VOL. 43 NO.7 JULY 2020
AG E E O RS T AINTY O D O C E RT R I THE OF UN G NIN NTHS E P REO ER MO E R S A RS AFT R E AIL SUME T E R N CO
R
R E PORT
AUCT I O N S
D E SI G N ER
E STATE JEWELS
HOW WILL TRADITIONAL MEMOS FARE IN A POST-CORONAVIRUS ENVIRONMENT?
SOURCING THE RARE JEWELS THAT BECOME TOP LOTS: TALES FROM THE EXPERTS
IRISH GOLDSMITH NIGEL O’REILLY IS READY TO WOW AMERICAN COLLECTORS
A DEALER’S GUIDE TO THE VARIED VIRTUES OF VICTORIAN-ERA PIECES
CON TENTS VOL. 43 NO. 7 JULY 2020
IN-DEPTH
18 AUCTIONS
8 NEWS Confidence for the fourth quarter; Industry mourns the passing of Arunkumar R. Mehta; Clash of the miners.
COVER
12 BACK IN BUSINESS As US retailers struggle to pick up the pieces after the Covid-19 shutdowns, many are seeing encouraging signs of recovery.
16 REPORT Memos have been the cornerstone of the industry, but will the post-coronavirus environment change that?
32 PAGE
How do the world’s biggest auction houses source the precious jewels they sell, and what does it take to get them under the hammer?
RETAIL
STYLE & DESIGN
26 JEWELRY CONNOISSEUR Perfectly imperfect keshi and baroque pearls add a splash of personality to the finest fashions.
22 RETAIL PROFILE
28 STYLE
The two sisters who run M. Flynn in Boston, Massachusetts, take an all-inclusive approach so their customers have lots of jewelry options.
Innovative designers are breaking the rules and experimenting with alternative materials.
24 RETAIL INSIGHT With many stores closed, retailers are using technology to make the conversation more personal. Are the changes here to stay?
31 INTERVIEW Jewelry marketing expert Liz Kantner talks about the value of social media in a post-pandemic world.
28 PAGE
32 DESIGNER Irish goldsmith Nigel O’Reilly is set to take his wearable art across the Atlantic.
36 LEGACY Costume jewelry started as an affordable alternative to luxury, but top brands like Chanel have since lent it a legitimacy of its own, according to author Deanna Farneti Cera.
39 ESTATE JEWELS Dealer Laura Dalesandro shares her knowledge of the intricate and varied styles from the Victorian era.
40 COLORED
MARKETS & PRICING 43 TRADE REPORT Industry begins to rebound.
44 USA 48 INDIA 49 ISRAEL 50 ANTWERP 51 HONG KONG 52 DIAMOND DATA 57 PRICE LIST 69 RAPNET PRICE LIST
GEMSTONE
Bicolor and parti-color gems, with their play of multiple hues, are a popular choice for stunning statement pieces and alternative engagement rings. 2 JULY 2020
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74 DIRECTORY 78 CALENDAR 80 THE FINAL CUT
N OTE FROM TH E P U B L I SHE R C L E A R C O M M U N I C AT I O N
John Costello PUBLISHER
IMAGE: BEN KELMER
J O H N .COST E L LO @ D IA M ON DS.NET
T
he phrase “business as usual” has always conjured up something stoic for me. No matter the slings and arrows that bombarded businesses, the best puffed out their chests and sucked it up. They would tell their customers with pride, “It’s business as usual!” And they would make it work. Then 2020 happened. The term no longer applies; nothing is usual in these most unusual of times. The largest problem for businesses, and particularly for a global industry such as ours, is that there is no one reality or truth. Every region, country, county, city and town is dealing with its own situation. And these situations seem to be in constant flux. Making business decisions today has become a highly reactive and fluid exercise. Apple led the way, reopening hundreds of stores around the US in May, but by early June it had begun closing stores in states that were emerging as Covid-19 hot spots. There is no “right way” or “silver bullet,” especially given that even the scientific experts seem to be clawing back statements of fact they made days before. This has left business owners dazed and confused, and their customers even more so. In this world of constant change, one thing is paramount as businesses look to short-term survival and their mid- to long-term future: customer communication. The current wave of this pandemic has caused stress, anxiety and uncertainty. There has been little consistent or reliable information available. At a time when we crave reconnection with the norms that once helped us navigate our lives, there is an immensely powerful opportunity to engage with clients and develop a deeper, transparent, ongoing conversation. As Danielle Max puts it in her article on Page 24, jewelry has always been a people-first business. Now is the time to make your conversation with clients more personal and tailored, keeping them informed in real time about your company activities, products and services. Read Danielle’s piece and others in this issue to find out how you can make a start on this journey.
