Which items sell better – branded goods or generic items? For many years after the 2008 financial crash, the answer appeared to be overwhelmingly generic. The vast decline in wealth among huge numbers of people across the United States meant there was little money left for luxuries. The same was true across Europe.
Indeed, so deep did the recession bite that consumers searched for generic for most items – from breakfast cereals and washing powder all the way up to jewelry and other so-called luxury items. And although the U.S. economy is in much better shape today, the tendency to look for generic items remains strong. Although unemployment has declined significantly, many workers still do not have the bargaining power to secure salary rises – meaning disposable income is pretty much static.
Against that sort of background, companies are asking themselves if there is a point to launching new brands – and that applies to the diamond jewelry business as much as any other. Although the diamond and jewelry industries often ask themselves about the level of success of branding exercises, there is some evidence to suggest that branding is paying off and that consumers are willing to pay a premium for jewelry with a name. Although buyers have overwhelmingly been happy to buy generic jewelry from trusted local jewelry stores, increasing numbers are now heading for more upscale luxury department shops and boutiques and paying a premium for branded fine jewelry from fashion houses.
In the 1980s branded diamonds arrived on the diamond scene when Lazare Kaplan branded and laser-inscribed the Lazare Diamond, the first branded round diamond. The Lazare Diamond was advertised as "The World's Most Beautiful Diamond" and was the first recognized brand name for a diamond. After Lazare Kaplan, many companies followed and created brand names for round diamonds with the goal of convincing consumers that their diamonds were the best of the best.
And the trend does not end there. Celebrity jewelers such as Russell Simmons in the United States, and British designer Stephen Webster are also enjoying the benefits. Wealthier consumers are increasingly plumping for expensive embellishment that clearly tells people which brand it is or by including well-known logos, such as Versace’s Medusa head, or David Yurman's distinctive chunky carved cable silverwork.
Some designers believe that, in essence, jewelry was the last luxury product sold, for the most part, anonymously. And when the major jewelry brands realized this, some years ago, they moved quickly to rectify the situation. American jewelry industry analyst, Ken Gassman estimates that sales of branded jewelry items will, in the coming decade, rise by 100 percent to almost one-third of the almost $60 billion a year American fine jewelry market.
The downside of this trend of branding, however, is that the independent jewelry stores, often referred to as Mom-and-Pop shops, have seen their numbers fall over the past 10 years – and even more so following the financial crisis of 2008, and the economic slowdown of 2009 and the failure of most Western economies to really take off. Competing with industry giants such as Tiffany & Co., and Signet Jewelers which operates around 3,000 stores in all 50 states in the US, primarily under the name brands of Kay Jewelers and Jared The Galleria of Jewelry, is clearly a huge battle for smaller, financially constrained, independent stores and small chains.
The story is very clearly presented in the numbers – although there were still an estimated 21,000 specialty jewelers in the United States as of the end of 2016 – that figure is down more than one-third in just one generation from a record figure reported in 1987.
The increasing consolidation of the jewelry industry is creating extraordinarily difficult levels of competition, ironically both for the smaller chains and the large alike. Indeed, the race for business is so intense that the jewelry industry is the one most susceptible to the foibles of the holiday-season gift-buying public. The November-December period generates almost one-third of jewelers’ annual sales, making them more dependent on the run-up to Christmas than any other retail sector, says the National Retail Federation
Most of the sales take place in December, and 25 percent of them in the week before Christmas, says Michael McNamara, a vice president for Purchase, New York- based MasterCard Advisors SpendingPulse.
Branding is good for the jewelry industry because converting jewelry from an evergreen investment that you pass on to your heirs into a fashion accessory that goes out of style and needs to be replaced boosts sales by driving purchases, Gassman said. “Consumers have a romance with brands,” he said, “They are a shortcut to higher social status."
The branding trend accelerated after the recession as luxury goods companies sought new areas of growth to complement their existing lines and keep attracting customers in the increasingly mature U.S. and European markets, said Hana Ben- Shabat, a New York-based partner in the retail practice at A.T. Kearney, a management consulting firm.
The popularity of colored stones also has driven the trend toward designer jewelry, Ben-Shabat said. “It gives more room to play with jewelry rather than just deal with diamonds and gold,” she said. As a result, the number of jewelry brands sold by luxury department-store chains has exploded in recent years, Ben-Shabat said.
