Loyalty between dealer and retailer could suffer as competition blurs
the once well-defined tiers of the diamond market
Everyone agrees the U.S. diamond market is healthy. So healthy, in fact,
that everyone wants a piece of the action. It may seem like good news that
diamond wholesalers from around the world are competing for U.S. retailers'
business. But is it?
Without doubt the competition brings with it lower prices. But it could
become an expensive mistake in the long-term if retailers jump from supplier
to supplier in hopes of lower prices along the way. During the next downturn
in the market, these retailers may have trouble getting the right type and
quantity of diamonds if they haven't established a long-term relationship
"The increased competition has cost us business," says dealer
Jacqui Ekstein of Eknam Diamonds, New York City. "I'm not saying retailers
should stay with one supplier. But they should not jump around for a 1%-2%
difference in price ... It's the cost of loyalty."
Ekstein encourages jewelry retailers to weigh the importance of their
relationship with suppliers the same way their own customers weigh loyalty
Different Ways of Doing Business
Dealers also are concerned that retailers could get caught in a squeeze
when buying from dealers new to the U.S. market. "Everyone is coming
to America, and they are ignoring the traditional ways we do things,"
says one dealer.
Even more troubling, in a rush to reach the end consumer, some of the
old and new players are using new technology to circumvent the retailer
especially via the Internet. "Examples of manufacturers or dealers
going retail themselves abound," says dealer Todd Wolleman of Leo Wolleman
Inc., New York City.
Other creative ways to reach consumers from a platform of low overhead
will get stronger as the years pass, he predicts, including catalog sales
and direct marketing.
These changes have made some longtime dealers edgy about their future. "I
have invested in a jewelry manufacturing company myself," says Walter
Feinblum, president of the West Coast Diamond Dealers Club and Carl K. Gumpert
Inc., Los Angeles, CA. "I'm also diversifying into colored gemstones
for this reason."
Some dealers suggest De Beers itself plans to pitch its own diamonds
to consumers through branding, which could put other diamonds and the retailers
who carry them at a disadvantage.
The strategy may have to do with a growing number of diamonds available
from non-De Beers sources, including Australia and Canada, though De Beers
may yet become involved in marketing diamonds from the new Ekati mine in
New sources and new technologies may bring new opportunities, say dealers,
but they won't take the place of strong dealer-retailer relationships that
assure quick delivery of quality diamonds at good prices regardless
of the health of the market.
by Robert Weldon, G.G.
Copyright © 1999 by Bond Communications.