Rapaport Magazine - April 2018

Vol. 41 No.4 April 2018

GETTING YOUR BRAND IN HAND FROM TIFFANY TO CHOPARD, ALL SIGNS POINT TO OMNI-CHANNEL

KingProfile of Bling

Checking the pulse of Meet celebrity London's Garden jewelryHatton designer Stephen jewelry Webster district

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How wholesalers Strong Geneva salescan improve profit and margins, for Sotheby’s fromChristie’s an industry expert

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Crown jeweler and Garrard has Challenges succeeded in extending its opportunities of customization reach beyond royals

Style Style

Gemstones Trade Report

Our selfie culture Animal jewelry is all has The Discover impact ofwhy newEthiopian mine propelled to fame: emeraldKué is the hot new the rage thisthem season.

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NOTE FROM THE PUBLISHER

Politics has its place

IMAGE: Ben Kelmer

Our February cover featuring President Donald Trump proved controversial. We may have only received four formal complaints, but it definitely evoked strong opinions. While the actual cover story was politically neutral, examining the impact of the Trump presidency on our industry, the headline used on the front of the magazine itself provoked the most annoyance.

I personally apologize for any anger anyone experienced, but be assured, when we used the headline “Disrupter-in-Chief,� it was not meant as a criticism.

Martin Rapaport, when he first published the Rapaport Price List in 1978, was proud to be a disrupter. He still is.

President Trump is also a disrupter. He has taken on the office of the president and has very much put his individual stamp on it. And just like the Rapaport Price List has divided opinion over the years, so, too, does the current president of the United States.

What proved quite revealing in the feedback we received was the suggestion from one reader that we keep our nose out of politics.

Our intriguing industry is influenced by a myriad of things, including economics, demographics, fashion, culture and, most definitely, politics. We believe that anyone covering the diamond industry who avoids politics should simply shut up shop.

Politics has a deep influence on our industry, and Rapaport will never shy away from reporting, dissecting and analyzing how our leaders, both domestically and internationally, affect our industry.

Love him or loathe him, President Trump’s policies have had a direct impact on our sector. At present, this has mainly been in the form of a more positive economic environment, aided by tax cuts. The effect of any potential trade war as a result of tariffs, especially on China and India, will also impact our industry for better or worse. We will continue to cover and comment on these developments to help meet our commitment to provide industry members with material that helps them better understand the trade and make informed business decisions.

So if you were annoyed by our February front cover, please understand that Rapaport believes disruption can be a positive force. Whether or not President Trump is, well, that is for you and history to decide.

John Costello Publisher john.costello@diamonds.net diamonds.net

April 2018

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IMAGES: Gem Diamonds; Garrard; Shelly Purdy Studio

CONTENTS

IN-DEPTH

RETAIL

MARKETS & PRICING

14 News

37 Retail profile

57 Trade report

Industry: Hong Kong, Modi and blockchain.

Retail: Jewelers reveal plans to revive sales.

Mining: From Gem Diamonds’ 910-carat stone to Alrosa’s 2017 results.

Movers & Shakers: Who’s coming, who’s going.

After accessorizing the British royal family for nearly 300 years, Garrard is updating its image.

Upbeat sentiment hits plateau.

23 Education Retail experts share their most effective tips for teaching new sales associates the necessary knowhow.

24 Profile: Hatton Garden London’s diamond and jewelry district is feeling the squeeze amid rising commercial rents and fierce competition from online retail.

26 Gems of wisdom: B2B sales A number of strategies can help wholesalers improve profit margins and avoid common pitfalls.

COVER 28 Outstanding in omni-channel An in-depth look at the 10 jewelry brands that made the biggest impression in digital marketing last year.

32 Ambassadors of fortune To stay ahead of the competition, diamond manufacturers are using brand advocates to drive sales in jewelry stores.

34 No business like showroom business E-commerce and brick-and-mortar shops find common ground, helping clients browse when and where they want.

diamonds.net

40 Retail insight

59 US wholesale 60 US retail

With change as the only constant, jewelers need to get their online strategies in line with brickand-mortar.

63 Hong Kong

43 RetailRap

64 Israel

What jewelry items are women self-purchasing?

STYLE & DESIGN 45 Jewelry Connoisseur The use of 3D printing has revolutionized jewelry design.

46 Style Statement earrings are grabbing attention on the catwalk this year, from cascading tiers of gems to curving climbers.

50 Designer

67 India 68 Russia 70 Antwerp 72 Diamond data 77 Price List 89 RapNet Price List 94 Advertiser directory

Inspired by Canada and its landscape, Shelly Purdy has teamed up with Maple Leaf Diamonds to use local stones in a new collection.

