De Beers Store Opening Delayed


November 25, 2002

De Beers Store Opening Delayed

De Beers' $400 million foray into retailing, a joint venture with luxury goods-maker LVMH Moet Hennessy Louis Vuitton called De Beers LV, is getting off to a rocky start, reports the New York Times. The flagship store will be on Old Bond Street, just down the block from Cartier and Tiffany & Co. in central London.

The opening of the flagship has been postponed until Dec. 3, said Alain Lorenzo, chief executive of De Beers LV. Ironically, the store hasn't received enough diamond jewelry to fill its showcases and display windows. The De Beers Group, of course, supplies 65% of the world's diamonds by value.

Preparations for the opening were also marred by an advocacy group's protest campaign linking diamond mining to the uprooting of native Bushmen in Botswana, where De Beers has a joint venture with the government to mine diamonds. Activists from the group Survival International, based in London, covered a De Beers billboard with one depicting a woman from the Bushmen. Mocking De Beers' marketing slogan, "A diamond is forever," the replacement poster read "The Bushmen aren't forever." The group plans to continue protests after the store is open. "The campaign will not end until the Bushmen's land has been returned to them, for without it they are doomed," Stephen Corry, director of Survival International, tells NYT.

De Beers also threatened Survival International with a lawsuit for continuing to insist publicly evictions of Bushmen were linked to diamond mining, a connection denied by Botswana, European legislators, British and Botswanan advocacy groups, De Beers and De Beers LV, says NYT. "No way does diamond mining require the removal of people," said Andrew Bone, a spokesman for De Beers. The company has prospected for diamonds in the Central Kalahari Game Reserve, the vast desert at the center of the controversy, and still holds licenses to explore there.

Despite the conntroversy, De Beers LV still held an opening party for the store Nov. 21, with models and celebrities in attendance. Singer Shirley Bassey sang the title song for the 1971 James Bond movie "Diamonds Are Forever." Iman, who has become the face of De Beers' move into retailing, was not be there, but De Beers LV tells NYT her absence was "for family reasons" and not because of any break with the company over the Bushman issue, as one newspaper in London reported.

The De Beers store in London is expected to offer diamond items ranging from $750 to millions. The London store is meant to be the forerunner of a chain planned to include a New York City store on the corner of Fifth Avenue and 55th Street, which the company hopes to open in 2004. The U.S. accounts for half of the world's $60 billion in sales of cut and polished diamonds, but expansion here could be problematic for the parent company, De Beers, because of a variety of antitrust investigations that preclude it from openly doing business in the U.S. De Beers, which is based in South Africa, draws a distinction between itself and the retail venture, De Beers LV.

Though De Beers's managing director, Gary Ralfe, is also chairman of De Beers LV, "De Beers management has no executive role in this company," Lorenzo told NYT. De Beers does not do business directly with its own retail joint venture either. Instead, Andrew Coxon, chief diamond buyer and one of a number of De Beers executives who moved over to the retail joint venture, has shopped wholesale diamond markets, particularly in Russia and Canada, to find cut stones to suit the venture's purpose. They must be high quality and certified as coming from sources untainted by conflict, he told NYT. To get such stones, Coxon said, De Beers LV must "stand in line behind Tiffany and Cartier" to buy from independent traders or from some of the 120 diamond dealers authorized to buy rough stones from De Beers for cutting, polishing and trading.

The retail venture's diamonds are branded with the name De Beers indelibly imprinted in minute characters on each stone larger than 0.25 carat. The logo is visible only under 200X magnification. De Beers is venturing into retail because it realized "other luxury products were outperforming diamond jewelry," and to reinvigorate the fragmented retail trade and increase global demand for diamonds Coxon told NYT.






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