Rapaport Magazine - February 2018

Vol. 41 No.2 February 2018

DISRUPTER-IN-CHIEF SYNTHETICS AREN'T THE ONLY THING SHAKING UP THE TRADE

Interview King of Bling

Can Gina Drosos's Meet celebrity customer-centric strategy jewelry designer Stephen save SignetWebster Jewelers?

Profile Auctions

How the Kwiatssales turned Strong Geneva afor family business Sotheby’s andinto a Christie’s brand powerhouse

RetailMemos Trends

Your ultimateand guide to Challenges doing consignment opportunities of right, customization from an industry expert

Retail Styleinsight TradeLegacy Report

Whether or notisyou PeggyofGuggenheim: Animal jewelry all want The impact new mine to talk them, chatbots Her lovers, herthe art and the ragetothis season.

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EDITOR’S LETTER

IMAGE: Ben Kelmer

Shaking things up

Editor’s Pick For the new collection she unveiled at VicenzaOro in January, Jennifer Ewah — founder and creative director of Eden Diodati — didn’t work with diamonds; she used Swarovski crystals.

Nevertheless, this is one of the jewelry lines that got me most excited. Not only are the jewels stunning, but as Ewah points out, “the pieces are hand-beaded in a social cooperative numbering 5,000 women artisans who survived the genocide in Rwanda, by master weavers, Hutu and Tutsi working side-by-side, supporting each other as artisan sisters.” How about socially sustainable luxury as the true disrupter of 2018?

One of the things I enjoy most about my job is planning articles with our contributors. We bounce ideas back and forth at each other, we brainstorm to get a sharper angle, and more often than not, we laugh. A lot. Their knowledge, passion for the industry, and sense of humor always make it a fun collaborative experience.

Following an insightful discussion about what qualifies as disruption, one of our writers is working on profiling companies that can be described as disrupters for a future issue. But before this closeup on specific players, we decided to focus on the global paradigm-shifting factors affecting our industry.

Love him or loathe him, US President Donald Trump is the undeniable disrupter-in-chief, and that’s why he’s made it onto our cover this month.

His new tax law is the subject of Anthony DeMarco’s fair and balanced analysis (Page 34). Beyond the heated partisan and personal opinions, we wanted to know: Is the 45th president of the United States good for business?

Meanwhile, the ever-growing appeal of synthetic diamonds raises critical questions for naturaldiamond professionals: To stock or not to stock?

Jennifer Heebner spoke to retailers who have decided to offer lab-grown diamonds in their stores (Page 36). Whether we see this as a deadly threat or an interesting development to watch, there’s no doubt that an open conversation on laboratory-created stones is essential.

And if there is one thing we have learned in the Trump era, it’s that we live in an age when transparency is not an aspiration, but a demand — at all levels of interaction, personal and professional.

That’s why blockchain is much more than a buzzword. In that vein, we take a look at what De Beers is doing to offer everyone in the pipeline the full disclosure they crave (Page 38).

I’d love to hear your thoughts on the individuals, companies and initiatives you believe are creating significant shifts in our industry. Looking forward to your insights.

Sonia Esther Soltani Editor in Chief sonia.soltani@diamonds.net 10

February 2018

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CONTENTS

IN-DEPTH

RETAIL

MARKETS & PRICING

16 News

40 Retail profile

61 Trade report

Industry: Cryptocurrencies, expanding labs and a royal ring.

Retail: A season to be jolly.

Movers & Shakers: Who’s coming, who’s going Mining: Letšeng’s big-stone bonanza.

Alson Jewelers in Cleveland, Ohio, seeks innovative ways to build lasting customer relationships.

Optimism shines through.

42 Retail insight

64 US retail

Are jewelry stores ready to sacrifice personal interaction to win over tech-savvy clients?

67 Hong Kong

45 RetailRap

68 Israel

24 Interview: Gina Drosos The new Signet CEO hopes her “customer first” and omni-channel strategies will reverse the retailer’s downtrend.

27 Gems of wisdom: Memos Consignment can be a lucrative arrangement for jewelers, as long as both merchants and suppliers take steps to protect themselves.

