Jewellers often yearn for the good old days when business was easier and when everything wasn’t driven by price alone.
They bemoan that quality takes a back seat to price all too often these days, and consumers are always looking for a bargain. To some extent, I agree; however, I am not sure if there was ever a time when consumers didn’t try to get the best price – it’s almost a natural human instinct. The only thing that has changed is that the internet has made it much easier and more overt to price compare.
Almost all retail categories have now become commoditised, but the jewellery industry managed to avoid the race to the bottom – where price no longer differentiates competitors – for quite some time.
There are plenty of reasons why jewellery was such a late-arrival to the commoditisation phenomenon. For a start, jewellers were easily able to position themselves as being very different to the store down the road, something that was aided by the fact that jewellery was once brand-less.
Watches have always been purchased on brand alone but consumers cared little for branded jewellery – it just wasn’t ‘top of mind’. Mind you, it’s a chicken or the egg scenario because there was virtually no branded jewellery to care about anyway.
That said, one of the overriding reasons why price and brand were not important was because jewellery tends to involve a love story, or at least a tale of romance that can develop into a story of love. If you think about it, it doesn’t have to even mean “love” for another person, but can be love of the product itself.
Being a bloke, I have a drill and a watch. I love my watch but I feel no emotion for my drill.
Love and romance
Jewellers have always understood love and romance; they see it walk into their store every day. Whether it be driving the sale of an engagement or wedding ring, stimulating birthday and anniversary gifts, or just purchasing jewellery for no specific reason, the reason for buying jewellery has long outweighed the cost.
But it gets better than that!
Depending on the item, there is another story behind jewellery, whether it be gemstones or precious metals. This story involves the miracle of nature. Add to that the beauty and skill of an item’s design and craftsmanship and it’s easy to see there’s much to adore in jewellery. What can you say about a drill?
But wait, there’s more... especially if a skilled craftsman has specifically made the jewellery item. Jewellery can certainly still be unique. While jewellery has its fair share of mass-produced lines, the scope remains to create bespoke pieces that resemble no other.
Of course, playing a lead role in this love story has always been the diamond. She, with all her beauty, is a story in her own right... and what a story! Enduring, lifelong and one-of-a-kind, each diamond had her own unique story... until she became a commodity!
Whether this shift occurred as a result of changes in De Beers’ operation, whether it occurred because of the internet, whether consumers demanded it, or a combination of all of the above, diamonds have now become a commodity in the eyes of most consumers. I say “most” because there are still astute consumers who value diamonds.
Regardless, it’s fair to say that much of the romance has been stripped away from diamonds as this commoditisation has taken place. This is true for both the retailer and the consumer, and when something is treated as a commodity, margins will fall.
Interestingly, this is true for white stones but their coloured cousins are a little different. Not only has the demand for “fancies” increased over recent years, but they’ve also become more popular even within the traditional market, such as engagement rings, where no longer is the only option a white diamond. Thanks to, so-called, celebrities, pinks and yellows are now all the rage.
The increased popularity and output of coloured diamonds is leading many jewellers towards new niche markets, which are not price driven and commoditised.
Furthermore, and as our comprehensive report indicates, astute jewellers are using colour diamonds to create a point of difference from their competitors and to bring back, or reintroduce, some romance to their diamond sales.
Coloured Diamonds report
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