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BACK IN BUSINESS As US retailers struggle to pick up the pieces after the coronavirus shutdowns, many are seeing encouraging signs of recovery. B Y L E A H M E I R OV I C H
12 JULY 2020
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IMAGE: SHUTTERSTOCK
imes are hard for luxury in general, and jewelry in particular. In a recent survey by McKinsey & Company, jewelry was one of the luxury products consumers were most willing to forgo post-Covid-19, considering the financial crisis the virus has left in its wake. The question is, how does discretionary spending fit into the “new normal,” and what does the future hold for the average independent jeweler? Local community jewelers have been hard hit by the pandemic, which essentially cut off their primary source of income for more than two months. As US businesses grappled with mass closures, furloughs and government aid, they worried not only for their own livelihoods, but for those of all the employees who relied on them. Most of all, they struggled with the uncertainty of day-to-day life: With 50 different states issuing different rules for how business could or couldn’t operate, they had to figure out how to keep customers and workers safe while also reigniting consumer sentiment for a product deemed nonessential.
THE R OA D TO R EO P E N ING The days of simply showing up, unlocking the door and turning the store sign to “We’re Open” have passed. Depending on how hard the coronavirus hit their state, many jewelers are taking alternate — and sometimes long — roads to reopening. Some states, like Arkansas, never closed, while parts of the northeast are only able to offer curbside pickup. And then there are New York and Washington, DC, which were still tightly shut as of press time. “Our governor never shut us down,” says Craig Underwood, who runs Underwoods Fine Jewelers in Fayetteville, Arkansas. “We were one of the few states where things were left open. They pretty much asked that we minimize contact and do the best we could to operate safely, but they didn’t have any hard, strict rules.” While Underwood did take precautions, closing his door to foot traffic and operating on an appointment-only basis for the first few weeks, others have had it tougher. “We’re only open for curbside pickup right now, which is just great,” bemoans Stewart Brandt, owner of H. Brandt
Jewelers in Natick, Massachusetts. “I’m walking a $5,000 diamond outside to go put in somebody’s back seat? I don’t think so.” Although Brandt has had difficulty selling with the restrictions state leaders have placed on him, that’s a problem other jewelers wish they had. “We haven’t reopened yet,” reports Caroline Hill, head of Van Scoy Jewelers in Wyomissing, Pennsylvania. “We’re still waiting. Our governor is basically telling us maybe [at a later date] he’ll move us to a zone where we can maybe open. It’s been horrible.” Tiny Jewel Box in Washington, DC, also remains closed. While the company has managed a few small sales online, it has not been able to service most customers because the district’s mayor has not yet permitted it, says Grace Tumminelli, its marketing and communications director. Even when the store does get the all clear, it will likely need to operate by appointment only, and later move to walk-in in a limited capacity.
TAK ING M ATTERS I NTO THEI R OWN HANDS Many jewelers are not just disheartened by the long-term loss of business, they’re downright angry — to the point that many have taken matters into their own hands in an effort to save their stores. “We might not have been given permission for curbside service, but we’ve been doing it,” declares Hill. “I don’t care whether I’m allowed to or not. People have jewelry here, and if they want to come pick it up, it’s their right to come pick it up.” Gary Long, owner of Gary J. Long Jewelers in Stockton, California, shares Hill’s sentiment. Not only were the rules unclear, he believes, they were also sometimes flawed. While he only received permission to open his store in late May, he “unofficially” opened on May 7, just before Mother’s Day. “The way I interpret it, that’s not against government rules,” he maintains. “The governor said florists and clothing stores could open up, so I took that to mean stores in which people shop for Mother’s Day, and that was us, so we opened up along with them. And I did it because it was Mother’s Day, and we’ve been closed for seven weeks, zero revenue, nothing. Nothing at all. And I just got
tired of listening to the politicians. They’re getting paid, their staff is getting paid, and yet they’re demanding we stay closed. And I just said, that’s it, I’m going to open.” That frustration is also a familiar feeling for Jimmy Green. The owner of J Green Jewelers in San Antonio, Texas, continued to do business even though his storefront remained closed. He would make rounds each day to the homes of his jeweler and CAD engineer, place things on their porches, and then wait for them to pick the items up. Once they finished working on them, he would stop by and retrieve the goods from their porches, turn around, and make drop-offs to customers by the same method. “I mean, grocery stores and liquor stores are open, and they can have as many people as they want, and nobody says close liquor stores,” he notes. “Why was it fair that Costco and Walmart were allowed to open and sell anything they wanted, including jewelry and clothing, but jewelry and clothing stores had to be closed? What if you’re a mom-and-pop jeweler and you need a $200 sale to make rent that month, and Walmart and Costco were allowed to sell as much jewelry as they wanted and you couldn’t? How is that fair?” Brandt, too, has been operating. “If one of my customers calls me up and says, ‘I want to buy something’ — of course.” Occasionally, it seems, even those in authority might turn a blind eye to businesses running during lockdown. “One of the people in my store last week was a local police officer,” relates Brandt. “She’s a regular customer and she bid on one of my Facebook auctions and won, so she came in to pick it up.”
