Midwest Retailers Hold Their Own

Retailers in the Midwest recently told national jeweler they are optimistic that business will eventually pick up once the stock market regains its footing and the recession turns out to be more fiction than fact.

Until then, however, jewelers, especially in Ohio, Michigan, Indiana, Illinois and Wisconsin, maintain that business has seen a steady downturn since the middle of 2000. Business that does happen doesn’t have the same gleam in the eye it had in the millennium days of 1999 and beginning of 2000. Caution is the watchword, both among jewelers and their customers, say heartland retailers.

Other jewelers in the area say that business may not be as slow it seems; rather, the cooling trend may just be an illusion in comparison to sales in 1999.

While some Midwest retailers say business is making a soft landing from the prosperous times, others have far more grave concerns, like downsizing in the auto industry in Detroit. Among those retailers most affected by economic downturn, less consumer demand even for staple goods like diamond stud earrings and tennis bracelets has left inventories stagnant.

One mainstay jewelers are glad to have in their stores is the diamond engagement ring. Regardless of a trend shift from the bigger-and-whiter to the ore price-conscious better cut delivering the best diamond bang for the buck people are still getting engaged in the Midwest. While fancy shapes and trendier looks aren’t as hot, the standard round-brilliant diamond engagement ring between 0.75 and 1 carat has helped most jeweler hold their own in recent months.

“Everything out of our staple goods is pretty slow. I just think it’s because the economy is slow. Everyone is feeling the same way,” says Robert Fixter of Sartor Haman Jewelers in Lincoln, Neb. “Rapaport just sent us a survey to fill out, so that’s n sign to me that they know the economy is slowing down and it’s having an effect on business. One thing we do like, though, is that diamond engagement rings sell all year.”

Out of all the engagement rings Fixter has in his stock, Hearts on Fire diamonds continue to be his strongest seller because of their uniqueness and ease-of-sale.

“We have 900 different engagement ring styles and demand is pretty varied. So, it’s kind of difficult to pinpoint which particular style is selling best. If there is one though, I would say the solitaire engagement ring. Platinum is okay; it’s not great. For our solitaires, we set them in 14-karat gold with an 18-karat head. White gold is still more popular.”

To target the engagement ring customer, Fixter relies on radio ads.

“Radio works,” says Fixter. “We use ads on one station and they usually talk about our store and things that make us different.”

Business at Godfrey Jewelers in Battle Creek, Mich., has slowed so much from last year that some of the best-selling items in stock are a selection of clocks. While high-end, trendy jewelry has waned in demand and begins to gather dust in display cases, tennis bracelets and bracelets with diamonds, rubies and emeralds have taken over as the prime movers.

“I only wish there was more selling,” says John Godfrey. “I would say we’ve been mainly selling diamond jewelry and loose diamonds. We sold a few loose diamonds between 0.75 carats and 1 carat, nothing larger, in what I call mid-quality G, H, I and Vs to Si.

Goods that continue to linger on Godfrey’s shelves since last year include colored stone jewelry and larger-sized, nicer-quality diamond jewelry set in platinum.

“I had a couple of people walk out recently on prices and they were shopping for nicer platinum jewelry,” says Godfrey. That’s not typical of last year. People are being much more cautious. We’ll see what happens. I’ve spoken to a lot of people who have said the Fed lowering the interest rates may have a big effect on the economy.”

A little boost to Godfrey’s business so far this year has been a week-long St. Patrick’s Day promotion.

Customers were challenged to find hidden inside a balloon in a roomful of green balloons a piece of paper giving the winner a great deal on a diamond ring. In another contest during that week, a lucky customer won a loose emerald and Godfrey sold her a mounting for it.

“And this is not an Irish area,” says Godfrey. “Customers had a lot of fun.”

Godfrey says the plan for his business is to proceed with caution. He plans to buy more of the hot-selling diamond, ruby and emerald bracelets toward late summer and early fall but will be very cautious about what other types of goods he buys.

“We’re going to be very cautious. We didn’t have a great Christmas, so we’ll probably need to buy after the first half of the year. There still are a nice amount of goods in the store, so We’re going to be very picky about what we’re going to buy. I think things really must be slow with the economy,” says Godfrey. “I just received telephone calls from suppliers who we haven’t dealt ith in years. For them to make cold cal s out of the blue like that is a sign to me at they’re looking for business.”

So far this year, this main seller in Trein’s Jewelry in Dixon, Ill., has been diamond stud earrings Store co-owner Linda Brantley says that while higher-end merchandise has not been not as strong compared to the same time last year, studs have kept overall sales to about even to what they were in 2000.

For the past 20 years, Trein’ s has offered a trade-in program for diamond stud earrings, where customers can trade in studs they bought in the store and put the value toward a better st.

“We have a lot of diamond studs out there,” says Brantley. “This is a small town, and people say our studs are the nicest because we don’t sell anything lower than a G. We’re very fussy about cut. From across the room, these things sparkle.”

To stock up on some of the diamond earrings and loose stones that have been selling so well this year, Brantley is also preparing to take a trip o Antwerp.

“It’s a real tough job but someone’s got to do it,” jokes Brantley. “I have a dealer in Antwerp and if he doesn’t have what I’m looking for, he makes it possible to find it. The trip usually takes a week or two. I’ll go to Antwerp get my business done and spend the rest of the time in some place fun like Italy, or Holland in the spring to see the tulips.”

