased an engagement ring couldn’t wait to show his fiancée the store.

“The store environment made him proud to buy it here.”

Here are some of the ways retailers are tapping into the five senses.

SIGHT A yellow blown-glass sun and 400 square feet of blue blown-glass sky welcome customers to Talisman Fine Jewelers in El Dorado Hills, California. “Our vision is to bring the outdoors inside in a surreal depiction,” explains owner Andrea Riso. A winding “river” filled with semiprecious stones and rocks runs the length of the store, airplanes are suspended from the ceiling, and the guitars on the wall of the Library Lounge can be taken down and played.

“Every single element was deliberately designed to create an environment that’s seamless with the natural beauty that surrounds us,” she says.

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Above: Erik Runyan Jewelers, featuring the store’s signature handhewn canoe.

Right: Spoiling customers with some sweet treats can help sales.

walls that allow natural light to shine through.

“We don’t want customers to feel locked in,” she states, adding that the store’s distinctive ambience has “absolutely contributed to increased sales.”

TOUCH Both High and Riso advocate displaying easily accessible cubic zirconia prototypes for customers to hold and feel. A brand-new prototype at Riso’s store features “magnetic sets — ring heads, different cuts, colors, halos, shank styles — so customers can touch the jewelry,” she relates. “Integrating the technology and the tactile has been very effective.”

“PEOPLE NEED A LITTLE PICK-MEUP — AND IT PUTS THEM IN A MUCH BETTER MOOD”

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HEARING All agree that music is an essential element to set a mood — as long as it doesn’t distract from the goal of getting the customers to buy.

“The music tends to ebb and flow with the audience,” notes Runyan, who uses sound to reinforce his branding message. “We have speakers that splash sounds of rolling waves to give a more immersive feel. Smooth Jazz is fine, but if we can, we like to bring our customers along on a sea voyage.”

The jewelers acknowledge that they alter their playlists according to the shopping demographic.

“Our core customer is in the 45-to-58 age range, so ’80s New Wave is a good choice,” says Riso.

She mixes it up, adding steel drum music and Bossa Nova tunes in the summer to evoke a “piña colada” feel.

Like every other marketing element, music requires attention to detail. High recalls helping a man buy an engagement ring. “He was already nervous, when suddenly the song ‘Another One Bites the Dust’ [by rock group Queen] started playing,” she recounts. “I immediately saw how he tensed up even more.” A quick-thinking salesperson changed to a soothing tune and saved the sale.

SMELL As with music, scent cannot be overpowering. “Scent changes our mood,” says High, who uses an oil diffuser with a light grapefruit scent that she describes as “calming and refreshing.” Runyan, who also believes smell is a memorable characteristic, incorporates lightly scented candles.

However, citing research that fragrances can be off-putting to a majority of people, Riso is adamant about ensuring a fragrance-free environment.

“We eradicate scent,” she insists — to the point that she does not allow her staff to wear fragrance and uses an air neutralizer to remove any scent after a perfume-wearing customer enters the store.

Windex and citrus-based cleaning products are the only scents she allows.

TASTE Customers always like a little nosh.

“You’d be surprised at the difference a snack at 3 p.m. makes,” says High, who offers customers water, soft drinks, beer and wine when they come in. “People need a little pickme-up — and it puts them in a much better mood.”

Riso, who places huge jars of chocolates, nuts and Jelly Belly candies all over her store, concurs.

Offering food and drink to clients can also be another branding opportunity: Runyan serves wine with labels bearing the “Under the Canoe” icon and tagline.

There is a distinct correlation between the lure of jewelry and appealing to the senses.

“We’re in the happy business,” says Riso. “Jewelry is an extension of people’s lives. No matter the occasion, it’s special. Their time spent with us needs to be multisensory so we can excite and delight all their senses.” ◼

Dianna Rae Jewelry in Lafayette, Louisiana, uses an oil diffuser with a light grapefruit scent to create a calming environment.

“THE MUSIC TENDS TO EBB AND FLOW WITH THE AUDIENCE”

SHIP-SHAPE SHOPPING EXPERIENCE

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anging from the ceiling of Erik Runyan Jewelers is the retailer’s signature image: a 30-foot, hand-hewn, upside-down wooden canoe.

“Everything that happens ‘Under the Canoe’ is unique,” explains Erik Runyan, a fourth-generation jeweler and licensed ship captain.

