LGD is not a Diamond Business

issues and help a business differentiate from their competition. d) The products are expensive, and the business has a large turnovers and thin margins. This requires high quality forecasting.A lost sales due to inventory gap creates a large dent in the profitability due to high value of products involved.

e) There is a loyalty at a customer level. A customer usually trusts a Jeweler and has loyalty spread over generations. This loyalty creates predictability. Every time an occasion arises (could be festival led or could an anniversary or a birthday), the customer visits his trusted Jeweler. Jewelers, if they peep into their data would be able to decide customer preferences towards brands,products, designs & how is it evolved over time.

Few indicative use cases of Jewelry Retail are listed below a) Sales Analytics to decide the Sales Trend across stores. Compare performances across festivals, stores, cities, regions, products, designs etc. b) Inventory Analytics to decide if the stores carry the right level and the right mix of inventory. Comparison of Sales to Inventory mix, Evaluate working capital efficiency etc. c) Vendor Analytics to decide the performance of Vendors across product lines. Find the best and most profitable vendors for the business.

d) Production Analytics to decide the lead times, delayed orders, findingability

How to use

constraints causing delays in the production processes e) Human Resource Analytics to compare the performance of your sales staff across stores, across product lines. Finding good performers, reward them and find bad performers for training f) Customer Analytics to understand the buying behavior of the customers. Finding your best customers, Finding the reasons of their purchase and targeting these customers to prompt them to visit you and buy g) Predictive Analytics like forecast sales for future months,predict customer baskets and products bought together “Data of past Intelligently analyzed will eventually will eventually lead us to a better future”.

Why now?

The amount of data available as well as the increased computing power has been the driver of the change. Running a data driven operation was simpler ten years back. The data was less, and the analytics was easy. One needed to grasp few simple tables and charts at the end of a quarter and plan a strategy around that. Not anymore, data being collected, stored, and processed has multiplied due to ongoing digital transformations. As business models shift with the advent of digital and e-commerce, companies have a real threat of existence in a new competitive world. Every day, we hear of disruption of existing business models across industries. Be it hotel industry, car industry, retail, health & pharma, the advent of digital and data would shift profitability profile and cause disruptions. Any business, unless ably aided by digital and analytics would eventually lose the battle to smarter and more efficient competition.

Conclusion

A digital transformation to a data managed operation is not a luxury anymore. It is a necessity which can create a massive differentiation for a jeweler. The available data set & the technology to analyze it can be combined to give a great competitive edge to any operator or any brand in travel retail.

For more details contact at manish@voicebackanalytics. com This article is loosely based upon an article by the same author previously published on The MoodieDavitt

Report{https://www. moodiedavittreport.com/ new-guest-column-big-dataanalytics-travel-retail/}

LGD

IS NOT A DIAMOND BUSINESS!

A majority of the participants in the LGD area have their roots in the diamond business and consider Lab-grown diamonds (LGD) to be an extension of their diamond business, albeit a much more profitable one. Anyone who runs an LGD business on the same lines as that of a natural diamond business is setting themselves up for eventual failure!! LGDs are physically and chemically a diamond and that for a large part their pipeline seems similar, it is very possible that some may come to believe that natural diamond business and the LGD businessesare similar and that the same factors which ensured success in one business would work in the other.

For the jewellery manufacturing and retail segments, that statement is actually correct, and those segments would continue to be driven by the existing dynamics. It is the mid-stream and to a certain extent the upstream where the natural and LGD businesses differ. A large part of the new capacity coming up to manufacture LGD is actually being driven and funded by persons who were traditionally in the diamond midstream, who might applying their successful practices in the natural business to the LGD business. That could be problematic.

Dialing back

The aftermath of the Covid-19 crisis proved to boon for the entire gems and Jewellery sector and specially for the diamond industry. The LGD industry, which is still in it’s infancy too got a huge boost as the US lead the market recovery, driven by huge sums of money which was pumped into their economy in 2020 and 2021. This takeoff in demand spurred a rapid acceptance of LGDs among retailers with more doors becoming available for the product. Apart from the demand side factors, LGD demand was also driven by the complete stoppage of the Argyle mine, which affected the availability of natural diamonds for the cheaper fashion Jewellery, while jewellers also found that they were able to convert a good portion of bridal consumers to LGDs by selling them much larger stones for the same budget. The buoyant natural diamond prices also provided some support for LGD prices, along