Brantley makes the trip as part of her involvement with the Independent Jeweler’ s Association (IJO), which offers members a chance to buy directly from Antwerp dealers. Most retailers in the IJO are from smaller, rural towns and must rely on their ability to advertise the fact they buy directly from Antwerp.

The biggest seller in Trein’s store is the Spirit of Flanders, which is cut and sold exclusively for IJO members.

“It’s a different niche. It’s something that we can have that no other store can,” says Brantley. “One thing about the Spirit of Flanders is that it looks bigger and the color is better than it really is. But the most important thing is that no one has it.”

Brantley’s son, Eric, 32, has also brought strong business to the store with his own designer jewelry lines.

“He makes everything-rings, pendants-and they’re all very popular. I would say half the stuff in the store we sell are his,” says Brantley. “People who come in often have a lot of diamonds and colored stones and he’ll build around it. He also lets them participate in the design.”

At Lang’s Jewelers in Muscatine, Iowa, business is about even with the same time last year, although store owner Martha Lang says she does notice a difference in consumer confidence.

“Right now, I think engagement rings, 0.5 carat, are more popular,” says Lang. “For some reason I think we’re bucking a national trend with fancy shapes. Marquise are more popular for us, while they’re slowing down most other places. We’re also selling a lot of watches in the $150 to $350 range. A lot of folks still look for platinum products, and they’ve remained pretty steady for us. Last year, we had our largest year ever in that type of product, but this year people are going a lot smaller. They’re pulling back into nicer qualities, but they’re just getting smaller stones.”

Engagement rings by Peter Sax and I.B. Goodman remain popular in Lang’s.

“We’ve been handling more of them in platinum and 18-karat white gold,” adds Lang.

Engagement and wedding sets are also popular in Ohio. Most retailers in the state report more 0.5-carat to 1-carat engagement ring sales so far this year, which has offset the drop in bigger, higher-end jewelry.

“So far, bridal has really picked up for us,” says James L. Thomas of Thomas Jewelers in Findlay, Ohio. “Mainly 0.5 carat to 1 carat and not necessarily the three-stone.”

Round-brilliants, followed closely by princess cuts, have been the most popular shapes in the store this year. Jewelry has been selling in the middle of the store’s usual $1,600 to $5,000 price range. Thomas’ customers are buying between J and Si2 to E and Vs, the qualities they bought last year at this time. Carat-weight diamond stud earrings have been some of the main sellers in the store.

So far this year, Thomas has maintained his usual amount of radio advertising. He spent 5% of last year’s sales on advertising.

“We’re very heavy in radio. We have a new message, not a new method. We don’t really push brands too much-we push us.”

Status Quo Prevails in Colored Stones

In sharp contrast to last year’s robust spring selling season, 2001 has been slow and steady for most colored stone dealers who say there is little news to report. There have been no major price shifts, no dramatic supply changes and no new gem discoveries (apart from a major ruby strike in Madagascar that is yielding hundreds of kilos of mostly dark material).

In fact, most dealers voice the same refrain: Customers are being cautious, big-ticket items are moving more briskly than run-of-the-mill goods and the color universe continues to expand, growing more varied as our cultural preferences come back to center following the black-and-white binge of the 1990s.

“In general, business is OK. It could be more brisk. People are very cautious and want to weigh out what’s happening now and what might happen by the end of the year,” said Roland Naftule of Nafco Gems in Scottsdale, Ariz. “They’re buying stones that they can get mounted in time for the holiday but are holding back on jewelry, maybe not wanting to sit on it during the summer.”

This is typical when cash flow slows to a trickle, he said, adding that in times of stock market distress, fine quality is always a best seller and mediocre goods are slow to get picked up.

Here’s a breakdown of supply and demand for the industry’s most significant stones.

Sapphire

Sapphires from Madagascar are still the trade’s hottest ticket, despite a tightening supply, 10% to 15% price hikes (primarily for pinks) and more stringent enforcement of government control measures.

Shaun Ajodan of N.Y.-based Shaun Gems attributed the market’s vitality to the fact that Sri Lankan production is down and Madagascar goods, which are easily confused with Ceylon material, have filled that void nicely.

“Madagascar goods are so close; if anything, they’re even prettier [than Ceylon goods],” said Ajodan. He added that finer goods in 10 carats and up are hitting $3,000-$4,000 per carat, those between 5 and 10 carats are hitting $2,000-$3,000 per carat and goods between 2 and 3 carats are pricing out at $1,500-$2,000 per carat.

Prices on the pinks are rising steadily. According to Steve Taylor of Taylor Gem Corp. in Sacramento, Calif., pinks in 1-carat sizes are at about $450-$650 per carat.

“When they first came out, they were about 20% to 40% less,” he said. “We were selling everything for less than $500.”

But by all accounts, the country’s sapphire business is starting to lose some of its early momentum, as miners and buyers give up on Ilakaka and flock to the new ruby strike in the eastern province of Toamasina.

A triple murder in Ilakaka in March didn’t help matters. According to Tom Cushman of Sun Valley, Idaho-based Allerton Cushman & Co., the town has been put on a 9 p.m. curfew following an incident at a local hotel where the owner’s son and two Sri Lankan gem dealers were killed. The crime was allegedly committed by a Malagasy miner, who became enraged after learning that the hotel proprietor-cum-gem dealer was paying him less than market value for a continuous supply of sapphires.

