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Stop With The Discounting Or Race To The Bottom!

The De Beers sightholder selection and Supplier of Choice assessment used to focus relentlessly on the comparative and qualitative minutiae of how sightholders provided “differentiated" and "innovative" products and services to their chosen segments. As a result of this I spent many hours trying to explain how my clients’ diamond jewellery offering was superior to those of the other sightholders competing in their chosen segment.

This was very  difficult because the reality was there was very little genuine differentiation in the "jewellery to majors” segment as the sightholders all followed a very similar approach — a formulaic combination of "tried and tested” but absolutely standard diamond jewellery product, with minor design variations linked to intensely competitive price discounting. This was seen as the only viable route to achieving the volume sales that both the mass merchandisers and their Indian suppliers constantly seek.  

Extraordinary really, that India is the world largest polished diamond resource with an an incredibly diverse inventory as well as a legendary jewellery design heritage of its own and yet produces a plethora of bland, boring and predictable product for export to the majors. Whose fault is this? Is it the innate conservatism of the US majors, or their Indian suppliers, or indeed both?

It’s  easy to blame the customer when the product mix varies so little from year to year — and yet they still buy. 

The JCK Las Vegas show reminded us once again of the unanimous agreement within the trade that the mining companies and all trade stakeholders need to urgently and seriously devote much more time effort and money to actively promote the "diamond dream”, particularly to millennials.

Fortunately the Diamond Producers Association (DPA) did not disappoint with their new slogan Real Is Rare inspired by their own research into the millennial mindset which concluded that millennials value above all, experiences that are authentic and individual rather than the conspicuous consumption or occasion-driven rituals of previous generations.

Millennials don't like being taken for granted or patronised in terms of design and value, and yet the the  mass merchandisers still seem to share the mindset of Gerald Ratner, whose frank opinion of his own product and customers brought about his own downfall even if the group he created remains the dominant US and UK jewellery mass merchandiser.

What if they are as much part of the problem as the solution even if their results don't necessarily suggest this is the case?!

How can one explain their marketing mindset when last Christmas season, a prominent British high street chain heavily promoted in the "quality" papers, a matched set of monochrome diamond jewellery featuring channel set baguettes diamonds apparently designed to resemble car reflectors, lacking any design originality or appeal.

As if the design wasn't prosaic enough, its intensive diamond content was negatively "commoditised" in terms of a price reduced by a whopping £800 "discount"  on what we were asked to believe was the original price of £1,800.

Little wonder that customers in shopping malls increasingly turn to Pandora or Swarovski for the  originality of their value based designs as the highly succesful “beads, baubles and crystals" brands have no choice but to be constantly innovative in design terms because their product has no intrinsic value when compared with real diamond jewellery. 

What will happen now that Swarowski has introduced a competitively-priced lab-grown diamond jewellery brand? Will the mass merchandisers respond with ever deeper discounts and a race to the pricing bottom? Or will they finally cast off the long shadow of Gerald Ratner and try to impress their consumer with  innovative, exciting design instead of the size of their discounts?

It's not only the majors who need to radically change their mindset. There are too many independent jewellers that have all the  atmosphere and appeal and product of a pawn shop and have no place in the modern retail environment. There are also so many seedy, dubious-looking shops that in no way inspire confidence. Yet they too take their lead from the majors in terms of discounting.

It's ironic that at a time when there have never been so many genuinely talented innovative and creative jewellery designers, they have to struggle to finance and establish themselves, largely ignored by a diamond trade and industry that seems to be unwilling or incapable of thinking outside its own particular segmentation boxes; reluctant to embrace or take a chance with any new or original design and marketing concepts.

Perhaps a fresh start could be made if diamond manufactures were to "adopt" a jewellery designer to mentor and support, if as it appears, the majors and department stores really have no interest in nurturing talent and showcasing the sort of exciting product that might actually appeal to millennials, rather than repeat  the same tired formula of safe design and constant discounting that may have worked for their parents and grandparents but certainly will not work in tomorrow's diamond market.  

After all, if the majors don't believe and demonstrate that "real is rare,” why should their customers trust or believe them?!

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2 Comments
Mark, excellent points...FYI, for the last four years, Rio Tinto Diamonds has done exactly that at JCK by "adopting" and promoting the work of talented designers (some established some "up & coming") and tasked with using/imagining Rio Tinto's Diavik (Canadian) & Argyle Champagne (Australian) diamonds. That initiative has been wrapped inside their "Diamonds with a Story" campaign designed to help diamantaires, retailers and consumers look beyond the 4C's and understand everything from the diamonds' chain of custody to the positive life stories of the indigenous population that live and work in and around the Rio Tinto diamond mines. On top of that, for the last 7 years, they have engaged noted industry design guru, teaching professor and jewelry designer Paola DeLuca and the Vicenza Trade Fair's TrendVision group to identify significant fashion & lifestyle trends to help retailers and designers create "on trend" product to various emerging global/social/media-friendly trends & themes.
full marks to Rio Tinto for the way your Diamonds with a Story campaign "adopts " young designers and seeks to influence retailers to be more creative .