30 Profile: Kwiat The new generation of this family brand is building on the choices of the previous ones.

What were your holiday jewelry best sellers?

STYLE & DESIGN 47 Jewelry Connoisseur African design influences are making their mark on the market.

48 Style

COVER

Trend-setting millennials are creating new bridal pieces by using stones with sentimental value in modern designs.

34 The Trump effect

50 Designer

The diamond industry is praising the new US tax law, but the president’s global trade policies have some worried.

Rachel Boston lifts the veil on the inspiration for her bridal collections.

36 Carbon copies

Art collector Peggy Guggenheim brought her passion for the avant-garde to the accessories she wore.

Lab-grown diamonds are making inroads among jewelry consumers — and stores are stocking up in response to their appeal.

38 New kid on the blockchain De Beers is using a digital register to document diamonds in a new initiative.

52 Legacy

63 US wholesale

71 India 72 Russia 74 Antwerp 76 Diamond data 81 Price List 93 RapNet Price List 102 Calendar 104 The final cut

54 Book review Part historical account, part tribute to fine craftsmanship, Joanna Hardy’s colorful volume is a worthy celebration of the regal ruby.

56 Colored gemstone Color is gaining traction among millennials who see jewelry as self-expression.

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February 2018

7

INTERVIEW

Going for gold New Signet Jewelers CEO Gina Drosos hopes her ‘customer first’ and omni-channel strategies will reverse the jeweler’s recent downtrend. By John Costello Times have not been good for Signet Jewelers. A decidedly disappointing holiday season saw samestore sales slide by 5.3%. This followed a 4.6% drop in 2016. Add to this poor performance the sexual harassment and discrimination allegations that have hounded the retail giant, and a share price that slumped 30% over the past year, and it becomes apparent that 2017 was a cocktail of catastrophe for the jeweler.

Despite the gloom, Signet’s new CEO, Gina Drosos, appears confident she has what it takes to stop the retailer’s freefall.

“The last couple of years have been disappointing,” she says frankly, sitting in a suite in the plush London NYC hotel in midtown 24

February 2018

Manhattan. “Now we need to have our fingers on the pulse of what customers really want.”

The millennial market Drosos, who was appointed in July, is banking on three strategic imperatives to transform Signet, the first of which is “customer first.” And her message to customers is that Signet is listening.

This, she believes, will put Signet in a prime position when it comes to wooing millennials — the most sought-after, yet misunderstood, consumer segment.

“We are really spending much more time understanding relationships and what is important to our millennial consumers,” she says. “And what diamonds.net

we know from that is that millennial consumers don’t see the kind of sequential relationships that their parents had as being necessary. So while their parents may have met, dated, gotten engaged, gotten married, then moved in together and then had kids, millennials see that as being able to happen in a much more fluid way. So what’s important for us to do is recognize that and to be able to help them have jewelry to be able to celebrate many of those different milestones along their journey.”

And like night follows day, “customer first” feeds directly into the second pillar of Drosos’s strategy: omni-channel.

“We know that most customers who are making a jewelry purchase start their omni-channel journey online, and they end that journey in the store,” she says. “We want to be part of that seamless journey every step of the way. In holiday 2016, when customers visited our websites, only about 3% of the time did they get a unique view based on everything that we know about [their previous visits] — what they are shopping for, what they want and need.”

In holiday 2017, she says, that number went up to 30%.

had become tired or outdated or weren’t as relevant to customers as they could have been, and by bringing new and innovative products and experience to customers. I think many of those same things apply to Signet, where we have an opportunity to take the lead and drive industry growth by putting customers first and bringing new innovation.”

That’s where her third strategy comes in. The company has implemented a new organizational model, moving away from a “functionally led structure” to one of “single-point accountability” to drive the success of each Signet brand.

“We have created within our company what we are calling the innovation engine. Because of our size, we have the capability to do more market research than any other company to understand customers even better, so we are creating a creative process to have a funnel of great ideas that get screened very quickly and that get developed very quickly in the right way and can come through to the marketplace,” she says.

