Rapaport Magazine - March 2019

VOL. 42 NO. 3 MARCH 2019

STARS OF INNOVATION HOW LEADING DIAMOND COMPANIES ARE LIGHTING THE WAY

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GEMSTONE

STYLE

SHOW REPORT

REFLECTIONS

NEWCOMER AQUAPRASE IS TAKING THE DESIGN WORLD BY STORM

SOLITAIRES WITH A TWIST PROVE ONE ISN’T THE LONELIEST NUMBER

FOUR JEWELRY TRENDS FROM THE LATEST VICENZAORO FAIR IN ITALY

CLARITY-ENHANCED DIAMONDS OFFER BUDGET-FRIENDLY BEAUTY

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CO N T E N TS IN-DEPTH

STYLE & DESIGN

14 News

37 Jewelry Connoisseur

Industry: Time to reengage with bridal.

Retail: Pandora looks to reignite growth.

Mining: De Beers profit slumps.

Movers & shakers: Who’s coming, who’s going.

20 Page

20 Profile

Diamonds that move in myriad ways bring designs playfully to life.

38 Show report Four leading jewelry trends from January’s VicenzaOro fair.

Luxury rentals are gaining popularity among jewelry consumers.

40 Style

COVER

Modern tweaks to stones and settings are putting a fresh spin on the classic solitaire engagement ring.

22 Cover story

42 Designer

How three companies are using innovative tools to improve the diamond sector’s efficiency, transparency and storytelling.

Former film professional Alexandra Mor works to save the elephants through her sustainable tagua-seed jewelry.

26 Reflections

The role jewelry played in social climbing during the 19th century.

44 Legacy

Clarity-enhanced diamonds are an attractive alternative for those seeking big and brilliant on a budget.

30

46 Colored gemstone Blue-green newcomer aquaprase is making a splash among dealers and designers.

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RETAIL 29 Retail showcase Tiffany’s new “style studio” in London may be a preview of what to expect at its Fifth Avenue location.

30 Retail profile Almaza Jewelers in Houston, Texas, brings old-world charm to contemporary American style.

IMAGES: TARICK FOTEH; FLONT

32 Retail insight Creating jewelry may be an art, but shopping is really a science, according to market expert Paco Underhill.

35 RetailRap Two jewelers discuss what they plan to restock now that the holidays are over.

MARKETS & PRICING 49 Trade report 51 USA 56 India 57 Israel 58 Antwerp 59 Hong Kong 60 Diamond data 65 Price List 77 RapNet price list 84 Directory 86 Calendar 88 The final cut

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Note from the publisher

IMAGE: BEN KELMER

T

TIME FOR CUTTING-EDGE SOLUTIONS

he diamond and jewelry sector has been relatively slow to embrace technology. Indeed, as a traditional industry based on human interaction and trust, it often treats technology with great suspicion. This is not so surprising, given our trade’s dislike of disruption and change.

However, technological advancements wait for no industry, and despite its less-than-healthy dose of aversion, our sector has always been shaped by such advancements — from diamond grading to online trading. Technology has also helped empower people and businesses within the diamond and jewelry market by offering greater transparency, access to accurate information, and opportunities to do business.

And for those who distrust technology, the words of former Apple CEO Steve Jobs are worth remembering: “Technology is nothing. What’s important is that you have a faith in people, that they’re basically good and smart, and if you give them tools, they’ll do wonderful things with them.”

Technology is indeed nothing. Its only benefits to our industry are the opportunities, freedom and abilities it gives people and businesses to excel.

There are already shining examples of that within the diamond and jewelry sector: companies applying innovative

methods to improve the efficiency, transparency and storytelling ability of retailers (see Page 22). But these are not the only parties in the distribution pipeline that are pushing the boundaries of change. Every day, we witness companies impacting the fields of mining, manufacturing, retail, finance, logistics and beyond by wielding technology in innovative ways.

As an industry, we should be looking to these leading lights for inspiration. Innovation is always contextual.

Embracing social media might be a progressive move for a retailer, adding great value to that business. A designer or manufacturer that starts selling online could see a dramatic expansion in its prospects.

There are many levels of innovation. The common thread among them is the concept of adding value and increasing opportunities. Our industry has never had a greater need for pursuing this mentality. So let’s cherish the innovators, because their mind-set lights the way for all of us.

John Costello PUBLISHER john.costello@diamonds.net DIAMONDS.NET

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Lockwood diamond chandelier necklace from Adorn.

Below: Payal Shah Puri Di Cuore Bella stud earrings from Flont in white gold and diamonds.

