June 28, 2006
Industry Must Build "Diamond Equity," Says DTC's Shine
Diamonds may be forever, but without an industry working together to keep consumer confidence and diamonds' value alive, the demand for diamonds might not be.
That was the core message behind De Beers Diamond Trading Company Managing Director Varda Shine's keynote address at the World Diamond Congress in Tel Aviv, Israel, this week. Shine said that as luxury goods with strong brands move to center stage and consumer confidence wanes due to media attention on conflict diamonds, the industry must work together to keep diamonds foremost in luxury shoppers' minds.
"We cannot assume that our inherent human fascination with diamonds alone will maintain the position of diamonds as the world's most popular luxury product," Shine said. "In fact, the diamond industry has reached the end of an era when heritage and sentiment were the driving forces. We need to extend the mood or message of 'a diamond is forever' into a new age."
Shine said the industry needs to invest more in "diamond equity" "the underlying emotional mystique that diamonds carry."
To do this, she recommended three approaches. First, she said, all jewelry industry members need to act together to build and promote best practices and ethics. "Look at the way both Hollywood and the music industry present a united front when it comes to controlling piracy or copyright theft," she said.
Second, she recommended taking a cue from strong brands such as Prada, Moet & Chandon and La Perla and creating "strong, relevant campaigns that get consumers excited, as well as enticing retail environments."
Finally, she said companies need to tailor their products to suit the different cultural preferences of consumers in different nations, to better reach an increasingly global market.
Shine also predicted trends for the industry in the next five years. Among the developments she outlined:
- "Over the next two to three years, consolidation and differentiation will bring about increased margins and more bargaining power."
- "Changes in the retail environment notably the arrival of strong branded chains are going to have an effect on other parts of the industry, especially traditional cutting centers. Moving forward, the cutting and polishing industry will either be dominated by larger players or players able to offer differentiated services ... either through cost efficiency or having a unique offering."
- "On the financial side, the industry is currently experiencing cashflow problems. If, as an industry, we operate in a more transparent manner particularly in the area of corporate governance we will see a greater range of financiers coming into the industry."