MartinRapaport

Martin Rapaport On The Future of Diamonds

Filed under: Jewelry

You've likely never heard of Martin Rapaport but to the diamond world he's famous. Rapaport is to diamonds what Robert Parker is to wine, a person of tremendous influence. He runs Diamonds.Net and his Rapaport Index defines diamond pricing for the world. On Monday, Rapaport spoke to the packed room at the JCK jewelry show in Las Vegas delivering his pronouncements on the diamond market at an annual breakfast event. Right now, the diamond industry is facing similar challenges seen by the rest of the luxury market. Rapaport feels that the current economic climate offers both opportunity and pitfalls for those in the diamond business.

The news is conflicting, larger stones have been getting higher and higher prices and the huge wealth in China, Dubai, India and Russia is creating a hunger for luxury goods and diamonds and diamond jewelry specifically. This is also a time when the plummeting real estate market in the U.S. and Europe means that the Western world, which fueled the global prosperity in the beginning, is now cutting back on spending. Independent stores and small chains are having a tough time and the news is full of stories of stores having bankruptcy sales where goods are being sold off at below cost.

As of 2007, the U.S. still made up the bulk of diamond jewelry sales, clocking in at 43%. China brought in 8.5%, Europe did 11% and the Middle East was responsible for 4.6%. Until recently, the U.S. had been on a path of prolonged economic growth and our prosperity fueled the global economy expanding the middle class in India and Africa. Small jewelers in the U.S. are now competing with a global market. As I've heard mentioned at other conferences such as the Luxury Summit, the number of millionaires and billionaires is growing worldwide. This might be one reason why the price of big stones is going up far faster than the prices for smaller stones, especially those under a carat.

For jewelry sellers, as I heard in other sessions at this show, branding is more important than ever, especially to new luxury spending markets. Rapaport cautioned though that branding is a "trojan horse" for the retailers. First the retailers convince their customers which brand to buy and then the seller of the brand raises that price. Many stores are worried about the new DeBeers Forevermark, a branded diamond sold by DeBeers. Now the considerable advertising budget of DeBeers will be aimed at marketing that diamond which will be sold at premium price. Rapaport's answer to those competing against this new stone? Hang a sign in your window advertising that you are selling for diamonds for 10% less than Forevermark.

Tags: diamonds, jewelry, martin rapaport, MartinRapaport