While a nautical theme is at the helm of the store’s branding, it is the display case of the Side by Side Diamond Selling Solution by Joseph Asher Collection that anchors the multisensory appeal. The approximately 6-foot-tall, jetblack showcase is filled with product.

“Its rotating LED lights make the diamonds in the collection wink and sparkle even when you’re standing still,” says Runyan. “Several times each week, someone literally comes through our doors just to get a closer look at it. It’s like a beacon.”

Once a customer is standing in front of the display, a salesperson will walk over and click a remote control. “And then we watch the customer’s jaw drop as the front glass retracts like a super-smooth treasure chest,” he continues.

“Then, when the salesperson reaches in and selects a piece of jewelry to show the dazzled customer, a video starts playing on the built-in 24-inch screen, highlighting the very piece that is being shown.”

It only takes a short time for the show to work its magic. In the span of about two minutes, says Runyan, this selling tool has “pulled in a customer off the street, raised their eyebrows with hidden technology, and tickled their emotions by showing synchronized videos of happy jewelry events. Now that’s customer engagement.”

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RETAI L RAP

HOW IMPORTANT ARE LAB CERTIFICATES TO CUSTOMERS? Two jewelers discuss whether grading reports can make or break a sale. By Phyllis Schiller PAUL BOSWELL

DAVID ROTENBERG

MANAGER, BRYANT & SONS SANTA BARBARA, CALIFORNIA

OWNER, DAVID CRAIG JEWELERS LANGHORNE, PENNSYLVANIA When it comes to what certificates are all about, our clients come in asking us to help them navigate the maze. They need us to help them understand what the certificates mean. That’s why they come here. We’re not the average clearing house where they just line up the best price. We provide hands-on service. We’re like a gourmet restaurant.

At a fast-food restaurant, one person will wait on you, and you find your own way to a table. But at a fine restaurant, 13 people are going to wait on you, and that’s what we’re offering.

“Yes, we use lab certificates, from the American Gem Society (AGS) and Gemological Institute of America (GIA). They are part of our sales strategy; our staff is trained to answer questions about them. I like to say that we’re not selling, but we are educating. We take it step by step. We talk about color — is it a high G or low G? We talk about clarity — is it an SI1 that wants to be a VS2, or is it an SI1 that really is trying its best to be an SI2? When we get to cut, we discuss the differences in the labs’ ratings. When the stones are side by side, it’s hard for clients to tell the difference and to understand why one stone costs more than the other, depending on its certificate. It’s up to us to guide them about whether a particular stone is worth spending more for.

“Not every diamond is worthy of a certificate. I could always send the diamond to a lab and get a certificate, because I’m telling them the truth about the stone. But I don’t necessarily run into people who only choose a diamond because it has a certificate. It’s not necessarily a deal-breaker. But it can [help give] the consumer a certain comfort level.

“Clients may think they’re prepared to discuss certificates, but they don’t necessarily understand what the ratings mean. We have to show them.”

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Customers do come in here having done their research about certificates. They might not necessarily ask about certs with colored stones, but with diamonds, they do, asking whether a particular diamond is a certified stone. It’s up to us then to explain why what the certificates are saying should be important to them. We ask them questions and have them ask us questions regarding any type of certification.

“We give individual attention, person to person, to convey to clients what they need to know about particular labs’ ratings and why the price of a diamond is indicative of that. We think it’s important to show them the stone using a loupe or microscope so they can see what the ratings are all about. And that depending on the cut, two diamonds with the same color and clarity can have more or less sparkle than [one another].

“We occasionally have certificates from other labs, but GIA and AGS certificates are the prime ones for us for diamonds. We also sell diamonds without certificates, grading them against GIA rating scales. We explain to customers that we are gemologists — I’m a graduate gemologist — and we’ve been doing this a long time. We will give them a proper appraisal.

“When it comes to the larger, more important diamonds, a certificate from an outside lab does give the customer added confidence to buy a big stone. And even if they don’t ask us about it, we will show them the certificate after they’ve looked at the stone. We can show them that the diamond they like is the 5.50-carat, E-color, VSI stone according to information from an independent laboratory. So a certificate can be very useful in that way.

“Customers are much better educated today about certificates and even [know] that there are certificates from different labs.”

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