Emerald

Still recuperating from the bedlam that ensued over enhancement issues several years ago, the emerald trade continues to lick its wounds and fortify itself against consumer vigilance. Prices on Colombians are firming up, said Ray Zajicek of Dallas-based Equatorian Imports, although they are still less than what they were three to four years ago. “It’s been a slow recovery,” he said.

Shaun Ajodan said fine-quality Colombian goods in 7-to 15-carat sizes are easily going for $7,000-$ 15,000 per carat, whereas “really fine gemmy goods” can cost upwards of $25,000 per carat.

Ruby

An estimated $40 million worth of rubies from at least four important deposits discovered earlier this year in Madagascar’s eastern province of Toamasina are now flooding Bangkok, according to sources familiar with the Thai ruby market. The goods, which have yet to be priced, are reportedly unheated and reminiscent of the older Siam ruby, a dark, garnet-red stone that fell out of production when miners in Mong Hsu, Burma, hit the ruby mother lode in the early 1990s.

Tourmaline

West Africa’s once ample supply of rubellite is dwindling, like most of the continent’s known gem reserves, said colored stone dealers. This scenario also holds true for pink tourmaline, which was hot last year, said Daniel Assaf of The Tsavorite factory in New York. Demand has fizzled, coinciding with the downturn in supply.

He recently bought a three-kilo parcel of Nigerian pink tourmaline that will yield “good calibrated sizes,” but this year, he thinks the goods may take some time to move.

“It would have gone really quickly last year,” he said. “But both supply and demand died at the same time.”

Not that Brazil, the world’s other big tourmaline producer, is faring much better on the supply side. Fine Paraiba tourmaline, whose very rare “Windex blue” color puts it in the nosebleed section of the price-per-carat list, continues to command buyer attention, said Naftule. Too bad supplies of the stone are virtually nonexistent.

In contrast, Taylor said he recently ordered “nice green tourmaline,” in rounds and trillions over 6mm from the new owners of a formerly defunct mine in Brazil.

Tanzanite

Prices on quality tanzanite are higher than ever before, due to a supply shortage that threatens to make these gems more exclusive than the trade ever expected them to be.

Dana Schorr of Schorr Marketing in Santa Barbara, Calif., said demand for the gemmy goods continues to outpace supply, while overproduction in Jaipur, India, has produced a glut of low-quality, calibrated material, bringing a substantial price decrease to boot.

“Fine tanzanite will maintain its price structure,” he said. “But when people dump low-end, included goods, it can drag the whole market down until the stuff filters through the pipeline. For single, well-cut stones, prices are stable.”

Tsavorite Garnet

There isn’t much happening on the tsavorite scene, said Assaf, except for a slight increase in demand for 1 to 2 carat sizes. Prices have been very stable since 1999, when they experienced a brief dip because a new find in Tunduru, Tanzania, wrongly convinced the trade the market would be forever glutted.

“Melee is being widely used these days,” he said. “It’s becoming a great replacement for emerald. A very fine 3-carat goes for about $1,300-$1,600 per carat. Fine 2-carats are selling for $750-$950 per carat. And 1-carat sizes are at about $550.”

Spessartite Garnet

Supplies of orange-colored spessartite garnet from Nigeria are drying up, only a year after quantities of it appeared in Tucson Still, interest in the gem is growing.

“When it first came out, people looked at it like glorified citrine,” said Assaf, citing the market’s slow acceptance of this refractive gem. “The difference from last year to this year is that there is not as much large-sized material available, but a good amount of well-cut calibrated goods in rounds, trillions and princesses.”

Peridot

Peridot is becoming the toast of the jewelry scene, as designers fall in love with its pretty Granny Smith apple color. Yet prices on Pakistani, Chinese and Arizona goods are holding steady, said Mike Romanella of the Commercial Mineral Company in Scottsdale, Ariz.

Production from the three major peridot-producing regions is distinguished by size. Arizona yields the smallest stones, up to about 3 to 4 carats; China produces 5- to 9-carat goods; and Pakistan supplies the world’s finest (read: largest) specimens, ranging anywhere from 9 to 50 carats.

Assaf said Chinese goods are going for about $23 per carat, while the material from Pakistan, which tends to be cleaner, is going for close to double that amount.

Aquamarine

A stream of “very good quality” aquamarine is flowing out of Madagascar, said Naftule, but don’t get too excited just yet. “These will not last,” he predicted.

Iolite

As prices for fine quality tanzanite hover around $650 per carat, members of the trade are turning to iolite for a more cost-effective alternative. Ironically, the surge in demand for this purplish-violet stone has created a parallel price hike of about 25% to 40% for good quality, said Romanella. That brings prices for fine 2-carat stones into the range of $30-$40 per carat.

It Was A Mad, Mad, Mad, Mad Basel

However considerably the watch industry changes from one year to the next, the Basel Fair always shows a certain staid continuity. You know pretty much what to expect as you enter Building 1, where the watch companies exhibit. Rolex is on your left; Patek Philippe is on your right. The same faces crowd the corridors, more or less. It’s all reassuringly familiar.

Not this year. This year, the watch companies at Basel were up to some strange stuff. Strange, that is, for watch companies.

