Ramble On Ron

Diamonds, Music and other Facets of Life

Diamond Market Report 2012 – Q4

Posted on | January 3, 2013 | 2 Comments

I received an email from Martin Rapaport this year talking about the diamond and jewelry industry. I don’t Emerald Cutalways read his emails, but this one in particular hit home because it was not just about diamonds but about the business world in general. I’ve written about Mr. Rapaport before. He’s arguably the most powerful man in the diamond world, publishing his monthly Rapnet Pricelist and magazine, the blue book and bible of wholesale diamond pricing.

I have paraphrased his email, but there are so many important points in here. Here are some excerpts:

2012 was a year of great change, challenge and development. The idea that American economic power had lost significance proved wrong as the boom in China, India and Pacific Rim fell flat and strong U.S. demand saved the diamond and jewelry trade. Let us learn from this – while it is important to develop new customers, it is as important to maintain relationships with old customers. There is more to business than the latest fast buck. Loyalty and maintaining relationships serve our long term interests. Make room for the new but keep room for the old.

President Obama’s re-election is a clear sign that a generational shift is taking place. New priorities and values will dominate the political, social and economic landscape in the years ahead. Youth, women and minorities will have increasing say about what happens. The Arab spring, protests in India, and a changing government in China are all signs of new values and the power of the people to demand change. The jewelry trade must learn to excite and serve a much more diversified and segmented customer base. Our traditional and conservative industry must adopt new values and adapt to new customers. Our emotional products must be in sync with a new generation of emotional values. The idea that we can ignore what our new customers want and continue selling questionable products is false. It is vital that we re-vitalize and re-legitimize ourselves and our products. We must excite diamonds in the mind of a new generation of consumers.

As we head over the fiscal cliff we must recognize our need for financial responsibility. Even a wealthy country like America cannot live beyond its means. Eventually, everyone must pay the bill for indiscriminate spending. The idea that a society is entitled to a standard of living that it does not create is false. The same holds true for our trade. We cannot grow ourselves or our industry on funny money from irresponsible banks. Bank credit that enables firms to buy diamonds at unsustainable artificially high prices that inflate Ponzi scheme balloons must be stopped. Legitimate firms have no business manipulating prices. Given expectations that the fiscal cliff will reduce demand for luxury products due to higher taxes, increased unemployment and reduced government spending, responsible companies should refuse to buy diamonds at prices that do not allow for healthy profits. Buyers should just say no to high prices. The real value of diamonds must be based on real money from real buyers.

The emerging middle class demographics in India, China and the Pacific Rim are huge and unstoppable. While there may be a few bumps in the road, steadily improving demand from these markets will support the diamond industry. Economic and currency uncertainty will also increase demand for higher quality investment diamonds as wealthy consumers seek alternative stores of value.

While there is no denying the fact that the year ahead looks challenging I believe that the challenges will bring great opportunities for those that have the right positive attitude. A key opportunity will be getting to know your customers much better. Not just as customers but as people with real wants and needs. Get to know yourself better as well. What are your strengths? How exactly do you add value? What is the cost benefit of your added value? Be brutally honest with yourself and don’t be afraid to reinvent yourself. Most importantly, accept the fact that the world around you is changing. Recognize that people will always desire diamonds and jewelry. And position yourself to meet that desire.

Don’t go for the fast buck. Realize that there is real value in diamonds and provide that to your customers. Get to know your customers as people and get to know yourself. That’s good stuff.Wishing all the best for 2013.