P ROM I SI NG SALE S The sheer fact that jewelers had someone to open up for in the thick of the virus was good news for business owners. While customer numbers are far from prepandemic levels, stores have been seeing promising sales since reopening. “We had terrific business just before Mother’s Day,” reports Long. “And all this month, since we opened up, it’s been pretty good business-wise.” While much of the activity has consisted of repairs and cleanings that customers had put off, new jewelry purchases are also high on the list, with ▶ DIAMONDS.NET
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many customers feeling celebratory at being out and about again. “Business is reasonable,” says Joel Siegel, who co-owns Siegel Jewelers in Grand Rapids, Michigan. “Down a little bit from the usual, but not substantially. The first day [after reopening] was one of our best days, and we’ve had people in continuously since then.” Mills Jewelers in Lockport, New York, was lucky enough to have consistent interest even during the closure period. “Every week that went by, the phone rang more and more, and more emails and texts came in, so it became nearly impossible for me to manage,” says owner George Fritz. “I had quite a few regular customers that were having a special occasion and would just call and ask me, ‘What do you have in stock, can you send me a picture?’ Some of those were major purchases. I mean, birthdays, anniversaries, those things still happen whether you’re in lockdown or not.” Reopening his doors proved an even greater boon to business. “The first day, I felt quite like a McDonald’s drive-thru,” Fritz laughs. “It was very busy, and people were happy. Yesterday, I would say we saw the same number of customers that we would usually see on a given day before the pandemic. I think to myself, ‘Yeah, you might have been kind of busy for the first two weeks, but it’s going to slow down’ — but so far, it hasn’t. It was surprising that we were making sales of jewelry on the street and at the car window. I just didn’t think that was realistic.”
A STEA DY F LOW O F M A JO R PUR CH ASE S Not only are people out and shopping again, but surprisingly many are shelling out more than they were before the pandemic, when business was booming, according to many jewelers. “We’ve had a variance of 20% to 100% in the number of people coming in compared to our pre-pandemic average,” reports Ed Menk of E.L. Menk Jewelers in Brainerd, Minnesota. “But all it takes is one good sale, and it’s a great day, and we’ve had a bunch of those.” Green, too, has found that the higher value of purchases is offsetting the lower customer count to some degree. 14 JULY 2020
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W H AT ’ S CHANGED? Jewelers have noticed several differences in how customers are purchasing since Covid-19. • Customers have been buying higherpriced items in the physical store, with the average sale price almost triple that of pre-pandemic levels. • Consumers are also more willing to shell out more online. Many jewelers have noticed a distinct increase in the average e-commerce sale on their site. • Although female self-purchasing was on the rise before the coronavirus hit, some store owners now report seeing fewer single women shoppers, and more couples or just men purchasing gifts for their partners. • Engagements are going up: A large proportion of jewelers note a higherthan-average number of couples coming in to purchase diamond rings. • Browsing is not as popular now as it used to be. For the most part, clients are coming into the store with a purpose, either to get something repaired or with a specific purchase in mind. • Many customers are expecting more when it comes to examining the merchandise. One jeweler even allowed a long-term client to take home a 2.50carat diamond ring to inspect and consider overnight, something he never would have done before. • Stores are seeing a larger number of older clients, at or near retirement age, while younger customers with families are more circumspect about how they shop. • Clients have become more open to shopping in innovative ways. In addition to e-commerce sales, jewelers have walked clients around the store over Zoom or Facetime, and used interaction-management program Podium to send them photos and collect payment.
