Diamond players addressed supply chain, marketing, and sales issues at the Mines to Market International Conference in Mumbai, India.
With Rapaport Groups’s CEO, Martin Rapaport, moderating the panel of speakers, it was serious stock-taking time among lighter moments. Recounting a joke, Rapaport’s message was “don’t sit on inventories” to which Mehul Choksi, chairman and CEO of Gitanjali group said it was easy to theorize, but difficult to implement such sage advice. The eager audience consisting of leading diamond merchants from within and outside of India listened intently to the panel’s issues.
Holding inventories close to $900 million annually, Andrey Waring, director of supply chain, Signet Trading Ltd., addressed managing the jewelry supply chain. He said that an important part of Signet’s buying process was their internal direct sourcing operation called Saphena, which lists loose diamonds to supply 70 percent of diamond jewelry manufacturers.
According to Waring, fine jewelry, costume jewelry, and the watch market was worth $6.5 billion (GBP 3.6 billion) including VAT in 2004 with an estimated 7,000 specialty jewelry stores. Signet had a share of 15 percent market share he said.
Waring said that in the United Kingdom, the mass market retailer was caught in the middle losing sales and margin. The middle market, where high volumes and good margins were achieved consistently had come under an attack and was eroding. At the higher end, luxury and designer brands had invested in diffusion ranges and were attracting brand conscious consumer with lower entry prices.
Ken Gassman, president, Jewelry Industry Research Institute, said that jewelry business could profit from research and that it was better to invest small amounts of money on useful research rather than throw money into unproductive schemes. He said the Internet is a new distribution channel, but reminded the audience that in the United States, Internet sales only account for 2 percent of jewelry sales.
Diamond Trading Company’s regional director, Graham Smith, said that the diamond industry needed to keep four points in focus: Change to compete; ideas win; have a design capital (design drives purchases;) and while marketing — one needs to talk to the heart. “We are in a battle. Our battle is against other luxury goods,” he added.
Smith says that Internet retailing depends upon “the target group.” The new generation of consumers find buying diamonds on the Internet an easy task. “Internet retailing has a growth curve. But how much?” Smith asked of the audience to consider on their own.
Nirupa Bhatt, marketing manager of Rio Tinto Diamonds, said that the way forward was to develop new markets in India, China, the Middle East, and in Russia, consolidate sales and marketing across the United States and Europe as well as add a greater emphasis on systems and processes.
Mehul Choksi, chairman and CEO of Gitanjali Group, said that acquisition of diamond jewelry was driven by: Identity and stature (the person feels socially enhanced,) enrichment (the feeling of possessing a well known brand,) and reward (the feeling that one deserved the jewelry.)
Thread-bare discussions on all aspects of the diamond industry from mine to markets kept the huge crowd captivated. Comments, observations as well as repartees from Rapaport and another diamond industry analysts were the hallmarks of the two day meeting, which ended May 25th.