JCK 2009

[John P]

Date: 6/8/2009 7:42:34 PM
Author: debi wexler

Hi John,

That Richard Homer ring - that''s a sapphire - looks like my Manderin Garnet only the cut is splendid! Love the gold against the rich orange. Bob would say that is one scrumptious stone

You know the garnet is my birthstone Debi ... so if you ever replace it with a Homer gemstone it will have a home.

 

[John P]

Some final thoughts from last week:

Martin Rapaport: “This is not a crisis. This is a new reality."

Mr. Rapaport is an engaging speaker with the ability to frame issues in a way that reaches people on many levels. His “State of The Diamond Industry” is always highly anticipated. Wink already posted a few minutes from the beginning of his new reality segment.


Consumer Reality

Mr. Rapaport said that economic changes in America are bringing about a fundamental shift in social values. In that respect, selling must become about understanding the mindset of the consumer and how he or she is thinking in the new reality: “What is wealth?” he asked. "How do you feel about it? How do you feel when the value of your mortgage is more than the value of your house? What is your mood in this economic situation? How do you value money? Is it for spending or for saving? Are you afraid due to employment, job security and credit card debt? What kind of lifestyle do you want? How do you want to be perceived?”

“Luxury for the sake of luxury is not cool. Conspicuous consumption is not an acceptable social value. It is an evil. You can’t buzz your new 3 carat ring around your girlfriend when her husband just lost his job.”

With the current economic change Rapaport believes the role, relevance and value of diamonds is being questioned; especially by the newest generation of consumers. He encouraged jewelers to get between the ears of consumers and understand the new mindset. “Stop polishing your showcase” he said. If you just assume the world will come out of the crisis and all will be as it was - “you’re going out of business.”

The good news, he says, is that security, love and long term value are cool. They are the most powerful forces on earth. Diamonds are still powerful. They are still worth money. Desire for diamonds has not gone down. So if you’re a retailer and want to do something cool “stop overcharging your customers for the sizzle” and sell the steak for a reasonable price. Of course to do that means combating the mining houses who always want to raise rough prices.

Mr. Rapaport feels that as a trade we would be wise to reflect the changes occurring in our political and generation values. The election of Obama, social conservatism and increasing popularity of responsible consumerism all indicate that America wants this kind of change, he says: Position diamonds as an honest, fairly priced, valuable product.

Industry Reality

For several years Mr. Rapaport has warned that the practice of credit/memo is hurting the diamond industry. Now he says it is critical for the industry to restructure: Confidence in products will be based on their actual cash value, not sizzle, and not hype. After all, we can’t hype, advertise, credit or memo our way out of a recession. Those who want to succeed must get “real" and the practice of memo and credit within our trade is not real. “If you can’t pay you can’t play:" Mr. Rapaport challenged jewelers to try going to any casino craps table and ask for the dice on memo...

In the current situation diamonds remain unpaid-for while dealers’ money goes to buy designer watches, he says: “What would happen if cutters only sold diamonds for cash?” Mr. Rapaport believes the diamond industry is destroying itself by not insisting that people who want to play the game should actually put their money on the line. The trade has used credit to lie to itself about the real value of diamonds while sitting on the goods. “The value of a diamond is the price you can sell it for, no more, no less.” Rapaport suggests manufacturers should say “here is the diamond, do you want it, yes or no? If yes give me the money if no (go away)…end of story.”

The US is threatened by the market we have created, he warned. We have a market with jewelers who say they will pay in 30 days but take 300, and many of them eventually going into bankruptcy. Rapaport warns that globalization is going to change this, whether we act or not, because in India and China there are cash markets evolving. This is creating real money competition upstream. As those markets grow they’ll naturally be preferred by suppliers to the credit/memo/high-risk system that currently exists in the US. Therefore, if we’re looking to the future and wish to restore trade confidence in our market it must be based on reality, not on hype, credit or memo.

Mr. Rapaport believes the trade must be in the business of selling diamonds, not holding them. Unsustainably high prices increase risk and destroy profits. A sustainable trade will create turnover to generate profit even when prices decline.