“We’re steady — I wouldn’t say busy, but there’s always at least one customer in the store, and it’s increasing every day. And while I’m selling all over the board, I’ve made several sales over $50,000.” Kelly Newton, owner of Newton’s Jewelers in Fort Smith, Arkansas, is also benefiting from customers’ renewed eagerness to spend. While it’s dramatically different from his business in January and February — which broke 106-year records — he’s happy with client engagement. “Business is, knock on wood, really pretty good,” he says. “Everything we’re selling, for the most part, is pretty good, big. We sold two Rolexes yesterday, and we’re seeing more higher-value purchases.” The reasons for the higher spending are varied, according to jewelers. While part of it is “freedom” spending, much of it also has to do with the emotional aspect of jewelry — the strong feelings generated by a crisis situation in which so many have lost loved ones and which has taught the world to appreciate personal relationships. “Our foot traffic is probably 20% to 25% of where it normally is, but value-wise, we’re up to about 75%,” notes Underwood. “People aren’t out buying smaller stuff. When they come in, they’re looking to do a major purchase. And the engagement ring people are coming in, and the anniversaries, and the big birthdays.” People are also more intent on making a commitment; the fear resulting from the pandemic has accelerated that endeavor. “We’ve sold a bunch of diamonds — some caraters, carat and a half, even 2 to 2-plus carats,” says Long. “We’ve had a lot of couples coming in looking for engagement rings — more so, I think, than we did before.”
WHAT ABOUT FUNDI NG? Of course, not all news is good news. The frustration of not being able to open has been replaced by the frustration of employee furlough issues and the ambiguity of how much debt jewelers will face as a result of getting government aid. While most jewelers found that procuring funds through the Small Business Administration’s Paycheck Protection Program (PPP) was relatively simple and effective, some say it also posed challenges to their operations.
“Many, many, many of my friends who own businesses are having a horrible problem trying to get their employees to come back to work right now, because while they’re getting federal money, they’re getting paid more to stay home than they would be if they were working,” says Green. Another problem is the limited duration of the funding. While the PPP covers two months of employee wages, many states have been locked down for longer, which means that if owners want to retain employees, they have to bear the burden of payment for the remainder of the time. “I bit the bullet and paid my employees and kept them going,” says Menk. “While I was able to get some financial help from the government, it doesn’t cover everything. And three, four weeks was directly out of my store’s pocket.” Additionally, while the PPP helps pay staff, there are still the jewelers’ own needs to consider. “I got the deposit right into my account within two to three weeks of applying,” says Hill. “The problem is, I have to spend about 75% of that money on payroll, and yet I’m not allowed to open my store and can’t make any money. So what am I supposed to do? It’s ridiculous.” Many jewelers are also concerned about the debt they may incur from the PPP. “We’re still waiting to see what’s going to be forgiven and what will be rolled into a loan,” says Siegel. “We know what the rules are, but it’s still somewhat fluid, so we are waiting to see how it’s going to shake down.” Long, too, is uncertain on that score. “I’m curious to see what’s going to happen with the forgiveness part of the loan. I don’t know if they’ve even determined [it] yet.”
A N OPT I M I ST I C F U T U R E For local jewelers, being the guy around the corner may actually be the best plan for rebuilding. A crisis will often spur communities to rally around their local businesses, according to experts, and loyalty can be a strong motivator. “I think a lot of people will buy locally now, which is great,” says Long. Green, who often runs campaigns to help his San Antonio community when they are in need, has seen that caring reciprocated.
“People aren’t out buying smaller stuff.... The engagement ring people are coming in, and the anniversaries, and the big birthdays” “I’ve had an incredible outpouring from the community, wishing me well, coming in my doors, literally so happy to see that I’m open,” he relates. Newton, meanwhile, has an “if you build it, they will come” approach to getting business back to its normal flow. “It can’t be about money in this environment, because that’s not achievable,” he cautions. “It’s about building relationships. Because it’s going to take a long time to go back to how things were, and right now we’re just going to have to do the best we can. And hopefully it’s good enough to pay all our bills. So far, it has been.”
