We recently had a chat with RDI CEO and Founder Michael InDelicato to discuss what he considers some of the biggest issues facing the diamond industry today.
Q: Tell us about inaccuracies and inconsistencies in diamond grading.
“Inconsistency has always been an industry problem, but it has gotten much worse in the last 10 years. Major labs have been more lenient with their grading. Human error, subjective grading, lack of technology calibration, and lack of governance are contributing to this overall industry challenge.
Inaccuracies and inconsistencies in diamond grading is especially detrimental to jewelers now, when they are competing with the online giants. For example, a misgraded diamond could be offered at a price point that doesn’t accurately reflect what the consumer is ultimately looking to purchase. Just as all natural white diamonds aren’t created equal, neither are the grading reports. If grading is inconsistent, how can you trust what you are purchasing?
To address this very challenge, earlier this year we announced a new, exclusive partnership with De Beers Group Industry Services established by the De Beers Group, the world’s leading diamond company, that enables us to assure our customers complete confidence that the diamonds they buy are accurately and consistently represented in grading reports that leverage unparalleled technology and expertise. De Beers is world renowned for its accuracy, integrity, and consistency in diamond grading.”
Q: How can jewelers instill confidence in customers looking to purchase diamonds?
“Think about how a car salesman sells you a car – he or she doesn’t defer to General Motors to inform you about the car. Rather, they take the time to learn about the features, safety ratings and value. The same approach should be taken by jewelers. They should align with good, knowledgeable diamond vendors, but they too should be very knowledgeable about diamonds. In a competitive jeweler market, trusted experts can expand their value and service to customers. Invest in your diamond business – not just in product, but in learning about those products too.”
Q: How can we educate and train the market to compete with buying diamonds on the Internet?
“The best way to combat online diamond purchases is to make the in-store shopping experience far superior. To accomplish this, jewelers should focus on catering to customers, making the store feel comfortable and special and create an environment that lets customers build connections with the merchandise. Jewelers also need to be sure they have the right inventory to entice customers and the right expertise to foster trust.”
Q: How can jewelers evaluate inventory so they have the right items on-hand?
“Jewelers need to rely on technology to help them predict what inventory they’ll need. Point-of-sale systems are essential, but they’re only effective when every sale is recorded in the same way.
I find that jewelers tend to break the rules and not enforce a consistent POS process, thereby creating larger inventory problems and inefficiencies. Entering data correctly across the entire store is essential for gaining accurate insight to help plan for your inventory and your future needs.
For example, sales in June 2019 should inform what you’ll need on-hand for June 2020. This is really important because 80 percent of engagement ring consumers buy a ring on the same day they shop, so if you don’t have what they want, they will go somewhere else. This is why good analytics is key to great business.”
Q: How should retailers determine the right diamond pricing in their stores (leveraging national data)?
“National data isn’t a good indicator – the Los Angeles market is always going to be drastically different than the market in Cleveland, for example.
A better strategy is to watch your local competitors. Don’t set out to beat them (no one wants a race to the bottom), rather just mimic their pricing to create an even playing field. Better yet, find a way to deliver more value – i.e. extra services, specialized expertise – so you can charge slightly more.”
Q: How has the pandemic impacted diamond market/prices and when will the market normalize to pre-COVID-19 conditions?
“Diamond trading has declined sharply amidst the global pandemic. With no transaction history over the past month – diamond hubs like India, Israel, Belgium and NYC are all closed – it’s hard to measure what the prices are. Until the market opens and transactions happen, we can only guess what will happen.
The good news is that the diamond industry has proven it is resilient during times of crisis. It has overcome anti-trust legislation, threats from simulated stones like CZ, the negative perceptions generated by the popular movie ‘Blood Diamond’ and ever-changing consumer preferences and priorities. In addition, the industry is better positioned to handle stocking today than it was in recent years as a mid-stream inventory deleveraging cycle already took place through most of 2018 and 2019.
In spite of a roller coaster first quarter, I predict that the diamond industry will align supply with lower levels of demand and the market will rebound. By midsummer we’ll see diamond prices steady and even begin to rise.”