98 Calendar

52 Legacy

100 The final cut

A stellar exhibition showcases the beauty of decorative watches through the ages.

54 Colored gemstone Colombia and Zambia have long been the leaders in emerald mining, but new Ethiopian finds are exciting the market.

ON THE COVER:

Tiffany & Co.’s Fall 2017 campaign featuring the hands of Annie Clark, Elle Fanning, Zoe Kravitz, Janelle Monae and Cameron Russell.

April 2018

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COVER/BRANDING

OUTSTANDING IN OMNI-CHANNEL An in-depth look at the 10 jewelry brands that made the biggest impression in digital marketing last year. By Anthony DeMarco There are plenty of lists that rank jewelry brands, but which companies have the highest “digital IQ”? That’s what business intelligence firm L2 Inc. investigated in a February report that ranked 70 luxury jewelry and watch brands according to their competence in e-commerce, digital marketing, social media and mobile.

The top 10 on that list are a who’s-who of distinguished heritage names, as well as a few new brands that are nearly as familiar. Here’s a look at the companies that outdid themselves in digital, and in other areas of marketing as well.

Profile: Founded in 1837 by Charles Lewis Tiffany and John B. Young as a stationery and “fancy goods” store, the business shifted its focus to jewelry after Tiffany took control of it in 1853. Today, it’s one of the bestknown luxury brands in the world, with 315 stores in approximately 20 countries.

Brand awareness: Tiffany has been a marketing innovator from the start: It partnered with circus mogul P.T. Barnum for promotions, set the standard for sterling silver, and published its iconic Blue Book in 1845. Its signature Blue Box has become a symbol of luxury, and the film Breakfast at Tiffany’s helped secure the brand as a fixture of American culture.

Digital footprint: The company has a well-rounded program featuring best-in-class product pages and robust digital marketing, social media and mobile platforms. Its Instagram account has 8.1 million followers. The online Tiffany Tattoo Shop launched on Valentine’s Day 2018, ensuring a large social media buzz.

Challenges: For some time, the jeweler seemed to have an identity problem, trying to appeal to younger consumers while maintaining its highbrow Upper East Side identity. Last year, its CEO and high-profile design director were forced out of the company.

Successes: In 2017, it appointed new CEO Alessandro Bogliolo, who is credited with revitalizing the Diesel brand. It also hired Reed Krakoff — known for reversing the fortunes of leather goods company Coach — as chief artistic officer, giving him control over much of the company’s creative operations, including store design, e-commerce, advertising and marketing. In another high-profile move last year, Tiffany opened the Blue Box Café at its flagship store in New York.

Meanwhile, the Tiffany Save the Wild collection — the profits from which go entirely to the Elephant Crisis Fund — reinforced the company’s established sustainability-friendly image.

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Profile: Founded in 1847 by Louis-François Cartier, the Parisian jeweler is a symbol of French high-jewelry design and craftsmanship throughout the world. Its hand-made jewels and art objects are distinctive in their quality and artistry. Cartier now serves as the flagship of the powerful luxury holding company Richemont Group, accounting for about half of the conglomerate’s revenue, and has boutiques in more than 60 countries.

Brand awareness: The company ranks 61st on the Forbes list of “The World’s Most Valuable Brands,” with a value of $9.3 billion (as a basis for comparison, Tiffany didn’t make the list).

Digital footprint: Its YouTube channel boasts more than 121 million views.

Challenges: During the early part of the decade, the brand was perceived as a bit too elitist for younger people.

Successes: Cyrille Vigneron, who became CEO in 2016, took on the mission of bringing Cartier to the people.

Among his initiatives was a series of exhibitions in 2017, in which Cartier presented its high jewels to the public free of charge in London, New York and Japan. Earlier in the year, the company held a pop-up experience called the Panthère Studio at a popular New York restaurant.

Profile: Quartz is one of the most abundant minerals on earth. But place this common substance in the hands of the creative geniuses at Swarovski, and it turns into a sought-after work of art. Bohemian jeweler Daniel Swarovski founded the company in 1895 in the small town of Wattens in the Austrian alps, not long after he patented an electric cutting machine that could cut crystal more precisely than by hand. Today, the familyowned, privately held Austrian company is synonymous with the jewels of the Swarovski Crystal Business — the highest-grossing of the company’s three business units, with a global reach of approximately 2,800 stores in around 170 countries, more than 27,000 employees, and revenue of about EUR 2.6 billion in 2016.