The Future

The near future, Mr. Rapaport says, is about information and value. Consumers know pricing information. There are no “secrets.” They have the internet and are becoming more and more educated. That is the way it’s going. The margin you can make will depend on your model and the value you bring to the table. Dealers who cannot survive on a small percentage will need to improve their value prospect in order to survive.

And, as he has for the past several years, Mr. Rapaport discussed the long range future and the globalization of demand. It is clear that future competition for market share will be coming from India and China. Demand in the rest of the world has decreased due to the recent economic climate but those two economies continue to grow in consumption and demand for diamonds. As we look at the next decade or so the sheer number of people (and the age demography) sets these countries up for unimaginable growth potential. Rapaport predicts that demand in those markets will eventually become greater than supply. When this happens prices will go up, but in his future scenarios China and India will be driving the market and setting prices, not the US.

To me Mr. Rapaport's message was a call for jewelers to become perceptive, adjust to what is happening in the US today and anticipate what's coming in the world tomorrow. In short, he advises that this is not simply a storm to weather; it's a complete shift in climate.

 

[John P]

Pricescope readers may be amused at an experience some of us had at Rosemary’s restaurant on W. Sahara away from the strip one night... Our dinner group that evening hailed from many far-flung places, including Melbourne, Dublin, Antwerp, Boston, Philly, DFW, Chi-Town and Sin City.

As the waiter took our photo he had to stand over a young couple at the next table. We apologized for bothering them (they did not mind) - and someone joked that they were probably there for a wedding proposal…

 

[John P]

Well, as it turns out the young man had indeed just proposed that evening!

So now, at their celebration dinner, the couple is seated next to a multinational table of gemologists, lab experts and a diamond cutter. We all laughed. Bonnie, the fiancée, was delighted to have so much attention on her finger - and so was her man Richard when the brain-trust gave him high marks on his choice (a nicely cut H&A round in a beautiful designer setting).

Originally teachers from Las Vegas, the couple is moving to Germany to instruct English. Their proposal story was charming. They had finished packing all of their belongings earlier that day. Richard told Bonnie they’d make pizza for dinner and called for her to come to the kitchen and help him find the correct knives (he was waiting for her with the ring box in hand). She was busy and told him to bring them to the next room. Still waiting on bended knee, he asked again could she please just come and help him? To which she replied (quoted to us) “You’ve got legs – bring 'em here!”

So he did, and he popped the question on her terms!

(smart guy!).

A fun night with fun people.

 

[canuk-gal]

Date: 6/9/2009 7:01:25 PM
Author: John Pollard
Well, as it turns out the young man had indeed just proposed that evening!



So now, at their celebration dinner, the couple is seated next to a multinational table of gemologists, lab experts and a diamond cutter. We all laughed. Bonnie, the fiancée, was delighted to have so much attention on her finger - and so was her man Richard when the brain-trust gave him high marks on his choice (a nicely cut H&A round in a beautiful designer setting).

Originally teachers from Las Vegas, the couple is moving to Germany to instruct English. Their proposal story was charming. They had finished packing all of their belongings earlier that day. Richard told Bonnie they’d make pizza for dinner and called for her to come to the kitchen and help him find the correct knives (he was waiting for her with the ring box in hand). She was busy and told him to bring them to the next room. Still waiting on bended knee, he asked again could she please just come and help him? To which she replied (quoted to us) “You’ve got legs – bring 'em here!”



So he did, and he popped the question on her terms!

(smart guy!).

A fun night with fun people.

HI:

What a delightful story!

I laughed out loud at the reference to the "brain trust"....

cheers--Sharon

 

[Paul-Antwerp]

Luckily, he had chosen a nicely cut H&A.

Imagine otherwise.

 

[strmrdr]

Date: 6/9/2009 6:43:27 PM
Author: John Pollard
With the current economic change Rapaport believes the role, relevance and value of diamonds is being questioned; especially by the newest generation of consumers. He encouraged jewelers to get between the ears of consumers and understand the new mindset. “Stop polishing your showcase” he said. If you just assume the world will come out of the crisis and all will be as it was - “you’re going out of business.”