with the stocking demand, as more retail stores started carrying LGD products. 2022 was expected to be tougher for the diamond industry, even before the Ukraine crisis, which added to the uncertainty for the diamond industry. Once can clearly see that both on an absolute basis jewellery sales have been flat from July 2021, while year-on-year growth has been trending to zero, as was predicted. The ripple effect of this will cascade through the through the entire diamond, and to a lesser extent LGD, pipeline. However, the sanctions by western nations against Alrosa directly affected nearly 28% of the total natural diamond supplies, thereby opening up another possible opportunity for LGDs and this could be another spectacular year for the LGD industry. A manufacturing business Given the intertwined pipelines, it is easy to believe that natural and LGD are the same business. Nothing could be farther from the truth, at least at the production and midstream level. All said and done, LGD is a manufacturing business, while natural diamonds could be considered as a resource industry. It is important to briefly understand the differences between these two types of businesses. While all of these are common sense, these could have serious implication on how the eventual LGD business will eventually work. Excluding the technology related factors, the top 3 fundamental differences are as follows

To stock or not to stock?

The diamond industry has been traditionally comfortable holding stocks, though the period from 2012 to 2019 did dent their confidence in holding stock. There have been multiple jokes in the industry on how holding stocks is not a good business practice, but at the back of the mind, most people still believe that the inventory will still have some reasonable value if held for a few years. That is not true of the LGD industry, where prices keep dipping on a regular basis, as production and supply grows more than the current demand.

Supply will not drop when prices fall As natural diamond prices drop, what you usually find is that some marginal mines will be put under

care and maintenance and or producers will process differing ores so as to reduce the total rough production and leave the rough in the ground. For LGD that is not the case.

The variable cost of production is probably about 30-50% of the total cost, which means that it will still be better for companies to run their factories, even if the price falls below sustainable levels. Hence, the price fluctuations at the wholesale level will be much more severe and volatile.

The pricing game

The LGD industry continues to use the natural price lists for pricing their stones. While it may be a short-term strategy to maximise profits, it will eventually have to move to fixed pricelists. Just as the eskimos have 47 words for “snow” , the natural industry developed the grading mechanism and the pricing as the values involved were quite large. This is not true for LGDs as pricing is not exponential in nature. Having consistent pricelists and lesser quality parameters can significantly simplify the entire LGD pipeline. If one considers the LGD business to be a manufacturing one, it is not difficult to imagine an LGD industry which will fewer quality parameters with lower pricing differential. Producers will manufacture and polish diamonds based as per advance orders on a just-intime basis and move totally away from thetraditional stock and sell model. This is probably a more realistic vision for the LGD business, and those who move there first will clearly have the advantage.

Pranay Narvekar

partner at Pharos Beam Consulting LLP, is a leading expert on many of the crucial strategic, financial and structural problems facing the diamond industry pipeline. He has been among the initial supporters of the LGD industry. He has over 20 years of consulting experience and has previously also worked with Rosy Blue. He can be reached at pranay@ pharosbeam.com

IGI has analyzed and graded a 30.18 carat emerald cut laboratory grown diamond, the world’s largest to date. Produced by Ethereal Green Diamond, LLP the 30.18 ct “Pride of India” is the first polished lab grown diamond The Pride of India, grown using the Chemical Vapor Deposition (CVD) process, the Pride of India; measures 18.85 x 15.85 x 9.71 mm. The gemstone displays H color and VS2 clarity with polish and symmetry grades of Excellent. The type IIa rough crystal from which it was fashioned took approximately four weeks to grow. Ethereal Green Diamond, headquartered in Mumbai, India, is well-known for producing large, highquality lab grown diamonds. According to Hirav Anil Virani, Ethereal’s Managing Director, the company plans to continue creating and certifying such exceptional record-setting diamonds. IGI is the largest organization of its kind, having laboratories worldwide, with an impeccable customer driven team and ameliorating technologies and equipment. This gives us the trust and confidence to certify our diamonds at IGI. Choosing ethically made, long-lasting items is one of the best actions you can take for our planet and its people. Constant research in developing methods and technology to protect the interest of the end consumer has been the utmost priority at IGI. Our team is continually in search of methods to ensure such spectacular creations are graded with rectitude & precision!