Consumers have changed a lot. The stereotype of men and women walking into shops willing to be guided by the retailer in their choice is outdated. Today customers know (or think that they know) exactly what kind of product they want, and what price they should be paying for it. That is because they have access to a large amount of information, which was precluded to them until not so long ago.
The Internet has disrupted long-established retailing rules, including for luxury products. Yet, every luxury sector was influenced in a different way. Travel agencies, as an example, have almost completely moved to the web, as people do not need to reach them in person in order to organise their holidays. Hi-Tech was also profoundly influenced. Today around 40% of electronic products are bought online, with a few clicks, and shipped directly at home. Customers do not feel the need to see the goods before they buy them, as they can count on thousands of customers reviews to help them in their choice.
Jewellery has been moving in a different direction. As of today, only around 4% of purchases are completed through e-trade channels. The reason for that is to be found in the peculiarity of jewellery products which, apart from some global brands, are unique, handmade pieces. In addition, diamonds themselves come in a wide array of cuts and quality, which makes each of them unique. People want to see and evaluate these products with their own eyes.
This though, does not mean that jewellery customers do not do their own research; on the contrary, due to the fact that diamonds are expensive products which require a substantial money investment, they feel the need to make their choice as informed as possible, mostly through web searches. The Internet contains a lot of good info and guides about diamonds, but also information that is completely misleading.
The traditional veil of mystery surrounding the diamond industry has, to some extent, backfired, allowing all sorts of misinformation to proliferate. Misinformation has a profound impact on the perception that customers have of diamond jewellery. In some cases, it can discourage them from considering a purchase, while in most other cases it will simply generate doubts and confusion about the opportunity to buy the product.
The burden of clarifying these doubts lies almost entirely on the shoulders of the retailers, who find themselves in a rather peculiar and difficult position. Why? Because diamonds usually pass through dozens of hands from when they are mined, sorted, auctioned, polished, graded, to when they are mounted onto a jewel and showcased, but there is only one point of contact between this complex process and the customer: retailers.
There are several examples of how misinformation on diamonds can shatter consumer’s confidence. The greatest source of confusion for customers revolves around the actual price and value of diamonds. The fact that diamonds possess a high individual value has produced the idea that diamond jewellery may be purchased as an investment for the future, and that a diamond ring can only retain or increase its value over time, which is not true. In turn, this ill-placed belief has given credit to the views of commentators who claim that the price policy of the entire industry is based on deception. The most notable example in this sense is the famous article “Have you ever tried to sell a diamond?” published on The Atlantic by Jay Epstein in 1982, but this sort of considerations still pop up in the media every now and then. Jewellery retailers should make everything possible to warn customers about this misconception. It is true that if you buy a diamond ring and try to sell it straight away, it will lose around 50% of its value, but the peculiar nature of diamonds comes into play over time. While as time progresses consumer goods such as electronic appliances or cars keep losing value, diamonds actually increase it. This means that customers are able to enjoy diamond jewellery and be reassured that, after the initial price drop, its value will only increase over time. If they want, customers can buy diamonds as an investment, but the best way to do it is relying on specialised diamond investment companies rather than venturing into this sort of business without sufficient knowledge.
Synthetics also represent a great source of confusion and misinformation. As fraudulent schemes are uncovered almost monthly in both specialised and generic press, consumer confidence decreases, prompting them to requests extra reassurances when buying diamond jewellery. At times, retailers can have a hard time providing those guarantees. While large stones should always be accompanied by a certificate, small (.2 to .4 points) and melee stones may present a challenge in that it is harder to trace their provenience. Retailers must therefore be able to explain their customers the actual proportions of the synthetic scandal, which is rather modest. In 2015 around 350,000 carats of synthetics diamonds were produced, against the 127 million carats of natural diamond extracted during the same period. Most of these 350,000 carats of synthetics are used for industrial purposes or sold as genuine hand-made diamonds for jewellery. Of the few diamonds that were mixed by fraudsters with naturals, most have been actually discovered, which explains why we know about them. The risk of synthetics actually making it to the end of the chain is therefore extremely low and limited to small stones, and it can be further reduced by relying on trusted suppliers.
Concerns regarding the presence of blood diamonds inside the pipeline have dwindled compared to the last decade, but today the public is extremely aware of the problem and wants precise reassurances. While the Kimberley Process provides sufficient guarantees, its intricate mechanisms can cause a lot of confusion. It is not rare for retailers to deal with customers who refuse to buy a diamond if that does not come with a conflict-free certificate. This is nonsense, but retailers must be able to explain with extreme clarity why. In particular, they should be able to explain that the KP is used to prevent parcels of rough diamonds from entering the pipeline before they are cut and polished and that therefore there is no need for guaranteeing every single polished stone. In addition, retailers should also be able to show customers the other face of the medal, explaining them that today diamonds provide means of sustenance to around 1.5 million people globally. Most mining companies have been developing serious CSR policies and today they are building houses, schools and facilities, as well as providing healthcare to the thousands of people they employ.
These are but few examples of concerns which are generated by simplistic or misleading information on diamonds. In ordered to address these concerns in an effective way, retailers are required to have a deeper, comprehensive knowledge of the diamond industry than ever before. This is a burden that they should not carry alone, and today there are several initiatives aimed at supporting them. It is worth remembering CIBJO’s Blue Book on Diamonds, the 2015 ISO standard 18323 aimed at reinforcing consumer confidence in the diamond industry, and the efforts and resources made available by the World Diamond Mark for diamond jewellery retailers.
Matteo Butera, Rough&Polished