For starters, a bunch of them decided they wanted to become jewelry companies as well. Like Breguet, for instance. Near the company’s booth, a prominently placed vitrine held one of the brand’s new offerings: a gorgeous tourbillon…necklace. Yes, necklace. It was strung with pearls representing watch balances. The precious-metal hoops surrounding the pearls symbolized–what else?–tourbillon cages. Other pieces of Breguet jewelry incorporated other watch conceits, with squiggly lines representing serpentine watch hands and straight ones, terminating in open circles, symbolizing traditional Breguet hands.

The new Breguet adornments were the mere tip of the jewelry iceberg creeping through Building 1. Omega also offered new jewelry; so did Guess and Alfex. Alfex showed off its new steel jewelry offerings in fashion shows repeated periodically at its booth. The company had new watches, too, of course. But that wasn’t what Alfex was shouting about. It was shouting about its jewelry. So was Swatch. The brand doesn’t even exhibit at the fair, but it took over the Swatch Group display area for a day to show off its new jewelry, along with its watches.

Watch companies weren’t content with just branching out into jewelry, they also wanted to become retailers. In some instances, the two impulses were entwined: Brands introduced jewelry they plan to sell in stores they plan to open. The Swatch Group led the way on the watch-company-as-retailer front, describing at a press conference its plans to open 30 new Breguet stores, additional Omega and Swatch boutiques and a chain of stores called Tourbillon that will sell several Swatch Group brands.

Of course not all the watch companies at Basel aspired to be jewelry manufacturers or retailers. Some wanted to be diamond merchants. What began a couple of years ago as a mere trend had become a veritable craze this year. It seemed as if every watch company in Basel had diamond-set watches. Many weren’t the type of watches you’d expect to see sporting diamonds–women’s dress watches and half-pound “hockey pucks” designed for oil sheiks–but sports watches, high-tech watches, you name it. It sometimes seemed diamonds were all anybody was talking about. Got a great new triple-jumping hour retrograde chronograph with a bidirectional solar compass you want to sell? It better have diamonds on the bezel.

Which brings us to another odd fact about Basel 2001: Some of the most talked about brands weren’t members of the venerable Swiss watch aristocracy, the usual subjects of most new-product buzz at Basel. Nor were they the Japanese companies that almost always gamer their share of Basel gab with one new high-tech wonder or another. Rather, they were brands that climbed to watchworld prominence in the past year or two on the strength of their diamond watches. Whoever heard of Technomarine just five years ago? Nobody. It didn’t exist. This year buyers had to fight their way into the company’s booth to see its new sparklers. And how about Michele Watches? The brand was a minor leaguer until it hit its diamond chrono with pastel dial into the stands last year. Now it’s a watch-market star.

One final example of watch company diversification on display this year: the Swatch ladders. The Swatch brand had commissioned various artists to design ladders in honor of the new Swatch boutique that opened last year in Paris’s Place Vendome. When Swatch displayed its jewelry and watches at Basel, it also exhibited its ladders. When Swatch is finished showing them off, it will auction them for charity.

Weird enough for you? Two years from now Basel Fair management will reorganize the fair’s watch section, dividing it into segments bearing various whimsical names. One of them is the “Hall of Dreams.” Funny, we thought we were already dreaming.

Breaking The Color Barrier

Every year, Argyle Diamonds, proprietor of the world’s largest diamond mine, holds an invitation-only sale of the best pink stones to emerge from that year’s production. The silent auction, known as the Argyle Tender, takes place in Geneva, usually in October. But before bidding begins, the entire lot takes a jet-setting tour of the world’s high-powered gem-brokering locales-Sydney, Tokyo, Hong Kong, New York and London-where specially sellected dealers are enticed into offering more than $100,000 per carat for what are believed to be the trade’s priciest stones.

“It works on a sealed-bid tender,” ex plains Alan Bronstein, a New York fancy-colored diamond dealer who has amassed the 260-stone-strong Aurora collection, an assortment of diamonds representing 12 different color varieties. “You write in a bid, and then you mail it to Geneva, and the highest bid wins. So the only person who knows what the stone’s worth is he person who paid for it. You don’t know if you’re paying double or triple or half what others might have bid.” Cheeky move, Argyle, but a perfect way to illustrate how in the rarefied world of fancycolored diamonds, absolutely anything goes. Argyle simply has to showcase its 40some-odd stones at the tender, then sit back and wait for colored diamond connoisseurs to wage an all-out war as they attempt to boost the stones’ value into a cost-benefit no-man’s land, familiar to only the Winstons, the Mouawads and the sultans of this world.

“They’re trying to create a fever so that people put up spontaneous, emotional bids,” says Bronstein, who has attended the majority of Argyle’s 16 tenders.

One reason why they can, and people do, is that the highly saturated pinks that come from Argyle’ s Western Australian kimberlite pipes redefine the meaning of rare, even in gemological circles. An estimated one-tenth of 1% (0.1%) of the company’s diamond production, which totaled 26.5 million carats of rough in 2000, falls into the prized pink category. Year after year, that output continues to slip. So as sophisticated consumers and well-heeled collectors tire of the more abundant fancy yellows, they may soon have to jack their bids up to $200,000 per carat to keep themselves in the pink.

Flights of Fancy

Welcome to the weird, wild universe of fancy-colored diamonds, where anonymous private collectors pay $926,315 per carat for 0.95 purplish reds (as happened at a Christie’s sale in 1987) and an inauspicious 45.52carat blue stone called the Hope draws more visitors to the Smithsonian than any other object in the world.

