Stop thief! (Part 1)

Posted on February 8, 2012 in Jewellery Safety & Security

Part 1 of 2

By David J. Sexton

Showing a customer jewellery is simply the way things are done. A client’s interest is piqued by a particular piece, the salesperson removes it from a locked case, and places it on a display pad in front of them. Next thing you know, the ‘customer’ has grabbed the jewellery and bolted from the store. ‘Grab and runs’ are one of the most difficult crimes to prevent. They are also on the rise in Canada, costing jewellers hundreds of thousands every year.

Grab-and-run thefts are crimes of opportunity. Thieves work alone or may even have an accomplice who remains in the background to help facilitate their escape by ‘innocently’ holding a door open. Normally, the grab-and-run thief requests to see specific merchandise. They may even ask that several pieces be removed from cases for the sake of conducting a visual comparison, thereby increasing the opportunity to steal multiple items. Creating a rapport with the associate, a grab-and-run thief will get them to focus their attention on making the sale, relaxing their guard just long enough to make a move. Their ability to read the situation allows them to determine the optimum time to strike, which they do with lightning speed. Unfortunately, a grab-and-run thief does not have to be highly skilled at doing what they do best: creating opportunities to steal right under a sales associate’s nose.

When it comes to surveillance systems, grab-and-run thieves are not usually deterred. In fact, many jewellers have video recordings showing how thieves successfully set up sales associates to provide the very opportunities allowing them access to high-value jewellery. When reviewing the recordings, sales associates frequently note their surprise at the customer grabbing the item(s) and fleeing. Victims frequently admit they were dazed by the speed at which the crimes occurred, which in many cases means they are only able to provide minimal details about the thieves to law enforcement.

Having done research online beforehand, thieves in general can be quite convincing as serious customers shopping for specific items. It’s not unheard of for a thief to visit a store several times, developing a rapport with a sales associate and creating trust. Each time they return, they may ask the sales associate to show multiple items for the sake of comparison, and in many cases, even higher-valued items. When the moment is right, the thief grabs the piece and runs, leaving the sales associate in utter disbelief. Without the proper procedures in place, these instances can become more and more common. Next time, we look at how you can protect yourself.

More to come of this story in Part 2.

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An appraisal primer (Part 4)

Posted on February 3, 2012 in Jewellery Appraisals

An adequate description of this antique ring would include the numerous repairs and presence of a modern diamond. Photo courtesy Mark T. Cartwright.

Part 4 of 4

By Mark T. Cartwright

Once the background information is out of the way, each type of jewellery product has minimum requirements regarding how it is described. For instance, a strand of pearls necessitates an opinion of the type of oyster that produced them (i.e. Akoya), the details of origin such as cultured or natural, nacre thickness, lustre, roundness, blemishes, colour, overtone, degree of match, length of the strand or strands, number of pearls, and their size in millimetres.

A significant coloured gemstone requires identification and classification as natural, synthetic, assembled, treated or imitation, a description of the colour (including modifying hues, tone, intensity, and evenness), clarity grade, cutting quality, measurements, as well as its weight and how it is derived (i.e. calculated, estimated, or weighed). Each of the required descriptive components for a specific class of property represents a ‘value element,’ in other words, an attribute that will directly influence the value.

In the current market, very subtle differences in quality can translate into a significant difference in worth. Therefore, being certain to include all the key details is important to fully protect your client. It also speaks volumes to the credibility of one’s appraisal.

Some organizations have specific requirements regarding the document’s precise layout, page numbering, and format. If one claims to adhere to an association’s minimum report standards, then such details are an important part of the document. Otherwise, it’s best to keep the layout logical, easy to understand, and simple to use. Safeguards against fraudulent misuse should be incorporated into the report whenever possible.

Credibility is the heart of every appraisal and the goal of every appraiser. Minimum report standards are like a roadmap, allowing us to consistently provide a level of information that can lead to correct valuations. The users of our services rely upon our expertise and knowledge to help them solve a problem. By adhering to professional standards, we can demonstrate our commitment to serving their needs with a superior work product.

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Times are changing (Part 1)

Posted on February 1, 2012 in Watches

Part 1 of 2

By Nicole MacIntyre

When Jenny Dortmans needs to know the time, she looks at her cell phone. It’s perhaps a shocking admission from a jewellery professional who selects watches for the showcases at James O. Poag Jewellers in Strathroy, Ont.