“And then, once we bring great ideas to the marketplace, we are looking at how we drive the longevity of those great ideas,” she continues.

“There’s definitely an opportunity for us to improve both the quantity and excitement of new ideas that we are bringing based on consumer desire, but also to extend the life of some of those innovations by continuing to innovate and delight customers over time.”

Drosos is hoping three is the magic number that will drive the success of her strategy. With any luck, it will be the three-pronged plan she’s laid out, and not a third year of negative sales figures for the company she’s trying to revive. c

IMAGE: Shutterstock; Signet Jewelers

“The last couple of years have been disappointing.

Now we need to have our fingers on the pulse of what customers really want”

Success story In order to implement this customer-centric, omnichannel approach, Drosos will be drawing on a deep well of past success.

“I spent 25 years at the Procter & Gamble company,” she says. “I was part of a team of people who built up a beauty company inside that soap and diaper company to become the biggest beauty company in the world. And we did that through understanding what customers wanted and needed by reinventing brands that diamonds.net

February 2018

25

THE FINAL CUT

Note to self

Rapaport Magazine asks industry execs: What advice would you give a young you starting out in the trade?

Ari Epstein CEO, Antwerp World Diamond Centre (AWDC) A young me was ambitious, confident and impatient — I don’t take half measures or like doing things gradually. First piece of advice: Stay disciplined, even if it is not in your nature. Born and raised in Antwerp, [I found] the industry an attractive option. Don’t reject an option just because it is close to home. Explore as much of the trade as possible — fortunately, in Antwerp, it is all condensed into a small area. When you find what feels right, visualize your goal and make it work. Wake up and go to bed early so you can do as much as possible any given day. Always hit your deadlines. Be professional, but don’t let it slow you down; be ambitious, but don’t go so fast you lose your footing. Stay grounded: Relationships, family and community will be very important before you know it. Above all, stay hungry!

David Bennett Worldwide chairman, Sotheby’s International Jewelry Division I started out in this industry somewhat by chance — my idea on leaving university was to train to be a film director.

However, my father, who was rather horrified by the idea, cunningly arranged for me to spend a year at Sotheby’s instead, for an immersion in all the specializations. At the end of that year, 1974, to my surprise, I was offered a place in the jewelry department. Looking back now, I see that my passions at the time were philosophy (in which I had obtained my university degree) and astrology, and so I didn’t immediately grasp any obvious link between those disciplines and the world of jewelry. Gradually, however, having studied gemology and learned to work with precious metals, I began to understand that all these things are closely interconnected. My career has, in fact, been guided in a sense by the importance of the relationships between individuals, precious stones and the planets.

So I would tell my younger self, “You are not moving away from your intended path; you are on the right track.”

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February 2018

Brandee Dallow Founder & president, Fine Girl The three pieces of advice I would give a young me starting out in the industry would be: First, experience every level of our pipeline — from mine to retail.

By understanding how each facet of the production process works, why it’s uniquely important to the overall industry, and how it leads to the end result (jewelry on a consumer’s finger), you can better appreciate what makes our product as special as it is.

Second, take the time to get to know people throughout the business. Your connections are the key to succeeding, and also to enjoying your time in the jewelry industry, so invest in those relationships.

Third, always keep an ear outside of the industry, bring back peripheral knowledge and challenge the status quo. Learning from the way other businesses succeed (or even fail) and sharing that knowledge almost always leads to positive change.

Deborah Marquardt Chief marketing officer, Diamond Producers Association (DPA) If I could go back and give a young me some advice, I would say — stay curious! Ask questions, keep learning, and find mentors and companies that give you plenty of opportunities to do both. Technology and digital communications have transformed marketing and will continue to do so. The fundamentals remain important, but the methods and the media are perpetually in flux. Curiosity keeps you current and relevant; it connects you to people and opens doors.

As a manager now, I look for key traits that cannot be taught. “Curious by nature” is one of them. People don’t learn to be inquisitive. They are born that way. And if someone is curious, they are likely to become passionate about a subject, and curious, passionate people are committed — they go the extra mile. These are the people who make organizations great.

Curiosity keeps us moving forward. diamonds.net