Anything goes indeed.

The furor over colored diamonds-a steadily increasing feature of the high-end jewelry landscape-begins and ends with their inscrutability. First and foremost, how are they formed?

Gemologists think stray atoms can stain a diamond’s colorless structure, giving it a distinct pigment that varies depending on the element trapped in the primeval carbon mix. Nitrogen turns diamonds yellow. Boron brings on blue. Other colors are of dubious origin. Some speculate that red/pink and green diamonds derive their hues from structural defects or the irradiating effects of the earth’s uranium ore, respectively. Yet no one knows for sure.

Nor can anyone conclusively define a fancy’s true color. Why not? Because color is in the eye of the beholder, never mind what it says on the cert.

“The nature of fancy-colored diamonds is very subjective,” says Bronstein, whose Aurora collection is the basis for Collecting and classifying Coloured Diamonds, a 742-page opus by gemologist Stephen Hofer detailing the splendor and the science of colored diamonds. “The cert is vital for giving the authenticity of the stone, but it’s not vital for deciding its beauty, rarity, value or what the exact visual color is.”

True Colors

Even the best labs in the world disagree on their color call-outs. In just one example, a stone from a recent Argyle Tender earned a “fancy red I1” grading from the Gemological Institute of America (GIA), the industry’s standard for nomenclature, while the Diamond High Council (HRD), the official body of the Belgian diamond trade, gave it a “fancy intense purplish red S12” grading. The Argyle catalog listed both cert numbers, leaving prospective buyers to make up their own minds.

The same thing happens at jewelry stores, auction houses and collector’s tete-a-tetes all over the world when salespeople and clients perform their own subjective color analyses. Someone seeking a fancy vivid yellow diamond is shown two stones, same carat weight, same cut. But because one person’s lemon yellow is another person’s orange yellow, confusion ensues.

“Even if a customer asks for a pink, I’ll bring out a purplish pink,” says Lily Vongwattanakit, a gem buyer for Van Cleef & Arpels, one of the few retail outlets for diamonds in this price stratosphere. “People have different interpretations of color.”

All the ambiguity lends itself well to these enigmatic stones, whose cachet is unparalleled in the high-stakes world of gemstone collecting. Not surprising, a survey of famous diamonds reveals that many, if not most, are colored: the Dresden Green, the canary-yellow Tiffany, the bluish-green Great Mogul and the faint pink Great Table, to name a few.

Perhaps this illustrious peer group-and their remarkable provenance-is why fancies are consistent bestsellers at auction, setting price records in the same way a rare Picasso might at the modem art sale in the adjoining salon. According to the December millennium edition of Auction Market Resource for Gems and Jewelry, from October 1994 to October 2000, 24 out of the top 25 price-percarat sales were fancycolored diamonds.

“The trend in popular jewelry was fueled by success of unusual and very highly priced fancy-colored diamonds at auction,” emails Gail Brett Levine, G.G., publisher of Auction Market Resource. “Such pieces receive millions of dollars in free publicity in national and local news.”

Colored diamonds are so adept at hyping themselves that De Beers doesn’t even bother with promotions. The Diamond Information Center and the Diamond Promotion Service, both based in New York, are overflowing with literature, marketing materials and promo cards extolling the virtues of white or colorless diamonds, but nowhere does a single fancy get billing.

In Short Supply

In truth, the supply situation is such that fancies don’t need it. Apart from fashionable and plentiful colors such as brown (champagne, cognac, chocolate), black and, to a much lesser extent, yellow, fancycolored diamonds are the gem world’s equivalent of organs awaiting transplant. Waiting lists run out the door.

“When customers look for a blue or pink diamond, they are usually very specific on the size and shape they are looking for, so sometimes it is not as easy to show them many of the same thing,” says Anjanette Spreen, marketing director of Vivid Collection, a manufacturer of high-end colored diamond jewelry that markets its pieces to consumers and the trade. “But we do offer our customers options.”

Unlike white diamonds, which can be assembled for a lineup in a matter of hours, maybe days, finding similarly colored diamonds to give clients a comparison can take months, if it’s even possible.

“I’m a consultant When I have a private client or a retail customer, I go out and source the market the best I can,” says Bronstein from his office, a sunny nook in one of Fifth Avenue’s most heavily secured buildings. ‘Then I will present to my customers all the stones that I can. This is fancy, this is intense, this is vivid. I can do that with yellow but not with pink or blue because there just aren’t enough specimens to make such a wide comparison.”

Unofficial estimates put the number of fancies at just 2% of the total diamond population. But when cut, that number shrinks even further because to optimize the color of a fancy, a cutter has to discard a lot more rough than for a specimen of colorless diamond of the same size.

Essentially, the way a fancy is cut is tantamount to good color, which differs markedly between a face-up and a body perspective. Bronstein brings this point home when he flashes two yellow diamond rings in a white tray, face-up. One is cushion-cut, the other radiant.

“Which one faces up a stronger yellow?” he asks. I point to the radiant cut.

He then flips both rings in the tray, so the body color becomes evident. The cushion cut is a much more saturated color than the radiant. I can hardly believe it’s the same ring I was looking at a moment earlier.

