The usual subjects affecting the global diamond industry were aired at the 2015 Presidents Meeting in Tel Aviv, with all the main speeches relating to the issues of declining profitability, high rough prices and standstill polished prices, the dangers of overgrading and coated diamonds.
If not exactly a new theme, the issue of the absolute necessity of raising diamond jewelry sales via generic diamond promotion was widely discussed. This was spoken about by the World Federation of Diamond Bourses (WFDB) whose main event of the morning session on the first day was a World Diamond Mark Generic Marketing Think Tank that discussed progress so far by the body and ideas for how it can progress further.
The WFDB has thrown its substantial weight and influence behind the World Diamond Mark Foundation which aims to raise consumer awareness of diamond jewelry via a range of initiatives.
As WFDB President Ernie Blom said: "Have you ever heard of a 20-year-old standing outside a store all night to buy jewelry? I haven't. We have fallen behind the curve over the past decade when it comes to persuading consumers that diamond jewelry can and should be among the items to benefit from their disposable income.
"We need consumers to regard regular diamond jewelry purchases as a natural and ongoing activity. Engagement and wedding ring purchases are fine, but there are so many other occasions for which diamond jewelry can be purchased and we need to show buyers those opportunities.
"We are, let us remember, an industry built on hope and optimism – we create and sell precious jewels that symbolize many of the best human characteristics: love, commitment, and long-term relationships. People buy diamonds as a way of saying: 'I believe in you; I believe in us.'"
However, the challenge in creating and developing a generic diamond promotional campaign are huge. There are, naturally, rivalries between various countries and sectors. Not every country or industry organization wants to become involved. And then there is the recently formed Diamond Producers Association which has its own aims. Although it has started off with a $6 million budget, there is some skepticism about whether this is enough financing for a global campaign, and questions about the direction it will be taking.
And industry analyst Chaim Even Zohar made the interesting point that, according to his calculations, diamond content in jewelry is dropping. Therefore, although jewelry sales may be rising, that does not necessarily mean good news for diamonds since smaller and lower-quality goods are being set in the jewelry. "As a result, retail jewelry sales going up are not as good as we apparently think it is. It is not the whole story."
Furthermore, while the $80 billion overall spent on diamond jewelry last year was a record, diamond manufacturers enjoyed a profit of just $100 million, a figure which is dramatically lower than the $900 million figure he estimates for 2010.
An analysis of the global diamond jewelry and wider luxury market was provided by international luxury marketing consultant Frank Mueller, of Bridge to Luxury. He forecast that sales in the emerging economies would grow in the long-term. However, for the moment they are not racing ahead.
Meanwhile, across the world, but particularly in the West, consumers are becoming more sophisticated and knowledgeable regarding products. "Consumption patterns are changing. All customers today live in the global village. Customers today are online and everyone is wired to everyone," said Mueller.
Among the problematic issues are the need for very high investments in brand communication, that the Internet is creating continuous changes and challenges, the volatility of currency exchange rates and so-called "grey markets". Mueller asked if diamonds are contributing to consumers’ luxury experience, and if the diamond industry is doing enough to "excite stimuli that enhance the consumers’ identity and status". Is the industry really doing enough to promote diamonds and diamond jewelry in the mind of the luxury consumers?
In contrast to the rather limited efforts of the diamond business, Mueller gave a range of examples of the type of sophisticated luxury goods advertising that is being produced by luxury goods firms. He asked why the diamond trade, given the inherent advantages that diamonds possess as a luxury product, are not being leveraged.
"Diamonds are made of true star dust, they take millions of years to materialize, they are a product of Mother Nature not an industrial product. Every diamond is unique: and only made once and someday the resource will run out since it is limited by nature. Add to that the fact that it is cannot be destroyed and you have an exceptional product."
Mueller said the diamond and jewelry industries needed to create a strong backstory for diamonds and bring about product placement in movies and other media where they can attract strong consumer attention and attraction. Though admitting the issue of budgets was difficult, it is imperative that marketing spends are in place, he commented.
Other participants spoke about the fact that the global diamond and jewelry industry moved some of its focus away from the United States after the financial crisis of late 2008 and the deep recession the following year. They moved in the direction of China, India, the Middle East, and Russia only to find that those emerging markets had not yet created a critical mass of sales and consumer interest to enable them to replace the United States which is still the jewelry industry's most important market.
"Ironically, we have had to turn back to the United States as a main market because half the world's jewelry sales are still there and will continue to be there for the foreseeable future," said a diamond manufacturer. "We believed that China and India could step up and take a bigger chunk of jewelry sales.
"But the situation is not clear in the U.S. market, either. The recovery there is uneven. The main market for jewelry and luxury goods is older people who are better educated and with a higher income, and that remains the so-called Baby-Boomers and they are not getting any younger. Many of them are around 70, and although they are still spending, their options are changing.
"And the Millennials are largely about to hit the peak of their earnings but they are not quite there yet. But they are also the first American generation to believe that marriage is not vital. What does that mean for engagement and wedding ring sales? They also will probably earn less than their parents' generation, they have student loans hanging around their necks for years after they complete their studies, they are also more conservative spenders, and they are not interested in the store-customer relationship that continues through their lifetime and which is a vital element for retailers.
"There is no doubt that the diamond jewelry industry is much more fractured than it has ever been. That makes it more difficult and expensive to market and sell diamond jewelry because you have to either be willing to spend more to attract a cross-section of consumers, or concentrate resources on a particular niche which, of course, means limiting your potential customer base."
By Albert Robinson for Rough&Polished from Tel-Aviv