P ROFIL E

SOMETHING BORROWED

Luxury rentals are gaining popularity among jewelry consumers — and may be a boon for sales as well. By Lara Ewen

I

n today’s sharing economy, consumers are increasingly comfortable not owning things. Even fine jewelry isn’t immune: An increasing number of rental companies have emerged offering diamonds for a few days to customers who don’t want or need to keep such luxury items around permanently.

Some of these companies — such as Adorn, which launched in 2006 — have been around for over a decade. Others are relative newcomers: Haute Vault launched in 2013, and Flont started in 2016.

Then there are the retailers that have started rental divisions, such Verstolo in New York and Pratiksha Jewelry in Dallas, Texas (see box). There are also companies like Switch and Rent the Runway, though these focus more on costume and demi-fine products, as opposed to fine jewelry.

How does it work?

As the rental industry develops, different business models have emerged to service a variety of client needs. Flont, for example, is a membership-based company with fees ranging from $59 per month to 20 MARCH 2019

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$379, allowing members to borrow between $1,500 and $8,000 worth of jewelry at a time. A separate “Privé” division handles one-time event rentals.

Haute Vault is also membership-based, charging approved members an annual fee of between $350 and $500, and a per-item rental fee on top of that.

Companies like Adorn, meanwhile, do not feature an annual membership fee, catering mainly to single-event clients such as bridal customers.

Rentals at Adorn last an average of five days, and fees range from $85 for pieces valued at $2,500, to as much as $1,900 for a $69,000 necklace.

All of Flont’s pieces are branded, with half coming directly from the brands themselves and half from estate dealers. Of the 65 brands currently available on the site, 42 have signed exclusivity agreements — among them John Hardy, Swarovski, and Hearts on Fire. Customers who want to buy the Flont pieces they rent can purchase them for 15% off the listed retail price.

“An interesting statistic for us is that 10% of our members have ended up purchasing, and the average purchase price has been about $4,000,” says Flont founder and CEO Cormac Kinney. He expects that average to skew down with the recent introduction of Flont Demi, a division that offers demi-fine jewelry.

At Adorn, which designs all its own pieces, the price is also below retail. “We never charge anyone full price to buy a piece, because they know — and we know — that we’ve rented it out multiple times,” says Nadine Zaun, Adorn’s director of sales.

“Anyway, if we want to make a new one, we can.”

The users: Brides and professionals

“I’m sure rental is taking away a small piece of the luxury jewelry market, but typically, people who are renting are people who are not purchasing on a regular basis,” he says. “Your best customers are still going to be your best customers. But you may see a dip in the customers who have been saving all year for one special piece.”

In fact, says Kinney, rather than cannibalizing traditional retail jewelers, his business is helping to expand their client base. “The result of borrowing jewelry is that you learn the value of it,” he explains. “We have been educating more millennials about jewelry and creating lifelong fine-jewelry consumers.”

Even as Flont expands — with plans to roll out 500 counters at Chow Tai Fook stores starting in 2020, as well as standalone stores in Shanghai and Hong Kong — Kinney insists his company is bolstering the industry. “The benefit to retailers is that we’re creating more future clients,” he says.

Zaun agrees, stating that it’s not her company’s intent to compete with retail. “You never rent the engagement ring,” she says. “And you can’t get away from the personal touch of buying an anniversary band. So we don’t do that. We don’t want to take business from other jewelry retailers.”

Instead, she sees her company as a gateway to retail. “[Rental] is something for the younger generation to wear so they can look great at their wedding. And then, after college and the house get paid off, after 10 years, that’s when they go to their local jeweler and build up their collection.”◼

“[CLIENTS] WANT TO WEAR THE REAL THING, BUT THEY DON’T WANT TO BE LEFT WITH THE PRICE TAG”

Kinney initially imagined his clients would be socialites who needed a lot of jewelry, but in fact, he says, it’s mainly “women in sales, and real estate brokers.

We have a lot of women in wealth management and banking. Mostly women who are working, and who are client-facing.”

Zaun says her clients are mostly wedding customers aged 20 to 40 who are getting married for the first time. “The general population can’t afford to get diamonds for an event,” she says. “They’re teachers or lawyers, and they want to look beautiful in jewelry, because everything is about pictures.

And they want to wear the real thing, but they don’t want to be left with the price tag.”

IMAGES: ADORN; FLONT

Bulgari Allegra diamond and gemstone earrings from Flont.

Retail threat or benefit?

Are rentals hurting the bulk high-end fine-jewelry retailers? Not according to Christopher M. Olshan, CEO of The Luxury Marketing Council.