“The physical production of face-up color in a polished diamond involves the distance light rays travel inside the stone and the direction in which they exit the crown relative to the observer,” writes Stephen Hofer in Forever Brilliant, another book on the Aurora collection produced in collaboration with Bronstein. “In general, these light rays travel relatively long or short distances (i.e., more or less absorption of light) and then exit the crown in a direction away from the observer’s line of sight. This basic behavior of light determines the colors we see in the face-up and how those colors are distributed.”

But even this fine physical explanation filters down to the same practical scenario: At the end of the day, perception of color is still subjective.

“The hardest thing about selling a colored diamond is, although people are educated, they have a hard time understanding the difference between an intense yellow diamond vs. a vivid yellow diamond,” says Spreen of Vivid Collection. “These two are so rare to find, and the price per carat changes a great deal when you go up the scale!”

It goes without saying that most of the uber-fancy shades–the reds, the pinks, the oranges, the blues–are astronomically priced. Argyle sells its bounty of 50 to 60 carats of pink for an estimated $5-$7 million. Van Cleef and Vivid pink and blue stones fall in the quarter-to-half-a-million-dollar range, while most yellows are considerably more affordable, with many going from $5,000 to $25,000.

In Fashion

But where does that leave the average jeweler or designer? On the darker end of the spectrum, with the brown and black diamonds, the only fancies in the fashion world’s sphere.

“We’ve done very well with brown brioletters,” says Craiger Drake, whose father, designer Craig Drake, uses fancy-colored diamonds in necklaces and high-end single-stone rings. “There are other precious stones with the same hues but they don’t have the brilliancy of a diamond. They don’t have the same allure or mystique.”

More and more, many designers are turning to diamonds for their color needs, partly because of name recognition and partly because of sparkle. Even opaque black diamonds, which caught on a couple of years ago, are still going strong, reflecting a mainstream desire for fancies that should keep the carbonados, as opaque diamonds are known, at the fashion-fore.

“The black-and-white craze will continue,” predicts Michelle Oman of the Jewelry Information Center in New York, forecasting a continuation of spring’s black-and-white binge well into 2002. “There’s a certain clean elegance in the black-and-white contrast that people are attracted to. And maybe they’re more attracted to that in a messy economy.”

Even watch companies–already gaga for diamond-studded timepieces–are experimenting with fancies. Concord’s La Scala Steel watches with black and white diamonds will soon come out in a chocolate diamond version.

Meanwhile, back in Bronstein’s office, he takes out another small, white tray with the funkiest colored diamonds I’ve ever seen. Milky champagne, steel gray, a juicy orange and the stunner of the bunch, a teal-green emerald-cut stone that Bronstein calls “the diamond that has no peer.”

“Colored diamonds have no absolute value, unlike their colorless sisters–they’re not worth X or Y,” he says. “Ultimately, it’s the look of the stone, the rarity of the color, the beauty.” And let’s not forget, the depth of the pocketbook.

Using Incentives To Generate Productivity

You’re sitting in your office pondering the state of your business over the past six weeks. Perhaps you’re approaching a major selling season and you have a fair amount of inventory on hand that, quite frankly, you would like to turn into some real dollars, which would be meaningful to your business.

When you want to give your business an extra boost or maximize your productivity during a key selling season like Mother’s Day, Christmas or graduation, you should consider creating an incentive program for your sales staff.

Many owners today are afraid of incentive programs because of all the war stories they’ve heard. There is no question that while some incentive programs work, others fail.

It’s my contention that the success or failure of an incentive program is directly proportional to the type of program, the incentive offered, the length and continual merchandising of the program and the feedback given throughout.

Let’s examine incentive programs for implementation in your business from a pragmatic point of view.

Types of Incentives Offered: Cash

There is no substitute for utilizing cash in your incentive program. In most cases, people prefer cash to other incentives like TVs and radios. if you’re going to utilize cash, it should be allocated in precise increments and paid as a reward for specific sales results. These increments can be fixed dollars ($100, $200) or they can be established as a percentage of salary.

Cash is a motivator only if it is paid frequently during the contest. If, for example, your contest runs six weeks, the cash payout should be made at the conclusion of each week. Contests that pay cash only at the conclusion of the program frequently lose the interest of the participants along the way.

One client ran an extremely successful cash-incentive program. He placed on the wall in the back room of his store a large board to which he affixed 30 $10 bills, one for each day of the month. Each employee was assigned a specific daily target. The first one to reach that daily target would run to the back of the store, tear the $10 bill off the board and then write his or her name in its place.

This incentive program accomplished two objectives: It awarded immediate financial gratification to the winners, and the winners were recognized by their names being inserted on the board. In addition, during this incentive program, the client exceeded his 30-day sales objectives by 50%.

Trips

Trips to exotic places are always good incentives, if you’re located on the East Coast, a six-day trip to the Bahamas might be an excellent inducement. On the West Coast, a trip to Hawaii or perhaps Puerto Vallarta would be a terrific reward.

While trips have a great perceived value among participants in an incentive program, the actual out-of-pocket costs are substantially less than a similar cash contest. When you consider the packages offered by travel agents, as well as trips to resorts during the off-season, a very nice incentive package can be put together. Call your travel agency and see what they can do for you.

Giving Prizes

Things like TV sets, stereos and sporting equipment are always popular items in incentive programs. While some programs offer a specific prize for winning a contest, others provide a catalog from which the winner can select a prize as a result of the number of points accumulated in the contest.

