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DIAMONDS MARKET REVIEW DESKTOP

JEWELRY RETAIL SEGMENTS

We recognized three groups of retailers that offer fancy color diamonds. The groups are not characterized by their turnover or reputation but rather by their business culture and the way they operate.

  • The first group comprises privately-owned, mid-sized independent jewelers, some of whom are authorized sellers of leading luxury watch brands. These jewelers are typically leaders in their respective geographic areas and incorporate fancy color diamonds into classic jewelry designs. Their sales teams are experienced, with some being owners or family members. Due to the infrequent turnover of sales personnel and their local residency, many of these retailers have established long-standing intimate relationships with their customers. This is significant because it often replaces the need for in-depth knowledge about fancy color diamonds to finalize a sale, although having such knowledge would likely result in a higher success rate with potential customers. These privately owned retailers are also recognized for their flexibility and quick response times, when it comes to price discounts and customizing jewelry designs to meet customers’ preferences. Additionally, local retailers prioritize pricing over placing an emphasis on traceability or strict quality standards. Consequently, if needed, they may feel more comfortable offering lower-quality fancy color diamonds to accommodate a budget.
  • The second group comprises a diverse collection of high-end, privately owned brands and jewelry designers who aim to make a statement with rare fancy color diamonds. Some of them create bold and unique multimillion-dollar pieces centered around colored diamonds, enjoying the artistic freedom to design their fancy color jewelry without adhering to any pre-existing design philosophy or rigid brand values, as most large international brands do. Moreover, these brands primarily sell unique, one-of-a-kind jewelry pieces rather than jewels from a collection with a narrative, affording them more pricing flexibility and freedom. As most sales are not made from an annual, international collection with a predetermined price, the need to account to other customers is therefore low and as a result, pricing is more flexible in this category. Here are a few companies that represent this wide category: Graff, Moussaieff, Chopard, David Morris, Boodles, Cindy Chao, Anna Hue, Lorraine Schwartz and more. These jewelers typically have a global presence and in some cases, even travel to serve discerning clients, as part of their strategy to offer personalized and intimate service.
    Generally, in this level, the owners of the company or very senior sales staff such as family members, are responsible for the multimillion-dollar fancy color diamond sales. When it comes to quality, these jewelers are not obligated to a structured policy but rather to what they find attractive, and avoid diamonds with certain properties relying on past experiences with clients. They also demonstrated the highest level of understanding compared to other retailers in other categories, and are involved in almost every purchase, attend trade shows and sometimes even in re-cutting procedures of their fancy color diamonds.
  • The third group includes large international brands that play a role in the history of luxury, such as Tiffany, Harry Winston, Van Cleef, Cartier, Dior, Bulgari, Piaget, Chanel, and Boucheron. De Beers Jewelers is also included in this category, even though it is considered a newcomer in this luxurious segment. These companies use fancy color diamonds constructively and consider them in their yearly budget. Some of these brands offer a wide range of jewelry categories mounted with color diamonds, such as engagement rings, jewelry collections, and rare one-of-a-kind pieces unveiled in exclusive gala events. However, through interviews made with wholesalers supplying these brands, we found out that most brands restrict themselves with rigid quality specifications for fancy color diamonds that don’t always impact the stone’s visual assets and value, but rather rely on gemological features taken from their general colorless diamond guideline. Color diamonds are rare and create better margins than colorless diamonds however, in most cases they are manufactured under no standardized quality parameters which makes them difficult to source in a consistent quality, especially when using the colorless diamonds parameters. When these jewelry companies are searching for a significant number of color diamonds within a specific timeframe for a collection, various departments like design, acquisition, and marketing become aware of the challenges associated with fancy color diamonds and change their standards in comparison to colorless diamonds.

 

These challenges arise from their rarity and the absence of manufacturing standardization. Following conversations conducted with certain customers, we realized that buying a color diamond from an international luxury brand, one that is perceived to stay around “forever”, gives a greater sense of security and strengthens the feeling of preserving the diamond’s value over the years, an advantage very few jewelers have.