Brand awareness: Aside from its main business, Swarovski crystal is used in building-design materials, optical instruments and construction tools. It sparkles on stage clothing, movie and television set designs, art installations and chandeliers. The star on top of the Rockefeller Center Christmas tree in New York is a Swarovski. There’s even a crystal-themed museum, Swarovski Crystal Worlds.

Digital footprint: The brand’s high site traffic and active Instagram presence are among the features L2 praises. It also cites Swarovski’s mobile-optimized website, which has detailed product pages and userfriendly navigation.

Successes: Nadja Swarovski, an executive board member of the Swarovski Crystal Business, has given the division new life by creating crystal accessories and objects in partnership with world-class artists, architects and fashion designers.

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COVER/BRANDING

Profile: The Rhode Island-based, privately held company that Carolyn Rafaelian founded in 2004 has achieved enormous success in a short time. All of its affordable jewels are manufactured in America, mostly from recycled materials, and sold worldwide in its own branded stores and other retail outlets.

Brand awareness: It is known for producing affordable jewels with inspirational messages and motivational quotes.

Digital footprint: As a young company that sells meaning as opposed to jewels, Alex and Ani has a strong digital presence. Its first mobile app, which launched in 2015, hit 80,000 downloads in the first three weeks.

Challenges: This kind of growth doesn’t come without some pain. The company’s most successful CEO left in 2015, and since then, it has had trouble keeping executives. Additionally, on January 14, its distribution deal in Australia and New Zealand ended; the countries’ websites were abruptly shut down, and for a while, residents were unable to purchase jewels online.

Successes: The jeweler’s revenue grew from $5 million in 2010 to over $500 million in 2016, and it is now valued at $1.2 billion. By 2017, Rafaelian, who owns 80% of the company, became America’s only jewelry billionaire, according to Forbes, and is number 18 on the magazine’s list of “America’s Richest Self-Made Women.” By the end of last year, Alex and Ani reached the $50 million mark in charitable giving, according to a company spokesperson.

Profile: The privately held American company is known worldwide for its fashion-forward luxury jewels. Husband and wife David and Sybil Yurman, both designers and artists, founded the brand in 1980, and it has grown to no fewer than 32 retail locations throughout the United States, Canada, France and China. It also sells at authorized fine jewelry retailers worldwide. All creative decisions are made by the Yurmans, and the business itself is tightly controlled. It fiercely protects its brand and copyrighted designs through litigation — and it usually wins.

Brand awareness: The Cable bracelet — a twisted helix adorned with finial gemstones — was David Yurman’s first celebrated design, introduced in 1983. It remains one of the brand’s best-known jewelry designs.

Meanwhile, the company’s groundbreaking advertising and marketing campaigns — including a longtime collaboration with supermodel Kate Moss — are an integral part of its brand presence.

Digital footprint: Both its marketing programs and the protective nature of the company’s business have translated well to digital media. L2 cites David Yurman’s strong omni-channel features and a dynamic social media program. The company works hard to protect its products against online merchants that sell discounted brand-name jewelry.

Successes: In March, the designer appointed chief commercial officer Carol Pennelli as company president, crediting her with transforming the brand “from a wholesale company to a dynamic global omni-channel organization” in her 15 years working there.

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THE RUNNERS-UP The next five jewelry brands on the L2 list are Pandora (6), Bulgari (7), Van Cleef & Arpels (12), Piaget (18) and Chopard (21). They are all among the biggest names in the industry, and all are manufacturers, wholesalers and retailers. But each has its own specialty, and its own strengths and weaknesses.

Known for its charms, this Danish jeweler, which has manufacturing operations in Thailand, boasts approximately 7,800 points of sale in 100 countries on six continents, including more than 2,400 concept stores. It has seen spectacular success since its founding in 1982, though it has also experienced periods of drastic downturn. Currently, it is in a period of stability, showing 15% year-on-year growth (in local currency) for 2017, and revenue is projected to increase another 7% to 10% this year. However, L2 says its e-commerce site is separate from its brand site, resulting in a fragmented user experience.

Like many luxury firms owned by large conglomerates, this Italian high jewelry house has been focusing on its iconic lines: Serpenti, B.Zero1, Diva and Octo. The results have been “excellent,” according to parent company LVMH’s 2017 annual report, which showed the group’s jewelry and watch division increasing 12% year on year. L2 gave Bulgari high marks overall for its digital platforms, particularly its social media. The brand is also growing on the brick-and-mortar front, having reopened its New York flagship store in 2017. CEO Jean-Christophe Babin told Forbes last year that he considered retail integral to the consumer experience.