Dortmans wears a watch, of course. In fact, she has an extensive collection. But a watch for her, like a growing number of her customers, is more about fashion than function.

“It used to be you’d wear a watch for years,” she says. “Now it’s about having more than one to go with what you’re wearing.”

While fashion and timepieces have always been linked, observers say there’s never been greater pressure on traditional watchmakers to produce trendy and affordable pieces that attract the eye of a younger clientele. Clothing designers like Michael Kors are giving them a run for their money with stylish and price point-friendly watch collections. The shift has forced some classic brands to reinvent their lineups to thrive in the changing market.

Alarm chronograph by Seiko with screw case, LumiBrite hands and markers, and polyurethane strap.

“Fashion has taken on a much stronger element and it’s here to stay,” says Marc Lachance, senior vice-president of Odyssey Time, which distributes Seiko, Pulsar, Lorus, Nike, and Rotary in Canada. “There’s no doubt we have to reinvent ourselves. The person who stays stagnant is going to lose out.” Not that long ago, a customer would own one or two watches in a lifetime, he explains. It was a major investment, a long-term commitment based on quality and technology that allowed traditional brands to dominate.

Now, says Lachance, it’s not uncommon for a customer, particularly women, to have four or five watches ranging in price from $200 to $400. The traditional watch buyer still exists, he notes, but the industry is growing increasingly uneasy about the next generation of buyers. Lachance says that everywhere he turns lately, it seems young people appear to be abandoning watches in favour of their cell phones. And if they are wearing a watch, many are buying based on look, not mechanics.

“We’re all having the same problem right now,” explains Lachance. “Young people are buying more fashion watches.”

More to come of this story in Part 2.

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An appraisal primer (Part 3)

Posted on January 30, 2012 in Jewellery Appraisals

Part 3 of 4

By Mark T. Cartwright

Let’s look at some examples of ‘required elements’ and why they matter. I’ll be basing the discussion on those imposed by the Canadian Jewellers Association’s Accredited Appraiser Program (CJA-AAP) and also ISA’s minimum report standards. This organization also requires compliance with USPAP and I’ll reference those standards as well. There is a harmonization in progress that will link USPAP with the recently revised International Valuation Standards (IVS) protocols, but for the moment we won’t venture down that path since very few of us will be involved with valuations requiring adherence to IVS.

On the other hand, some appraisals prepared for the Canadian Revenue Agency will be expected to rise to the level of USPAP. The full texts of the standards to which I’ll be referring are available from the organizations in question. USPAP is available on the Appraisal Standards Board (ASB) website. However, a revision is due in January, so I might suggest waiting to purchase a copy until it’s available. A comprehensive understanding of USPAP will require attendance at one of the 15-hour classes offered throughout the year, but reading the text of the standards and the advisory opinions will give many appraisers a basic ability to be in compliance. My presentation is by no means to be an education in the requirements of these organizations. Rather, it is intended to serve simply to begin the discussion of the concept of appraisal standards.

Every report should have a section identifying the client, the intended use of the appraisal, the inspection date, the valuation date (or ‘effective date’), the report date, the type of value sought, and disclosure of any conditions that may influence user confidence in the value’s accuracy. There should also be a statement regarding the appraiser’s neutrality, the basis for fees, the level of testing/evaluation performed, his or her qualifications, the confidential nature of the information, and of course, their signature. CJA, AGS, and other retail jewellers organizations make a distinction between an ‘insurance appraisal’ or ‘statement of replacement cost,’ and valuations prepared for other reasons; the appraisal organizations make no such distinction and apply the same standards to every report.

Why does that information matter? Well, there are a variety of reasons. To begin with, identifying the client helps reduce the potential for mass production of the report for fraudulent purposes. Specifying the intended use of the appraisal restricts possible misuse or misrepresentation of the value conclusion. For example, the retail replacement cost to insure a pre-owned ring is usually significantly higher than its resale market value. If a user of the report knows the stones were not removed from the setting to precisely determine the weights and grades, they will know how to judge the validity of those grades and weights. Disclosing the appraiser’s qualifications and disinterest in the property lends an added level of confidence in the reported conclusions. And so it goes. Basically, all of that ‘padding’ lets everyone know the ‘who, what, when, and why,’ as well as the ‘how’ of the descriptions and values that follow.