A huge part of the problem is that diamonds have in some ways priced themselves out of the market in the last few years.
When I first came to PS the most common E-Ring budget was around $5k today the most common E-ring budget? Around $5k
The problem is that $5k will no longer buy a 1ct and a setting that has been marketed as the expected size for decades without making to many sacrifices for many people.
It wasn''t to bad when it pushed people to H from the G range then to I and then to J to make the size but now it has pushed into the range where there is an actual large visual difference to a lot of people K/L/M
The e-ring budget has not grown with the price increases and people are resentful at having to spend more than that or settle for less.

 

[oldminer]

When I look at new housing, I have the same issue as when I look at diamond prices. Newly constructed townhomes (row houses) in my area cost about as much as my much larger, single home is worth if I sell it. In our area, there was little real estate crisis or crash compared to many parts of the USA. You simply get less for your money when you DECIDE to spend it. I belive that we will see a more rapid change in this direction in the months and years to come.... It is called inflation and we are on that path and apparently not looking back over our shoulder. As much as we all want our economy to recover, we are in the process of selling out long term stability for short term fixes. I can''t imagine the pain felt by some folks in this economic disaster we are living through and I refuse to be resentful of what is surely coming down on us as a long term consequence of helping our fellow citizens as best we can today.

Expect to pay more, not less, in years to come. Maybe setting one''s goal for diamond size and quality at a reasonable level is realistic and not something to be angered about. We can all wish for the good old days over a drink or two.

 

[Skippy123]

Date: 6/6/2009 3:21:03 PM
Author: Wink
As promised, Andrey.

http://www.screencast.com/t/8i13BxekXZe

Wink

Yay for Andrey

Garry, that is great you were a speaker, you did fab!!!

 

[Skippy123]

Date: 6/9/2009 5:04:06 AM
Author: Lorelei

Date: 6/8/2009 7:04:02 PM
Author: coatimundi
Coati goes to JCK!

I had the opportunity to attend JCK last Monday, and it was incredible. I met Andrey, Garry (the cut nut), Sir John, Sir Wink, Paul, and Jerg. I also had the pleasure of meeting Angela, Drena, and Lieve—and of course, I got to admire their beautiful jewelry in person. Ah, the glimmer of diamonds by the light of the casino is a wonder to behold.

This was my first visit to JCK, and it was incredibly vast. There were aisles upon aisles of diamonds and jewelry that seemed to stretch for miles. It’s Heaven for any PS’er, and getting to see JCK with our resident experts was eye opening and endlessly entertaining. I also got to attend the AGTA gem show—gems galore! We were not allowed to take photos. I really wish I could've whipped out my camera. There were some incredible gems at the show.

This was also my first visit to Las Vegas. It’s fitting that they hold the show in a casino, because you lose any concept of time. Who needs time when you are surrounded by diamonds and gems? I certainly don’t!

It was a brief but fantastic visit.

Thanks so much! It was wonderful to meet you all!

Here's an (iphone) pic from lunch. I'm the shady character in between Andrey and Wink. haha

Hehehe! Love the super kewl shades Coaties!!

Mwah!

Yay; groovy shades!!!!

These are great pictures

it is so much fun to see everyone

 

[strmrdr]

Date: 6/10/2009 10:23:59 AM
Author: oldminer


Expect to pay more, not less, in years to come. Maybe setting one's goal for diamond size and quality at a reasonable level is realistic and not something to be angered about. We can all wish for the good old days over a drink or two.

Dave what is a huge problem even with consumers here that know more about diamonds then anywhere on earth the trade could not convince people that the price increases where legitimate.
Ask any consumer that was here at that time why prices went up and they will tell you DeBeers greed.
The news of diamond stockpiling to keep prices high is not helping.
The industry as a whole has a huge image problem.
There are some bright spots and one of those is right here with the relationships and reputations the PS vendors have earned.