IN THE SPOTLIGHT:

PRATIKSHA JEWELRY Dallas-based Pratiksha Jewelry has run its rental unit for about two years, and it’s already big business. “Dallas is a market where there are a lot of charity events,” says founder and CEO Tisha Vaidya. While fashion rental company Rent the Runway offers black-tie apparel and costume jewelry, she says, “there isn’t anyone here who addresses the rental market for fine jewelry. And if you rent a black-tie gown, costume jewelry doesn’t really match.”

Pratiksha, which started as an online-only retail business when it opened three-and-ahalf years ago, had to make some adjustments to incorporate a rental division.

Obviously, insurance was one hurdle, but Vaidya says her clients take exceptionally good care of their rentals, and she quality-checks every product each time it goes out and comes back. Learning inventory control was harder, she recalls: “The same styles are available for rentals and sales. It was a bigger challenge to know what we needed to have on hand.”

Still, she’s figured it out. “It’s usually the classics people want, so we bolstered our inventory on that.”

Her business, which includes clients outside of Dallas, doesn’t use a membership model. Instead, it charges a perpiece fee for items, which are generally rented for five days.

Vaidya says typical rental fees range from 1% to 20% of the purchase price, with a $300 maximum, even for the most expensive items. Pratiksha currently designs all its own products and plans to open pop-up showrooms around the country. “Every woman deserves to wear fine jewelry pieces,” declares Vaidya. pratikshajewelry.com

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RETAI L INS IG H T

CRACKING THE CONSUMER CODE Creating jewelry may be an art, but shopping is really a science, according to market expert Paco Underhill. By Joyce Kauf

I Paco Underhill, CEO and founder of Envirosell.

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s there a formula retail jewelers can use to make the shopping experience more enjoyable?

“It’s really about changing the paradigm to respond to the realities of the way people — especially women — shop, and their expectations of that experience,” advises Paco Underhill, CEO and founder of Envirosell, a New Yorkbased market research and consulting firm dedicated to “exploring the science of shopping.”

“First of all, we need to recognize that selling has gone from a nose-to-nose interaction to a hip-to-hip interaction,” says Underhill. He believes the traditional way of selling jewelry, with the salesperson standing behind the display cases, detracts

from the “distinctive nature of luxury products” that calls for proximity to the customer.

FOCUS ON WOMEN “Historically, a jewelry store was designed for the male shopper. In 2019, it is women who are buying for themselves. Jewelers have to create a social aspect that makes the store a lot less intimidating,” explains Underhill.

“Part of what is a little awkward in this modern age of jewelry is the recognition by the [often] male jewelry-store owner that it is the joy of trying something on that gets women to start falling in love with the stuff,” he continues. And that presents an opportunity.

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A life experience or celebration — a wedding, birthday or career promotion — is often the catalyst for a woman purchasing jewelry. As Underhill points out, “wouldn’t the customer appreciate the retailer saying to her, ‘If you really want to get the right pair of earrings, you should bring the dress that you are going to wear it with — and I have a dressing room for you to change’?” The goal is to link the in-store shopping experience more effectively to the occasion for which the person is shopping.

Underhill acknowledges that store design is often influenced by lossprevention measures, especially in prestige stores with high-value jewelry. He advocates ushering clients into a separate room and offering coffee or wine. “It’s a form of hospitality that helps generate the first sale and the expectation of the second, and holds the customer in place longer. You are creating more of a captive audience while establishing a sense of trust and reinforcing an aura of luxury.”

EDUCATE AND INFORM

IMAGE: ADOBE STOCK

Even the ever-increasing competition from online sales can be used to the jeweler’s advantage. Underhill advises translating the “immediacy and simplicity” of the online transaction.

“The premise is that online isn’t just about selling. It is about educating and informing,” he explains. “You want the customer to walk in the door with enough information to start asking questions so that the salesperson can showcase

“ANY TIME SOMEONE IS WAITING IS AN OPPORTUNITY FOR GUERILLA MARKETING”

their knowledge and experience. In fact, one of the best ways to educate the customer about your online presence is in the store itself.”

Underhill envisions this scenario: “The customer walks in and says, ‘I have a question about this ring.’ The salesperson is happy to show her the piece, but adds, ‘We have a website where you can find this information. Let me show it to you on my iPad.’ The benefits are twofold: It extends the conversation and is a very effective method of engaging the customer.”

TAKE A PICTURE “Retail jewelers need to recognize that any time someone is waiting is an opportunity for guerilla marketing,” says Underhill. Most likely, the customer will be on her iPhone. If she could be scrolling through photos of women wearing jewelry she was trying on or thinking of buying, it would keep the sales process top of mind.

Furthermore, asking clients to submit photos of themselves wearing the jewelry furthers the retailer’s ongoing conversation with existing customers.

Looking ahead to the store of the future, Underhill envisions one that comes to you. “Consider a jewelry store in the parking lot of a tennis tournament selling tennis bracelets. Or a store that is in the middle of a wedding fair,” he suggests.