For him, attitude is important. “I’ve got to choose between being positive and negative, so I’m just going to be positive. If things turn bad, you just work harder, or work differently. You just can’t expect things to stay the same, because we are in a different environment right now.” In the meantime, some jewelers are prepared to hold out until things get back to a state of normalcy. “People aren’t going to be coming out in droves like they did before,” says Long. “I think it’s going to take a couple, three, four, five months to recover. Hopefully, it gets better by Christmas time.” Fritz thinks it may even be sooner, given the business he’s seen so far. “I really believe that by fall, we’ll be close to normal. That’s what I’m hoping for, anyway, if the trajectory continues as it is now.” Green has a simpler answer for why customers will return to pre-pandemic buying habits sooner rather than later: “As long as men continue loving women, and women continue loving jewelry, we’ll be just fine,” he chuckles. ◼
ASSESSING THE ODDS
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ow realistic is a jewelry sector recovery in the near future? Pam Danziger, president of research firm Unity Marketing, shares her thoughts. Are independent jewelers more likely to survive the crisis than big chain stores? I feel that coming out of this horrible thing, small specialty independent retailers are better positioned for recovery. It has drawn attention to how important local retailers are, and supporting the local community. That being said, I think there are some big underlying challenges in the luxury sectors. We have to take into account that luxury isn’t something that just the ultra-affluent buy. The majority of people who have more discretionary spending power are what I call the HENRYs: high earners, not rich yet. They’re going to have a much harder time making a case for indulging in jewelry versus more necessity spending. These people have been unemployed, or seen their salaries cut. I think they are going to want to maintain their financial status moving forward, and that may mean shifting their spending.
A number of jewelers have reported stronger-than-expected reopening sales. How likely is that to continue? I have a feeling it may start strong out of the gates, because people are excited to spend, but ultimately, it may well fizzle out later on down the road. What’s the likelihood that small retailers will survive if this buying dies down? I think how strongly they went into the pandemic is going to be [one of] the biggest predictors of how they come out of it. [That said,] if business was booming before, they might have made [poor] business decisions they wouldn’t have made if they had known something drastic was coming. So I think the best predictor of future success is more how they managed their business. Were they being conservative? Were they cautious? How far out do you see recovery? I don’t think the August V-curve is going to be a tipping point; I think it’s going to be a long-term process. We need to plan for a very slow and painful recovery. I don’t think things will ever get back to “normal.”
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Sentimental
VALUE
Rapaport Magazine asks three women from the industry to share the most significant piece hiding in their jewelry boxes, and what each one’s story is. B Y L E A H M E I R OV I C H
JENNIFER M ARKAS
MICHELLE ORM AN
EXECUTIVE DIRECTOR, WOMEN’S JEWELRY ASSOCIATION (WJA)
“My mother gifted me a 24-karat gold, handcrafted necklace with a Libra zodiac symbol that my father used to wear when they were together. My mother and father split up when I was very young, and I did not know him well over the course of his life. I’ve always been interested in his astrology, as we are both air signs. I’ve learned that we are very much alike. Libras and Geminis are usually the most free to express their emotions, and we are both very communicative and assimilate different ideas and have the ability to see things from the point of view of others. I like knowing that I have a piece of my father tucked away. The chain is broken, so I have never actually worn it. Maybe it’s time I got it fixed!”
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PRESIDENT, LAST WORD COMMUNICATIONS (PR FOR COUTURE SHOW)
FEDERICA LEVATO PARTNER AT BAIN & CO., CO-AUTHOR OF THE GLOBAL LUXURY STUDY
“I love all my jewelry...but there’s one piece that is most special to me. It’s a solid gold Bulgari Tubogas necklace that my parents gave me when I turned 18. It was originally a birthday gift from my father to my mother — Tubogas was one of Bulgari’s core product lines in the early ’80s — for her 30th birthday, shortly before they found out they were expecting me. My mother wore the necklace often: I remember admiring it as a young child and trying to play with it when I was in her arms. I always thought it was so beautiful, so I was touched and thrilled when she decided to pass it on to me. I have cherished it ever since, and every time I wear it, it takes me back many years. I like to think of it as my own ‘madeleine de Proust,’ flooding me with memories of special times with those I love.”
“I wouldn’t say it’s hiding, but one of my favorite pieces of jewelry, which I bring out whenever I need to feel empowered, is a necklace my grandmother (who I called Sitto, which is a Lebanese dialect for grandmother) gave me on my 30th birthday. It’s from Monet, a brand that was popular in the 1950s and 1960s. When she gave it to me, she told me she’d spotted it in the jewelry store case when she was there getting my grandfather’s watch battery replaced. She ended up putting it on layaway (which she cutely called ‘layover’), bringing in a little bit of money each week until she was finally able to take it home. It’s a gold-toned collar necklace with a teardrop featuring a small sprinkling of diamonds. I just love it!”