More to come of this story in Part 4.

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CAD CAN—Young designers get a leg up with technology (Part 2)

Posted on January 27, 2012 in CAD/CAM

Part 2 of 2

By Sevan Titizian

Many point to the lure of inexpensive labour costs overseas as the main reason behind Canada’s inability to sustain a large-scale manufacturing sector. However, Tony Leung, owner and principal designer at E2 Jewellery in Markham, Ont says CAD can help keep some manufacturing local, since designers can tweak renderings quickly without the worry of distance, time, or language barrier.

“CAD helps local manufacturers if they have an understanding of CAD design,” he says. “Take stone setting, for instance. Having someone local to discuss details of stone placement and setting style on a ring designed with CAD software is easier than dealing with someone overseas.”

Chris Cicero, regional sales manager at Roland Canada, says CAD can encourage local manufacturing, though not on a mass-production scale. Most designs created with CAD technology, he says, are done in-house, especially for custommade pieces. However, the growing popularity of the technology has added another level of service to the industry, he adds. A manufacturer who does not have the software in-house can use CAD modelling businesses that take the design of a piece from an idea to a wax model.

One such operation is 3D Tech Designs located in Toronto. Owner John Tarabay says he’s noticed a significant increase in the number of businesses like his over the past few years, which he credits to having close proximity with clients. “The majority of the relationships with my customers extend beyond business and become personal, since we interact constantly over phone, e-mail, and in person,” Tarabay said. “Most importantly, we speak the same language. How can I make the same connection with someone overseas?”

According to Shele Letwin—sales and training manager at design software firm Gemvision—there is a demand for local versus foreign. “I remember even two years ago at the JCK Toronto jewellery show, there were a lot of people looking for local manufacturers because of the trouble they were having with overseas production,” she says. Communication is a major issue, she notes, and more and more companies have turned to local design. “In the past year alone, numerous companies have purchased our matrix software and no longer depend on overseas production for the design of their pieces.”

Cicero says there is certainly a market for CAD-designed jewellery, as more and more consumers want to personalize what they wear through custom design. “CAD won’t transform the industry, but it will keep it alive.”

 

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Man-made versus natural diamonds (Part 3)

Posted on January 25, 2012 in Gemstones/Gemmology

Part 3 of 3

By Hemdeep Patel

The most common myth regarding synthetic diamonds is a CZ tester can be used in their identification. A synthetic and its natural counterpart have the same chemical structure; they also have the same physical properties, meaning they react the same way to a CZ tester. Therefore, this method cannot be used as a way to separate natural diamonds from lab-created.

Gemesis jewellery featuring both colourless and yellow lab-created diamonds. Photo courtesy Gemesis.

As in the case of synthetic corundum and emeralds, the key to identifying labcreated diamonds is to look for key characteristics left behind during the growing process. Many of these features can be identified at the macroscopic and microscopic levels. But in some instances the results are ambiguous, requiring more advanced analysis at the atomic level by way of spectroscopy.

Through macro and microscopic analysis, HPHT synthetic diamonds can be identified by a number of key features. In some cases, tiny fragments of metal— residue from the metal chamber in which the stones are grown—can be found, magnetizing the stone. Intersecting internal graining lines is another indicator of a diamond’s lab origin. The absorption of nitrogen and boron at different rates and intensity result in colour zoning areas that can be seen under ultraviolet (UV) light as a green cross pattern on an inert background. As well, most HPHT-created diamonds exhibiting fluorescence under UV light continue to glow a short time after the source is removed. This effect is called phosphorescence. Conversely, CVD diamonds do not leave behind any distinct macro and microscopic features. Therefore, a detailed spectral analysis must be conducted when a stone is identified as Type IIa invisible to UV light.

 

What’s in a name?

I have spoken to many industry members regarding synthetic diamonds and reactions vary. Many feel natural diamonds have a unique place in a person’s life, since they are usually offered as a symbol of love and as such, there is an overwhelming preference for a natural stone as opposed to man-made. There are many who feel lab-created diamonds are a trend that will quickly go away, or may not be a threat at all, as it was with synthetic gemstones. Although both may be correct and valid assumptions, I would like to add a few other pieces to this puzzle.