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This luxury brand has similarities to Cartier. Both are based in Paris, are internationally revered for French jewelry design and craftsmanship, and are part of the Richemont Group. Like Cartier, Van Cleef is trying to bring its jewels and watches to a larger, younger audience — and like Cartier, it held an exhibition in 2017 for its latest high-jewelry collection, L’Arche de Noé racontée. Van Cleef commissioned visual artist Robert Wilson to create a jewelry-themed multimedia art installation based on the story of Noah’s Ark. However, L2 says it needs to increase investment in digital media.

Initially founded as a watchmaker for other companies, Piaget began producing watches under the family name in the mid-20th century, entering the jewelry sector in the 1950s. Jewelry watches are a strong part of its business, so in addition to its Swiss watch manufacturing facilities, it has a separate workshop nearby for its timepiece-related jewelry crafts. Today, the Richemont-owned company has brand ambassadors in actors Jessica Chastain and Ryan Reynolds, who feature its products on red carpets and at other events. L2 says Piaget does a good job using video on YouTube and Instagram Stories.

The independent Swiss company began life in 1860 as a maker of men’s and women’s watches. The Scheufele family has owned the brand since 1963. L2 says it does a good job of appealing to younger consumers, with an active presence on Instagram and a partnership with singer Rihanna. Paid search investments generate strong visibility as well, L2 adds. Chopard has had a partnership with the Cannes Film Festival since 2007, and that has given it unprecedented international exposure for its high jewels and watches. It has also been a pioneer in sustainable jewels, using Cannes to showcase its Green Carpet high-jewelry collection. ◼ April 2018

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THE FINAL CUT

Pursuit of happiness

Rapaport Magazine asks members of the industry: What other career could you see yourself having?

Bruce Cleaver CEO, De Beers I’ve always been drawn to roles where there is an opportunity to help make a positive impact on people’s lives. One of the aspects I value most about my current role with De Beers is that I have a unique opportunity to help shape a better future that goes beyond the direct focus of our operations, be it through fostering enterprise development opportunities in local communities, helping to protect endangered species and their habitats, or supporting the empowerment of women in diamond-producing countries. And of course, we’ve made a very positive impact on the development of countries we operate in, like Botswana and Namibia.

So I’d see myself doing something where I’m able to make a positive difference, such as working for a charity like help2read, which is focused on improving disadvantaged South African children’s lives through literacy, and which I currently volunteer for in my spare time.

But failing that, I’d also be happy to consider playing center half for Chelsea (watch out, David Luiz!), or being a vintage wine critic.

Gina D’Onofrio Director of fine jewelry, Heritage Auctions Exchanging musical thoughts on stage, in the moment, with a jazz trio.

Connecting with an audience over a powerful lyric in a tiny venue. These were the moments that I lived for. This is what I was supposed to do.

Or so I thought.

Jewelry was the back-up plan; it was supposed to sustain me while I was developing my music career. I didn’t want to be a starving artist.

So I tried to juggle both lives. Something had to give.

Fortunately, my day gig has turned into a fascinating and fulfilling career. Working with Heritage Auctions offers new ways to challenge my creative drive. I still sing, but now it’s for fun, rather than a means to survive.

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Jenny Luker President, PGI USA President, Women’s Jewelry Association My educational background is in sociology, so I have always found relationships and societal institutions fascinating.

An aspect of my job at PGI USA that I enjoy most is conducting research to better understand how to meet the needs of our consumer and trade alike.

If I could have another career outside jewelry, I would want to combine my education and research experience within the legal industry and work as a jury analyst. I love understanding how people think and why, and the impact our social behavior has on society at large. Ideally, I would hope that studying behaviors of juries could help create a more balanced justice system to ensure that jurists are qualified and their behaviors are understood, so they are able to more fairly provide decisions based on the law.

Don Palmieri President, Gem Certification and Assurance Lab (GCAL) Recruited as an apprentice jewelry designer out of high school and drafted soon after as a soldier, unlike most young adults, I was hooked on two career paths before I was 21. Fifty years ago, I was a Military Police traffic investigator in Nha Trang, Vietnam, where I used my innate investigative techniques. Escaping physical injury, losing both innocence and trust in government, I returned home and to the jewelry industry as a retail designer. After receiving my graduate gemologist degree, I became enmeshed in major appraisal assignments, leading to testifying as an expert in major court cases globally, putting the pieces together to come to a defendable conclusion.

Working with top law firms and government litigators, I’ve enjoyed providing answers and solving mysteries. I do that every day as a forensic expert in gems and jewelry. If I ever decide to give this up, I’ll go to law school and become a lawyer or criminal prosecutor. diamonds.net