The Future of the Diamond Industry
Maybe you’ve never heard of Martin Rapaport, but in the world of diamonds, he is an A-list celebrity. Mr. Rapaport runs Diamonds.net and defines diamond pricing throughout the world with his Rapaport Index. Recently, Rapaport addressed the JCK jewelry show to offer his predictions for the diamond market. Presently, the diamond business faces many of the same obstacles that other luxury industries face. In Rapaport’s eyes, current economic conditions offer both challenges and opportunities for the diamond business.
Mixed Predictions
On the one hand, the prices of large diamonds have been climbing higher and higher. Similarly, exploding wealth in Russia, China, India, and Dubai is creating a strong demand for luxury good, especially diamonds. On the other hand, crumbling real estate markets in the U.S. and Europe, the places that drove global prosperity initially, have resulted in spending cutbacks in the Western world. Small chains and independent stores in the West are struggling to survive, many of them forced to sell of goods at below cost in bankruptcy sales.
The Major Players
The U.S. still accounts for most diamond jewelry sales at 43%. Europe comes in second with 11%, China with 8.5%, and the Middle East with 4.6%. The United States’ past growth and prosperity had bolstered the global economy, expanding the middle classes of India and Africa. As a result, small jewelers in the U.S. are now competing on a global scale. The number of millionaires and billionaires in the world continues to increase, which could partially explain why the price of large stones is increasing faster than that of smaller stones.
Branding
Along with many jewelry sellers, Rapaport believes that branding is more important than ever, particularly in new luxury markets. He admonished retailers that branding can be a double-edged sword because retailers must persuade their customers of which brand to buy and then sellers raise the price of that brand. Rapaport’s answer to this conundrum is for retailers to advertise that they are selling diamonds for considerably less than the biggest name brand.
The Big Picture
Overall, Rapaport seems optimistic about the future of the diamond industry. His data indicate that global demand for diamonds will soon outstrip supply. He insists that the current economic climate will eventually be good for the industry and will even benefit small jewelers if they acknowledge the power of flexibility. In conclusion, Rapaport urged jewelers to remember the idea that is sold along with diamonds. Not just the romance, he says, but also the good that the sale of diamonds can do for people like miners, diggers, etc. around the world.