CUSTOMER ANALYSIS

Fancy color diamond customers are not confined to one geographic area, age, gender or race and it might be irresponsible to say with certainty what exactly attracts and excites wealthy buyers before they decide to purchase a diamond of one color or another nor to know their motivation. In fact, there are many profiles of buyers, and it is impossible to analyze each type . From various interviews we did with collectors from the US, China, Taiwan, and Hong Kong, we were able to divide private buyers into three different groups.

  • The first group comprises high-net-worth jewelry admirers who belong to a more sophisticated customer segment. These individuals often seek the ultimate luxury product, which is unattainable to most. They have typically explored and learned about the subject to a significant extent, and in many cases, they are more knowledgeable than the sales specialist in the store although many of them still to confuse quality criteria taken from the colorless diamond parameters. They are willing to spend substantial amounts of money because they view it as a part of their family’s wealth preservation strategy and view a fancy color diamond as a personal financial security in the event of the dissolution of the family unit or heritage. They follow record breaking prices at auction to get a sense of market prices and sometimes prefer to conduct their purchase overseas as part of their tax planning.
  • The second group of fancy color diamond buyers are mid-sized affluent jewelry enthusiasts who constantly seek to diversify their jewelry collection and will purchase mainly yellow diamonds and smaller sized diamonds (0.30 to 2 carat) from the more exotic color groups such as pink, blue, green, orange and so on. These buyers are often inspired by media publications, high-profile red-carpet events and record-breaking auction prices. Diamond enthusiasts in this category are aware of the wealth preservation factor as well and will track their appreciation over time.
  • The third group typically consists of younger buyers who seek to purchase an engagement ring with a unique character within a predetermined budget, or jewelry enthusiasts who wish to adorn themselves with unique fashion jewelry, often incorporating fancy color melée or fancy color diamonds with low clarity. The wealth preservation factor plays a minor role in these purchases.

THE CUSTOMER’S NEEDS

High-end jewelry collectors value exclusivity and rarity, seeking to differentiate themselves from the masses by owning the ultimate luxury product that is not readily available to everyone. They are willing to invest in their diamonds, knowing that the value of these gems is likely to appreciate slowly over time. They also seek a high level of service and attention to detail, which translates to a need for understanding the story behind the diamond. Unlike colorless diamonds, each fancy color diamond is different and unique. Thus, the storytelling of a fancy color diamond is crucial to drive a satisfying transaction, as it is often the way in which consumers connect with and understand the value of their jewelry. Diamonds are not just an ornament that indicates one’s status or the hardest material in nature, but are also about the story and meaning behind them. By telling a compelling story based on real facts, a luxury brand can elevate their diamond from a mere commodity to a symbol of achievement.
Interviews with two veteran sales specialists revealed that private fancy color buyers need a well-crafted story about the qualities of a natural color diamond. In most cases, a good demonstration turns into a fascinating lesson about their passion for diamonds in general and fancy color in particular, creating a sense of belonging to the brand and the excellence it represents, as opposed to a random diamond offered at auction.
This demonstration of knowledge about a fancy color diamond can lead to high brand loyalty, as customers become invested in the brand’s expertise. Furthermore, consumers report that when the expertise of the sales team is reflected during a high-end jewelry presentation, it can differentiate any color diamond from other competitors and justify a higher price, as consumers are willing to pay more for a fancy color diamond that is presented by an expert.

Sales personnel also reported that diamond collectors who invest a substantial amount of money in a natural-color diamond look for a memorable buying experience, one that can be shared later with close friends and family. In most cases a diamond’s story could intensify the wealth preservation factor when relevant.

To conclude, the need for explanation about the visual characteristics that differentiate a fancy color diamond from other diamonds, with a similar GIA report, is a key element for a successful transaction. It can create an emotional connection with consumers, differentiate the product from competitors, justify a higher price point, and create a memorable and immersive experience. By leveraging the power of the story behind the cause of color, historical price behavior, rarity data, and an intelligent discussion about the prices fancy color diamonds achieve at auction, sales teams can establish a strong brand identity and build long-lasting relationships with their customers.