All this gets to the heart of the matter.

“The jewelry business hasn’t done a very good job of communicating what jewelry means,” Underhill stresses. “Jewelry for the modern woman is one of the ways in which she states her individuality, often in the context of her professional life, where she has to dress in suits that resemble a uniform. Rather than what she is wearing, it is the accessories — the jewelry — that establish her style.”

Faced with the challenge of adapting to an ever-changing retail environment, retail jewelers have to make changes in their attitude and approach. On that score, Underhill quotes Chinese philosopher Lao Tzu: “The journey of 1,000 miles starts with the first step.” ◼

SELLING POINTS Paco Underhill, CEO of Envirosell, is the author of Why We Buy: The Science of Shopping, which has been published in 28 languages. The press has called him a “retail anthropologist”; he says he is just an interested observer. His columns and editorials have appeared in The New York Times, Money magazine and The Wall Street Journal. Envirosell has worked with the jewelry industry for more than 20 years.

Here is Underhill’s advice to retailers on how to transform the jewelry-buying experience.

• TAKE A WOMAN-CENTRIC APPROACH TO SELLING. Female self-purchasers represent a significant segment of the market.

• STAND SIDE BY SIDE. The counter is an unwelcome barrier between the salesperson and the customer.

• MAKE SPACE FOR A DRESSING ROOM. Let the woman see what the jewelry looks like with the dress she is accessorizing.

• CREATE A PARTY ROOM. Host birthday, bachelorette or wedding parties in the store and take advantage of an opportunity for new customers to see the jewelry, try it on and love it.

• KEEP THE CONVERSATION GOING — even after the sale. Ask clients for pictures of themselves wearing the jewelry that you can post on your website or an app that can be downloaded on an iPhone, Android or iPad. • SET UP AN OUTPOST at an event where customers will congregate.

• INTEGRATE the online and in-store experience.

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TH E FINAL CU T

FUTURE FACETS

Rapaport Magazine asks four of the trade’s top execs: What innovation would you like to see in the diamond and jewelry sector in the coming years, and why?

Our industry is in the middle of a crisis. Bank financing [has] contracted from $14 billion to $4 billion, banks’ confidence is at the lowest level, consumers’ confidence is shaken, [chemical vapor deposition (CVD) diamonds] are at the center of an industry discussion. The industry needs to react cohesively and swiftly, but there are no leaders. We have filed an innovative patent for the commercialization of a technology to generate billions in new capital inflow to the diamond industry while securing industry standards [via] a blockchain platform, thus generating confidence for the entire ecosystem — mines, diamond manufacturers, banks, insurance, retailers and consumers.

88 MARCH 2019

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BETH GERSTEIN COFOUNDER AND CO-CEO, BRILLIANT EARTH We think there’s a great opportunity to offer customers a shopping experience that’s memorable, high-touch and personalized. We would also like to see a redefined retail environment that is seamlessly integrated across channels, utilizes tech-enabled tools to aid decision-making, and allows for the creation of personalized products. We choose to focus on offering a memorable, high-touch and personalized experience because it’s reflective of the expectations we’re seeing in the marketplace. Customers... want to shop how, where and when they want. We want to provide a convenient and enjoyable shopping experience that meets and exceeds their expectations.

TERRY W. CHANDLER PRESIDENT AND CEO, THE DIAMOND COUNCIL OF AMERICA We have to learn to speak millennial. Our industry has to learn how to build relationships with millennial consumers. I don’t think we’ve done a good enough job yet. Millennials have a different perspective.

They want relationships; they want you to be green; they want transparency. Research shows that they like our product, and they like nice things. But we’re still speaking a language they don’t understand. My advice?

Hire millennials now, and let them tell you what millennials want. They want to work with you, not for you. Also, engage millennial consumers.

Create an advisory board of millennials. Take them out to dinner, listen to what they have to say, then act.

TODD REED JEWELRY DESIGNER AND CEO, TODD REED The first thing that comes to mind is to Make Diamonds Special Again. One way to do this is to slow down the mining. This will help justify the high prices, encourage higher design, and bring back the sensibility of what makes diamonds so special. I love diamonds, but in the last 10 to 15 years, what was once special has become “seen it, done it.” If we slow down mining and advocate for more creativity within our own industry, we can foster more curiosity in consumers.

“OUR INDUSTRY HAS TO LEARN HOW TO BUILD RELATIONSHIPS WITH MILLENNIAL CONSUMERS”

COMPILED BY DEBORAH YONICK. IMAGE: ADOBE STOCK

BRUNO SCARSELLI PARTNER, SCARSELLI DIAMONDS

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