Prizes become a good incentive because they can be purchased at wholesale prices and merchandised to the potential recipients at the retail value. For example, a television that costs you $300 could be framed this way: “The person who sells the most during the next six weeks wins a television set valued at $600.”

Dinner or a Night Out on the Town

This incentive is very popular, rather inexpensive and goes a long way toward promoting the relationship between your employee and his or her spouse. The award is only attractive, however, if the restaurant selected is one of the most, if not the most, exclusive in town. The restaurant should be one that the employee would not normally frequent because of the expense.

Dinners in which you join the employee at the restaurant can also be extremely valuable. Remember, when awarding this prize, allow the employee to select the date and, during the dinner, be sure to focus the conversation around his or her family and personal goals. And, above all, avoid discussing business.

Awards and Plaques

Trophies, awards and plaques are extremely valuable because they usually find a permanent spot on the wall in your employee’s home. They are a source of pride that cannot be eaten or spent and will be a source of satisfaction forever.

Several retailers around the country with whom I conduct sales and management training frequently hold awards banquets at which time plaques, trophies, cash or trips are awarded for specific goals achieved.

Several chains have a President’s Club in which they induct the Top Five or Top 10 salespeople. One chain awards blazers with a President’s Club patch, another gives a commemorative ring and another awards a beautiful lapel pin. Whatever the award, you can be assured that your employees’ sense of pride won’t permit them to leave the house in the morning without it being prominently displayed.

Prior to announcing your incentive program, it is important that you determine the following five objectives:

  1. What is the purpose of this program?
  2. What specific sales dollars do you expect to gain from it?
  3. What is expected from each employee during the program?
  4. What will be the length of the incentive program?
  5. What will the prizes be and how frequently will they be awarded?

You would not get into your car and just take off without a specific destination in mind and a road map in hand. The same holds true in conducting an effective incentive program: You must set a specific objective, preferably a dollar objective, and establish the criteria of your incentive program accordingly.

It is critical that the objective be specific and obtainable. If the objective is a pie-in-the-sky goal, perceived to be unattainable by your sales staff, the program will fall on its face.

Generally speaking, incentive programs that last longer than 40-45 days are ineffective. To conduct the contest for a longer period of time will leave employees disinterested and unchallenged and, by the tune the payout is made, many will have forgotten what the program was about to begin with. Run the contest for a shorter period of time, get greater hype and, ultimately, greater sales.

Merchandising the Contest

Contests and incentive programs fail because they are not appropriately merchandised; that is, people are not advised on a periodic basis as to their standing in the contest relative to the objective and their colleagues.

A golfer looks at the leader board during the golf tournament to know where he stands in relation to the number of holes to be played and the competitors to be beaten.

A baseball player, by examining the scoreboard, knows the number of innings to be played and the objective to be obtained. One of the reasons the sport of boxing lacks wide interest and appeal, other than the fact that two people are beating each other up, is the fact that no one, not even the participants themselves, knows what the score is until the bell sounds in Round 15.

It is a proven fact that people will work harder and more effectively when a specific goal is assigned and their progress toward that goal is periodically measured and announced.

Incentive Programs: Are They for You?

Examine the different types of programs discussed in this article. If you decide to challenge your people, remember to:

  1. Set specific obtainable objectives.
  2. Minimize the length of The contest.
  3. Give ongoing feedback.
  4. Give the payout or reward as quickly as possible.

South Central: Neither Panicking Nor Ecstatic

South Central jewelers told national jeweler they are selling the same quantity and quality of jewelry as they did last year.

Depending on the perspective of the jeweler, sales either equal to last year, lower than 1999 or about the same as 1998, could either mean that 1999 was simply a phenomenal year or that the trade is facing a steady decline in demand due to unseen economic forces. For the most part’ however, most retailers, especially in Texas, Colorado, Oklahoma and Arkansas, are not panicking.

Ben Gordon of Judge’s Jewelers in Houston is optimistic about the state of demand for jewelry despite the economic uncertainty suggested by the news media. His customers range from young college grads who are getting married and landing that first job to older couples who are either getting remarried or buying fashionable jewelry for the thrill of it.

This year, he has also seen a continuation of an ongoing trend of young, collegiate couples in the market for 1- to 2-carat weight diamonds of high-end quality, though they are unable to foot the bill themselves. Gordon says the trend stems from an increasing importance among young male buyers to show their worth in terms of the value of the ring.

“They want to show how much value they give to the wife-to-be. Value is very important among the young customers I deal with. What is it worth? It’s like a dowry on the man’s side. They want to make sure they’re giving the bride something of value, something that the bride’s parents could take anywhere to get appraised and be assured that its worth enough,” says Gordon.

While the bridal sets have remained strong in his store, Gordon still sees potential for other markets, such as professional women buying jewelry for themselves.

In 2001, he has seen strong sales in titanium jewelry, which is designed in the store. According to Gordon, the right design speaks for itself, saying, “This is the place to shop.”

“The industry is so focused on the bridal market that we have neglected the age 60plus woman,” says Gordon. “What I’m seeing is a trend in titanium wedding bands. People want something more durable because they want to be able to workout while wearing the jewelry.”

“Out of the fancy shapes, princess is still the best. Rounds are still the most popular for us, but we can’t give away marquise or pears. I don’t think the economy will have an effect on overall business. I think it’s just a lot of hype from the media. People are still buying. People who have been married for 25 or 30 years want to enjoy it. I’m still finding that jewelry is for the living,” says Gordon.

