The diamond business desperately needs more clarity. I am not talking about inclusions but the need to be clear on what we are selling and how much it will cost.
The diamond industry is built on smoke and mirrors. Everything about the marketing and selling diamonds is a carefully constructed illusion meant to fool and confuse the consumer. It worked well for many decades, building a multi-billion dollar product line. But the smoke is clearing and the mirrors are going breaking. The illusion is no longer sustainable. We are faced with the most educated and connected generation in history, one that has the ability to see beyond the smoke and demand clarity.
Smoke and mirrors #1: Rarity
With the exception of extremely large high quality diamonds or fine fancy colours, diamonds are not all that rare. Millions of carats are produced and sold each year. DeBeers held back vast quantities of diamonds, releasing only enough to foster the belief of rarity. Sure, it worked for a while. But any rational observer of the market can see that millions of anything can’t be considered rare. Yet we still promote this concept. Why not promote the amazing properties and exceptional beauty of diamonds instead of clouding our customer’s minds with the illusion of rarity?
Smoke and mirrors #2: Lasting value
By carefully controlled availability and a continuing rise of rough prices, DeBeers created the illusion that diamonds would always go up in value. And they did, at least for a while. Retailers often told their customers that diamond jewellery was a solid, safe investment. Modern times have shattered that illusion. Prices for polished goods are dropping. The resale value of diamonds during the recent economic downturn was shockingly low. So much for that great investment. It is time to ditch the idea of lasting value and speak about the emotional value of how it feels to wear an object of beauty.
Smoke and mirrors #3: Price lists
Martin Rappaport may be the greatest illusionist of them all. He created a price list that is both confusing and false, but the list is the basis of almost all diamond pricing. It relies on grading standards that are not exact or consistent. It is the most confusing bit of information on the planet. The prices listed are not the prices in the actual market. All pricing is based on a variable discount from the list. In my 30+ years in the trade, I have yet to meet anyone that can actually explain how it works. In many cases, the price of a stone remains the same even though the “list price” changes. The discounts change along with the list. Not only is it confusing, it is a fox guarding a hen house. The list is supposedly an objective reporting of the market, even though he is actively selling diamonds through his auction tenders. We need an accurate, objective list based on actual selling prices without needing to play a guessing game of discounts.
If the diamond industry is going to have a chance at survival, it needs to stop hiding behind the smoke and mirrors and achieve clarity. We must provide the consumers and ourselves with a clear picture of what they are selling and how it is graded and priced. Our customers are getting smarter, too smart to fall for this game. It is clearly time to respect our product, our customers and our industry by blowing out the smoke and shattering the mirrors..