Diamonds and their shapes, as they relate to mutual funds...note...this is not about investing...

[Regular Guy]

Garry recently created a thread which is pinned, here, concerning the shapes of diamonds, and a simple inquiry into which diamond we like best.

But...what is this about? Even more, can we use this information in shopping...and how?

A possible outlier as background to this discussion is this one, but so far only Anna deigned to comment, and she's long gone.

It was commented that...so what about all of these shapes? For example, going to the corner shop, all they stock are rounds and princesses anyway.

Well, maybe Next Diamond will take care of that.

But...take care of what?

Look.... And...I will need the diamond scientists to answer the question at the start...

For a given shape, we've said all along that round diamonds tend to provide the most sparkle, brilliance, etc.

But...what should we intend when we use that word...tend.

For any given diamond...forget any particular shape...the brilliance (see other discussion as to how you wish to map brilliance/fire/scintillation onto beauty and preference) of the diamond when compared to another given diamond will only tell you how you like this one diamond over another.

This does not tell you about the relative performance of a group of diamonds in a group of shapes.

For a given shape, there is possibly or probably a slope to suggest the maximum beauty vs the rate of descension based on the nature of the shape to begin with.

Probably, rounds have it by the numbers, including the science, and the experience cutters bring to it. Personally, I picked a round as dead last in Garry's list of diamonds. Is that supposed to influence my predisposition about preference for shapes?

Am I making some kind of sense?

A corner shop...if they know how to pick books very well, will do a magnificent job picking really excellent books, and have a swell selection for...well...who...a particular clientele who will beat their path to their door? Is the clientele differentiated? I am guessing that with books, the differentiation of product class is higher, than for diamonds...but the mapping is challenged based on many things, including price points. Alternately, go to Barnes & Noble...with many many more books, and the selection, for those books you will actually be interested in, is less. Maybe.

For stocks, and mutual funds, the professional recommendation is to have a broadly represented fund...with as many shares you want, and then don't worry too much about what's in it.

Now, how do stocks, in this case, map onto a shopkeep who wishes to stock diamonds, and serve his clientele well.

Does he keep rounds & princesses primarily? Does she keep a broad variety of shapes? Let's presume people will actually shop based on their willingness to take a fresh look at options.

Mostly questions here. Are they clearly enough presented and aligned to request answers?

 

[Hest88]

Interesting question, Ira.

I don''t think the analogy to mutual funds is quite what we''re looking for. Mutual funds are about diversification so you can minimize your risk (and hopefully maximize your profit) through a professionally managed and wide-ranging portfolio. A jeweler''s purpose is the opposite: to pinpoint the items that are most popular and generate the most sales. Maximum diversification would likely torpedo that purpose.

Instead, I would think a jeweler would mostly carry the most popular shapes for his market and, depending on his clientele, sprinkle those core products with some more singular ones to make his shop stand out from the crowd.

 

[Regular Guy]

Hest,

It's difficult to beat the market, and I don't think a jeweler's purpose is different.

The 80/20 rule is supposed to drive success.. .Barnes & Noble will try to maximize the 20, and carry it the most.

Your smart jeweler might try to beat that...also going for 20.

Let's say you're satisfied with not trying to beat the market...and go for an even 80/20 spread. Then what?

With a diversified portfolio...most of your holdings will be in the large sector shares, still.

What are these? All rounds?

Again...presume a best case...and that you're investing in beauty only, and betting that your customers will take a fresh look, and look for beauty, too.

 

[Hest88]

Date: 11/10/2009 11:54:27 AM
Author: Regular Guy

Again...presume a best case...and that you''re investing in beauty only, and betting that your customers will take a fresh look, and look for beauty, too.

Then your 80% goes into branding and marketing. Think about the education that goes on when someone finds PS and think about how that person represents the pinnacle of the (non-millionaire) consumer already. Diamonds are highly complicated but highly emotional purchases. No amount of beauty alone is going to drive enough consumers to your store unless some external factor---an ad campaign, a prominent media article, a celebrity endorsement--plants the idea in the mind of the average consumer of the superiority of your product.

 

[jet2ks]

Ira,

Thank you for starting this thread. I'm not going to pretend to be an expert on the jewelry industry or history, but as a buyer for retail stores, I hope I have some insight into general retail practices and trends.

As I look at diamond sales, I see most stores stocking predominantly rounds and princess, to the exclusion of other shapes and the diverse "personlities" they represent. I understand that those two shapes dominate the market, but my question is whether they should dominate the displays.

