Creating Desire in the Diamond Industry
The specialized world of the diamond industry is one that doesn’t receive much press beyond its own internal participants. The mainstream business news rarely includes this interesting and ever-evolving sector. But recently, UK broadsheet, The Guardian, ran a triumphant piece on a new world record sale of $35m for a rough diamond discovered at the Cullinan site in South Africa, by Petra Diamonds. Chief executive, Johan Dippenaar, was photographed holding the 507 carat monster with a broad grin on his face. Yes, you would be smiling too.
But, as we reported in the first profile on this business, the current market is struggling in these lean, cash-strapped times and there has been a fall in the volume of stones on the market reflecting this. DeBeers made a net loss of over $36m for 2009 but issued a statement last month suggesting that demand for rough stones was up, and starting to really move. New, developing markets in China and India are making up for the slump in Western Europe, and the U.S.
DeBeers, Petra and other key companies also realize that the business battleground really lies with creating and marketing desire at the retail level. Driving demand is a tricky enterprise, and it’s made even more so for luxury items such as diamonds. The Managing Director of DeBeers, Gareth Penny, was quoted in the press earlier this year saying, “The demand strategy for the future must be driven by excited consumers at retail.” The key word, I think, is excited. Good press, like that following the find at the Cullinan mine is a much needed elixir after the last twelve rocky economic months.
The industry, however, needs more than just marketing. It also has to recognize a longer-term view on how to cope with a finite supply of the precious stone, and the shift, to the east, of buyers. One emerging player in the business, Paul Ekon, also sees a change in the public perception and reputation of the business being crucial, “good PR and the ability to engage the consumer in the right way is something that needs improvement. From a mechanical standpoint, the industry is still often mired in bureaucratic squabbling and legalities, when it should be focused on creating a buzz, or demand for diamonds and fine jewellry.” This has to happen at the consumer level.
What people like Ekon and Penny recognize is the need to have a cohesive presence in countries like China. And do it quickly. This will involve a real marketing paradigm shift – away from the focus on the US (still the biggest retail market). Even with the world in an economic slump, China accounted for almost 15% of retail sales last year, and this is just the beginning. It will take creativity, sensitivity, and speed to embrace this new economic focus in the east. But, for those companies that can get there early, and create that necessary ‘buzz’ around this natural treasure, long-term stability and profitability are much more likely. After all, you only need to see the smile on a person’s face holding a diamond, to realize that this is a business that will always be in demand.
By: William Feins
About the Author:
William Feins is a freelance journalist currently living in London and Managing the Euro Cheddar Blog; he received his B.A. degree in Economics and his Masters in Sociology. William has always been interested in the mechanics of business and the inspiration of original thinkers, and firmly believes that the former can’t succeed without the latter. In his spare time, he enjoys the ridiculous spectacle of watching table tennis on a big screen (preferably at a pub) and reading weighty tomes about World War II.