The Large Hadron Collider (LHC) is the world’s largest and highest energy particle collider. It consists of a magnetized 16.7 mile circular tunnel able to accelerate proton streams to 99.997 percent of the speed of light, creating extraordinarily high energy collisions that allow physicists to recreate the conditions that existed less than a second after the Big Bang. Among its many contributions during the past thirteen years was confirmation of the existence of the Higgs Boson, the so-called “God Particle” responsible for the fact that matter possesses mass, without which the Universe – and life itself – could not exist.
Prior to its initial activation, fringe scientists imagined all sorts of potential dangers accompanied with its activation, including the possibility that the LHC would give birth to a black hole that would instantaneously gobble up the Earth and its atmosphere. Fortunately, those fears proved to be unwarranted. But for this article, I invite you to accompany me on a thought experiment involving the LHC that may provide insights into the near future of diamond jewelry sales, and how you might construct merchandising and marketing strategies to benefit.
Let’s imagine that in the course of performing ever-higher energy experiments, one day in the near future physicists at the LHC create a high frequency oscillation that flows through the Earth’s atmosphere, unexpectedly causing everything on the surface of the planet to experience an intense ultra-high frequency vibration. Fortunately, these vibrations pass through nearly everything harmlessly. But in the same way that certain operatic singers are able to hit a note at precisely the right frequency to shatter a fine crystal glass, in this case, the vibration frequency doesn’t shatter glass. Instead, it shatters diamond. It literally pulverizes every diamond in every jewelry box, as well as on every finger, ear, wrist, neck, and ankle on planet Earth.
Given this extraordinary turn of events, how would you react? Which product categories would you initially choose to advertise, and at what funding level? How would you adjust your inventory and pricing?
Many of us might reflexively choose to advertise engagement rings, given the fact that after 2008 we all learned that bridal appeared to be the only reliable revenue stream in the diamond jewelry business. But now things are very different. Remember, every piece of diamond jewelry in her jewelry box has been annihilated. Does it therefore follow that her engagement ring would be the first replacement piece? I suspect not. Just as physicians don’t mount their high school diplomas on the wall in their office, choosing instead to display their medical school degree, similarly the celebration of her engagement in the form of her engagement ring has now been superseded by the fact that she became married. So while in this new environment where no one owns a diamond engagement ring, engagements will continue at a 3 million per year pace, the potential for diamond bands, as well as particularly three stone rings celebrating her current life story, seem to me to have considerable greater potential.
And what about diamond studs? And inside-out hoops? Remember, the selfie era requires ear adornments for every photograph, so she’s going to either direct someone to purchase new diamond earrings for her, or she’ll buy them herself. Similarly, especially for affluent women who already own multiple high end handbags, will her next self-purchase be another Louis Vuitton, or will she instead choose an adornment for her wrist? And don’t forget pendants and necklaces, as well as fashion rings for her right hand. Indeed, in a world where suddenly all of her diamond jewelry has been vaporized, her interest in the fashion diamond jewelry side during the next five years will be massive and ongoing, until she has managed to fully repopulate her jewelry box.
When you consider the possibilities of a suddenly diamond-free retailing landscape, will you not choose to ramp up your advertising to a much greater degree than normal, since the consumer base into which you’re messaging suddenly has a considerably greater appetite? Remember, the diamond jewelry area in her jewelry box at home is now completely empty, so wouldn’t this be a terrific time to expand your ad spend?
And what about pricing strategy? Will you choose to treat the feeding frenzy that will now occur as an opportunity to expand margins, or might it be a better play to at least initially price for volume? Remember that every sale you make early in this consumption wave is actually a walking billboard, because as your customer wears the piece, her friends are going to notice, and they’re going to ask her where she got it. The ideal time for margin maximization probably occurs much later into the frenzy, once you’ve captured significant market share and have established a pre-emptive level of dominance.
So now that we have considered possible strategies that might be appropriate for our imaginary scenario in which all the world’s diamond jewelry suddenly vanished, let’s apply the same thought process to the real world. Because in the real world, a group of scientists working in a different kind of laboratory actually have created a parallel effect. No, they haven’t destroyed all the diamonds in the world the way our imagined vibrations did in our thought experiment. Instead, they’re rendering all of the existing diamond jewelry obsolete, by making the diamonds contained within appear to be microscopic, in the context of the much larger diamonds that are suddenly available at affordable prices. And these new diamonds are also generally of much higher clarity and color, so they look like they all came from high end Fifth Avenue jewelry stores.
How will the American female consumer feel about her 3 ctw diamond bracelet mounted with slightly off color I1s when all of her friends are wearing 10 ctws that look like they came from Tiffany? Or how about her 1 ctw studs, when all of her friends are suddenly sporting 3s to 6s in their selfies? So just as surely as if a laboratory experiment wiped out all the diamonds in her jewelry box, the real world consumer is suddenly going to be confronted with a scenario in which all of her current diamond jewelry is less than satisfactory, a circumstance that possesses tremendous potential for revenue production in the fine jewelry vertical.
This is the extraordinary power of lab grown diamonds. It renders every prior existing ring, every earring, every necklace, and every bracelet suddenly obsolete, in the same way that Henry Ford’s 850 dollar automobile reinvented transportation in the early 1900s by rendering horse and buggies obsolete. Technology does this. It’s neither a good thing, nor a bad thing. But the way you choose to harness this power will determine how much of this new avalanche of jewelry purchases will flow through your registers. Just use the lessons from our thought experiment, and enjoy the ride.