But a specific challenge for designers is figuring out how to signal the brand through the jewelry, Gassman said. “There are not nearly the opportunities to broadcast the brand as there are in clothes and handbags,” he said.
Tiffany, too, has emblazoned its name most obviously on its “Return to Tiffany” silver jewelry collection. The risks of producing branded gems are greater for jewelry designers than for the luxury-brand giants because they are starting from scratch, and must stand out in the highly crowded market to succeed, Ben-Shabat said.
Webster, 53, founder and creative director of his namesake London-based brand, made a mark by bringing what he describes as “edge” to fine jewelry, and he has shown a modern savvy in building up his brand. He has appeared as a guest judge on Project Runway and produced brand videos that are posted on YouTube. His jewelry inspirations range from thorny tattoos to shark jaws.
“We have a certain type of jewelry and it is attractive to people who want to sort of show off,” the rugged Webster says in one of his videos. “The minute you see it, you kind of get it.”
Meanwhile, American firm, Hearts On Fire, announced that it has unveiled a collection of diamond anniversary and wedding bands that feature a new, hidden signature on the inside of the band. This signature, a ring of hearts encircling the band behind each diamond, highlights the unique company name of Hearts On Fire. The diamond company said the design also provides extra meaning for both the wearer and giver of the band.
The firm is also the official jewelry sponsor of the Miss Universe Australia pageant. Hearts On Fire’s most important assignment is to provide the Miss Universe Australia pageant with a magnificent diamond crown.
And a report by Bain & Co in 2015 showed the importance of branding for the diamond jewelry market, especially in the United States and other Western markets. The survey also found demand slightly falling off among younger consumers, with women aged 15 to 24 showing the least interest in jewelry. “It is unclear whether this is a temporary phenomenon or a long-term trend, but younger women show a growing preference for other luxury goods, especially consumer electronics,” the survey said.
One of the best-known diamond brands is De Beers' Forevermark, and more than a decade on, the firm is celebrating the continuing growth of its diamond branding program, which began on a pilot basis in Hong Kong in 2004 before being scaled up in Asia and beyond. De Beers has since introduced the Forevermark through selected jewelers in Hong Kong, Macau and mainland China, as well as in Japan, Taiwan, India, South Africa and the United States.
The most recent country identified by De Beers for its Forevermark brand was Botswana where it was introduced towards the end of 2014 following South Africa.
Each Forevermark stone has a unique symbol and identification number laser inscribed on the table facet. The inscriptions are only 1/20 of a micron deep—500 times thinner than a human hair. The inscriptions are not visible to the naked eye, but can be seen with a special Forevermark viewer. Consumers who buy Forevermark diamonds also receive a Certificate of Authenticity from the De Beers group.
De Beers says its Forevermark branded diamonds are guaranteed to have been selected and processed in accordance with its Best Practice Principles at every step along the pipeline, meaning that they must be natural and untreated. To be eligible, diamonds need not come from De Beers mines, but must be 0.18 carats or larger, SI2 clarity or better, K color or higher and good quality or better cut.
The Best Practice Principles for Forevermark stones are monitored by an independent third party, which according to the company is meant to ensure that all Forevermark diamond facilities are inspected on an annual basis to guarantee that they meet the standards.
The expansion of the Forevermark brand includes the launch of its own independent grading operations, which will only analyze Forevermark diamonds. New facilities using proprietary technology have been opened in Belgium and the U.K.
“There is a demand for branded diamonds and discerning customers are looking for the very best with the name of De Beers behind it to certify that they are the shiniest, the best and what is very, very important is that they are responsibly sourced,” said De Beers CEO Bruce Cleaver. “Forevermark offers unrivalled accuracy of grading and integrity, with each diamond inspected at least five times. Our proprietary technology and systems are cutting edge, as are our people. And our grading will as never before combine consumer needs and technical requirements into the perfect expression of Forevermark’s quality, trust and integrity.”
De Beers believes the Forevermark brand will continue to boost consumer confidence. “Consumers are becoming more knowledgeable, more demanding and more concerned about the well-being of the world at large. Forevermark will meet those concerns; it will give assurance and comfort," said Cleaver. "The Forevermark team has a clear vision. Working in partnership with the world’s leading diamond jewelry retailers, Forevermark will be established as one of the world’s leading diamond brands, inspiring, exciting and re-assuring diamond consumers of all ages.”
By our Israel correspondent Abraham Dayan
