Is the industry becoming complacent?
Part 3 of 4
By Hemdeep Patel
Gemmological diamond reports and jewellery appraisals continue to play an important role in our industry, since they are the key methods in which grades are presented to customers. As the number of laboratories increase, the various grading methodologies and techniques are creating deviations from the traditional grading scale. Diamonds that were once graded as VS2 from one laboratory are now graded as VS1 from another. And now SI2-graded stones comprise what would have traditionally been I1 diamonds. The loosening of grading scales has filtered down from the laboratories and through the diamond supply chain, as people have found the easiest way to keep profits intact is to widen the grading scale.
The information provided by these gemmological reports is then presented to consumers in one of three methods. One group of retailers sells diamonds by allowing customers to inspect the stone with the use of a loupe or microscope while showing them the gemmological report to interpret the details. This sales method allows the client to see how what they viewed through the microscope or loupe relates to the lab’s findings. Even though many retailers are not set up for this level of sales support, those jewellers who are able to provide it find they are able to close deals with even the most skeptical of buyers. In other words, each diamond is being sold on its merits, as well as on the report that accompanies it.
Alternatively, there are other retailers who do not provide this level of sales support and find there is still enough business to be successful. They are able to do so as there is a significant segment of buyers that is not interested in the way a diamond is graded, but rather is focused on buying a stone of a particular set of grades at the lowest price. By accessing the large network of available diamond reports, these retailers can find a suitable stone for their clients.
The final method encompasses a whole host of well-established e-tailers providing a massive virtual inventory of discounted GIA-graded diamonds i.e. stones that can’t be inspected, but are bought on the basis of a report containing findings, language, and diagrams that consumers usually find foreign and without any context. Here again, the sale is made on the basis of price, without context or useful explanation. In fact, consumers likely rank all the stones by price and simply purchase the least expensive one.
All three kinds of retailers have found themselves at a crossroads of what the next step should be. Many brick-and-mortar storeowners are re-evaluating the business of buying and holding diamond inventory, with some preferring to order stones on memo whenever there is a potential sale. Others find selling a diamond with a misstated grading report is key to keeping them afloat and in business.
Those retailers who have built their business on a full sales support-buying experience have continued to push forward and have found customers appreciate the added expertise and are willing to pay the premium. Yet, there remains increased competition with e-tailers, and as technology improves, frustration may increase. My belief is they will adopt technology that allows consumers to view the actual stone online, including all its grading characteristics. This is just another question brick-and-mortar retailers will have to address at some point and counteract. How that will happen is something we should all start thinking about now.
More to come of this story in Part 4.
Read the full article: Without question