 

[John P]

Date: 6/10/2009 10:11:05 AM
Author: strmrdr

Date: 6/9/2009 6:43:27 PM
Author: John Pollard


With the current economic change Rapaport believes the role, relevance and value of diamonds is being questioned; especially by the newest generation of consumers. He encouraged jewelers to get between the ears of consumers and understand the new mindset. "Stop polishing your showcase" he said. If you just assume the world will come out of the crisis and all will be as it was - "you're going out of business."

A huge part of the problem is that diamonds have in some ways priced themselves out of the market in the last few years.
When I first came to PS the most common E-Ring budget was around $5k today the most common E-ring budget? Around $5k
The problem is that $5k will no longer buy a 1ct and a setting that has been marketed as the expected size for decades without making to many sacrifices for many people.
It wasn't to bad when it pushed people to H from the G range then to I and then to J to make the size but now it has pushed into the range where there is an actual large visual difference to a lot of people K/L/M
The e-ring budget has not grown with the price increases and people are resentful at having to spend more than that or settle for less.

Oh man. If Ellen or Lorelei or one of those "creative smiley" people has a huge hammer whacking a nail right on the head it should be posted here.

This is exactly what traditional stores - where I do staff training - are reporting. In addition to your comments about lower colors/clarities becoming included in the envelope over the years (on PS we have really seen this) it's why second and third tier lab reports continue to flourish in traditional stores, despite overall improvement in public education about their relative value.

 

[John P]

Date: 6/9/2009 8:42:57 PM
Author: canuk-gal

I laughed out loud at the reference to the ''brain trust''....

Used very loosely Sharon.

 

[John P]

A final few photos.

Here we see Garry demonstrating fearlessness in his crusade to improve global cut quality.

 

[John P]

And... Peter Yantzer’s Lamborghini!

 

[John P]

Ok, not really.

 

[John P]

As I think about last week the overall tone I heard at this year’s JCK was one of conservative optimism... However, depending on who you spoke to, where they were from and their area of specialty, you could hear predictions of ultimate recovery - or ultimate doom - both for our industry and the future of the economy in general.

Predictions notwithstanding, something I gain from trade gatherings such as this one, apart from fellowship and brainstorming, is powerful reinforcement that the trade leaders and colleagues I respect are doing the right things for the right reasons.

It was great to see everyone. I already look forward to seeing you again.

 

[strmrdr]

rofl teasing Peter about a car has become a yearly tradition.

 

[Lorelei]

Date: 6/11/2009 1:48:16 PM
Author: John Pollard

Date: 6/10/2009 10:11:05 AM
Author: strmrdr

Date: 6/9/2009 6:43:27 PM
Author: John Pollard



With the current economic change Rapaport believes the role, relevance and value of diamonds is being questioned; especially by the newest generation of consumers. He encouraged jewelers to get between the ears of consumers and understand the new mindset. ''Stop polishing your showcase'' he said. If you just assume the world will come out of the crisis and all will be as it was - ''you''re going out of business.''

A huge part of the problem is that diamonds have in some ways priced themselves out of the market in the last few years.
When I first came to PS the most common E-Ring budget was around $5k today the most common E-ring budget? Around $5k
The problem is that $5k will no longer buy a 1ct and a setting that has been marketed as the expected size for decades without making to many sacrifices for many people.
It wasn''t to bad when it pushed people to H from the G range then to I and then to J to make the size but now it has pushed into the range where there is an actual large visual difference to a lot of people K/L/M
The e-ring budget has not grown with the price increases and people are resentful at having to spend more than that or settle for less.

Oh man. If Ellen or Lorelei or one of those ''creative smiley'' people has a huge hammer whacking a nail right on the head it should be posted here.

This is exactly what traditional stores - where I do staff training - are reporting. In addition to your comments about lower colors/clarities becoming included in the envelope over the years (on PS we have really seen this) it''s why second and third tier lab reports continue to flourish in traditional stores, despite overall improvement in public education about their relative value.

Head whacking one above?

 

[Ellen]

Thanks for the notes and pics John, appreciated, as always!