Kathleen Wilson of Legend Jewelers in San Angelo, Texas, says the main part of her business this year has come from redesigns by the bench jewelers in her store. Wilson says most couples look to have older-styled engagement rings melted down and refashioned to a newer look.

The southwestern trend of silver and gold also remains strong, says Wilson.

Wedding rings have shown strength, as well as sterling silver anklets, bracelets and rings. In the wedding sets that have sold so far this year, diamonds of 0.5 to 3 carats strike a balance with the quantity and quality sold last year.

“They [the customers] want something in style. We went through the nuggets, the clusters, the sleek look, and now it’s two-tone–it allows them to mix gold pieces with silver ones.”

Because her customers have grown more price-conscious this year, Wilson says her staff, as well as the store’s radio ads, focus on the store’s message that it caters to a customer’s budget.

“We have the ability to sell in the price range that meets our customers’ needs. If they say, ‘We have $2,000 and we want an oval in the center with side stones,’ then we take the time to cater to them. We realize that not everybody can afford a 3carat stone.”

Tennis bracelets and diamond stud earrings, while still selling, are not moving as rapidly as they did last year at this time says Wilson. Nevertheless, consumer demand has remained steady for Legend’s custom design work.

“Most of our customers have been coming in as couples. They have a design in mind. They’ll ask us if we can do something with a certain center stone, and we just work around the look they want,” says Wilson.

Because radio continues to be the best medium to reach Legend’s customers, Wilson airs service-oriented ads. According to Wilson, the San Angelo area has a host of country western and easy-listening stations to choose from, one of which can be heard playing in her store daily.

“Radio seems to do well for us, not so much TV,” says Wilson. “We ran a lot of print ads for Valentine’s Day and Christmas, but because there are so many stations and all the towns here in Texas are distanced so far apart, radio seems to be a very popular medium. All sorts of people I’ve talked to are always listening to some kind of sports score or what the weather is like, so that’s why we advertise there. We advertise customer service. We realize that if we don’t give them the customer service they’re looking for, they will go elsewhere,” says Wilson.

At Garwood Jewelry in Fort Collins, Colo., engagement sets with stones between 0.75 and 3 carats remain the headliners, selling the same amount as last year. In fact, storeowner Debbie Reider says she’s been selling a little of everything to the same extent as last year.

“Funny as it may sound, diamond stud earrings, even during Christmas, were slow. We’ve sold a lot of pendants and colored-stone rings, but not a lot of earrings,” says Reider. “I’m still seeing a lot of yellow gold and a lot of white and yellow two-tone. Just a little bit of everything. I’ve mostly been selling rounds, and once in a while I’ll get a request for a marquise.”

Reider says she usually keeps her inventory low to avoid being stuck with a caseload of merchandise that gathers dust.

“Generally, we find that it’s better to buy steadily as the year progresses instead of either overstocking or having to buy at the last minute,” says Reider. “My husband is really good at knowing what and when to buy.”

Hirsh Chapman of Lavery’s Jewelers in Leavenworth, Kan., says his sales are about the same as last year, which still translates to less overall consumer demand.

“I think all the talk about the economy in the media is [nonsense] because they’re looking at the stock market,” says Chapman. “Whether the stock market goes up or down is almost irrelevant to the ordinary blue-collar guy out there bringing something home for his family, and that’s our customer. When they look at the economy, they need to go to Main Street, USA.”

But despite his reservations about the economy’s coverage in the media, Chapman has noticed less buying and a slowing economy on Main Street.

“I think buying is down and it was down last year, too, so it’s all about the same as last year. I think we have a real problem in the jewelry industry with the Internet and cable TV. I see a lot of that stuff coming in to be appraised.”

Items that remain in Chapman’s inventory from last Christmas include tennis bracelets and diamond stud earrings. The steady sale of gold charm bracelets and G, H and Si diamond engagement rings has evened out sales to a break-even pace.

Kelly Newton of Newton’s Jewelers in Fort Smith, Ark., says she’s been selling lots of things lately.

“Rolex watches have been extremely strong. So have AGS Triple Zero, Lazare Kaplan. We’ve been doing super with them and the AGS stones. As far as size goes, we’ve been selling everything from 0.50 to 2 carats,” says Newton. “We’ve been the strongest in the past few weeks than at any point last year. We’re very surprised. We’ve been listening to the TV about the economy and expecting something to happen, but so far we haven’t found anything bad.”

Diamond necklaces are not as strong this year as platinum bracelets or studs. Lazare Kaplan diamonds are among the strong sellers in the store.

“I don’t know why Lazare Kaplan sells so strongly. I guess it’s because we tout them as the old ideal, and [they are] the best-priced compared to any other diamond of that quality,” says Newton.

Coleman Clark of B.C. Clark Inc. in Oklahoma City says his store has sold mostly diamond engagement rings this year. In all three of his Oklahoma City stores, it’s business-as-usual, says Clark.

“I’d say our silver jewelry continues to be popular, especially David Yurman silver, and that doesn’t mean gold hasn’t slowed down. We’re continuing to sell the diamond basics, like pendant engagement rings in sizes of 2 to 3 carats, even larger. Mostly very good qualities.”

Diamond stud earrings and marquise cut diamonds are plentiful in stock and demand, says Clark.