Using the 80/20 rule, with small variation, I know that in my business 25% of our items drive 75% of our sales, but, and it is a very important BUT, those 25% of items only take up 30-40% of our available retail space and inventory dollars. Why? Because it the uniqueness and diversity of the other 75% of the items that brings customers into our stores instead of a competitor to shop, browse and eventually purchase--we carry things they cannot find anywhere else because our buying team actively pursues these items. Even the customers purchases one of those 25% items, it is in many cases not what brought them to our store.

What I see in jewelry stores is that rounds and princess seem to take up 90% of the available retail space and inventory dollars, because the sales numbers say that's what sells the most. I personally feel that a good store pulling back on the number of rounds and princess and utilizing the extra space for the unique, unusual and niche shapes and styles could bring in more shoppers to look and through that make more sales--even though most of those sales might still be rounds and princess. It is a matter of sacrificing turn rate on the more unique items to increase the turns of the popular ones and therefore increase the overall profitability of the store.

I may be way off on this, but all I know is that when ring shopping, I got tired of looking at the same shapes and ring styles over and over in every store, with little variation or diversity. It soon felt like it didn't matter where I went, I would see the same thing. If one of those stores had stocked more variety, I would have spent much more time browsing--even if I didn't like all the styles, I would still have to look at them to decide that. This browsing time would have given a good salesperson more opportunity to interact, determine wants and needs, and possibly make a sale.

 

[Rockdiamond]

Most jewelry stores can not afford to stock a wide selection of diamonds- forcing them to utilize whatever their budget into Rounds, and possibly princess cuts.
The internet has made this situation even more one sided.
Specialization is far more possible if you''ve got a potential market of millions, as compared to a retail B&M jeweler who''s market is a tiny fraction of that.


An internet seller can afford a high degree of specialization- both in inventory and information.

An example from a different industry:
I am a guitar player.
I''ve always had an interest in "Pedal Steel Guitar"- which is mainly used in country music.
The stores here in New York City carry many thousands of regular guitars, but don''t carry even one pedal steel- much less have personnel capable of answering detailed questions about them.

Add the internet to the mix, and now you can buy a really nice pedal steel guitar in New York City ( actually, you can have it shipped here)
But remember, it''s no only the actual inventory, it''s the free flow if information that will create desire to own different type of guitars.
None of this has made any difference in the local market you still can''t fine a pedal steel in New york stores

 

[Regular Guy]

David, of course I get this example.

How interested in this pedal steel guitar are you? Or, do you know?

Where the rubber meets the road, given your knowledge of what can happen with the internet...have you sought to make this happen? What are your blockages, and will you seek to overcome them?

 

[Rockdiamond]

Considering I have four of them- and have taken the time to drive to North Carolina on a number of occasions to visit the Emmons factory, I''m quite interested in them.
In response to your question: I have had an interesting experience.

About 6 years ago, I bought a Pedal Steel from a company who is prominent on the web.
I didn''t like it at all.
There a forum about Pedal Steel Guitars on the web ( big surprise).
When I shared my dislike for the guitar, all heck broke loose and a torrent of supporters of that company barraged me .

The moral of this story ( for me) is that it''s sometimes difficult to separate true information from promotional material online.

 

[Regular Guy]

Date: 11/10/2009 12:19:56 PM
Author: jet2ks
Ira,

Using the 80/20 rule, with small variation, I know that in my business 25% of our items drive 75% of our sales, but, and it is a very important BUT, those 25% of items only take up 30-40% of our available retail space and inventory dollars. Why? Because it the uniqueness and diversity of the other 75% of the items that brings customers into our stores instead of a competitor to shop, browse and eventually purchase--we carry things they cannot find anywhere else because our buying team actively pursues these items. Even the customers purchases one of those 25% items, it is in many cases not what brought them to our store.

I like that. I did intentionally not mention Borders, which may be closer to this model, and did mention Barnes & Noble, which to me is less helpful.

What I see in jewelry stores is that rounds and princess seem to take up 90% of the available retail space and inventory dollars, because the sales numbers say that''s what sells the most. I personally feel that a good store pulling back on the number of rounds and princess and utilizing the extra space for the unique, unusual and niche shapes and styles could bring in more shoppers to look and through that make more sales--even though most of those sales might still be rounds and princess. It is a matter of sacrificing turn rate on the more unique items to increase the turns of the popular ones and therefore increase the overall profitability of the store.

I''m not sure about this myself...though it was a part of my original question...

I may be way off on this, but all I know is that when ring shopping, I got tired of looking at the same shapes and ring styles over and over in every store, with little variation or diversity. It soon felt like it didn''t matter where I went, I would see the same thing. If one of those stores had stocked more variety, I would have spent much more time browsing--even if I didn''t like all the styles, I would still have to look at them to decide that. This browsing time would have given a good salesperson more opportunity to interact, determine wants and needs, and possibly make a sale.

Good points!