While gem-quality synthetic diamonds have been available since 2000, they haven’t taken a strong foothold, with many pointing to marketing as the culprit. First, what do you call them? In 2008, synthetics manufacturers felt ‘cultured diamond’ accurately described their product. On the other side of the fence were the Jewellers Vigilance Committee (JVC), World Federation of Diamond Bourses (WFDB), and CIBJO, who felt the term ‘cultured’ could be misrepresented and does not accurately describe the stone’s true lab-created nature. Instead, they preferred ‘synthetic diamond.’ The fight made its way to the U.S. Federal Trade Commission (FTC), which upheld the term ‘cultured diamond.’

The second part of the marketing dilemma was how to introduce lab-created diamonds to consumers accompanied by an information package from a recognized body. This problem was solved in 2006, when the Gemological Institute of America (GIA) announced it would be issuing full grading reports for lab-created diamonds. I feel this was a watershed moment for the cultured diamond industry, as did Lux when I asked him. Though GIA reports are colour-coded to indicate a stone’s lab-created nature, it is the information of its clarity, colour, and cut that may prove very useful to manufacturers like Gemesis. It is now possible to compare lab-created diamonds to their natural counterparts as equals, a fact most in the industry do not welcome.

 

Strategizing

Major manufacturers of cultured diamonds have taken positive steps to assure the jewellery industry their intention is not to harm the marketplace, but rather to introduce a new product line with untapped potential. Their marketing strategy hinges on four key facts.

First, cultured diamonds are chemically the same to their natural counterparts and cannot be distinguished without the use of advanced gemmological equipment. Setting aside issues surrounding identification, only the buyer knows the diamond they’ve purchased is synthetic.

Second, some would argue the manufacturing processes needed to create cultured diamonds are more environmentally friendly than extracting natural stones through vast mining operations. Third, the conflict diamond issue is a non-starter when it comes to cultured diamonds. The same cannot be said in regard to natural diamonds, particularly in light of the ongoing debate on whether rough from Zimbabwe’s Marange region should be certified by the Kimberley Process (KP) and exported. And lastly, cultured diamonds of similar colour and clarity to naturals are about 20 per cent less expensive. Lux seemed quite steadfast in our discussion that Gemesis’ pricing policy will be firm on maintaining value by not undervaluing its product, much like what happened in the synthetic gemstone market.

 

A matter of trust

The issue of transparency is one that is always tossed around when it comes to lab-grown diamonds. Manufacturers—including Gemesis—assure stones of any significant size will be laser-inscribed. In addition, they will be examined and graded by a reputable and recognized gemmological laboratory.

Disclosure is one of the main drawbacks of cultured diamonds. Though major manufacturers continue to maintain a transparent business model, there are numerous entities throughout the world that don’t hold the same philosophy. Instead, those businesses aim to bring to market white and coloured cultured diamonds without any disclosure. As well, lab-created small diamonds ranging from one to 20 points will inevitably become a significant concern.

Since there is no intention of laser inscribing melee, what assurances does anyone have that disclosure will be maintained through the supply chain. Consider also the secondary markets created by the ‘cash-for-gold’ business model. It is possible consumers who sell their diamond jewellery to the trade may or may not disclose the nature of the stones or even know whether they are lab-created or not.

It’s true some of these concerns may not seem pressing at the moment, however once a significant number of synthetics make their way into the marketplace, these issues may become something the industry must address and decide on how to proceed.

 

Where do we go from here?

So where does this leave the jewellery market today? I would say we are in an unenviable position. We have a fairly good idea of what the issues are, but the missing element in this equation is the consumer’s reaction to this new product. During the economic downturn, most manufacturers hit some hard times and many had to reevaluate their business model on how to bring their goods to market. In the case of Gemesis, this involved moving from a business-to-business model to one of a direct-to-consumer. Ten years ago, it was said jewellery could never be successfully sold on the Internet. But here we are in 2011 and we find that today’s consumers are quite comfortable making online purchases of pretty much anything, including jewellery. With a strong push through social media and online advertising, Gemesis aims to reach a new audience who find it convenient to purchase online and are looking for an alternative to natural diamonds that may address their concerns regarding the environment, price, and conflict-free status.

To be prepared, jewellery retailers must re-educate themselves on the definition of lab-created diamonds, their properties, and concerns surrounding disclosure. Regardless of the topic of discussion, the issues facing the jewellery industry can be overwhelming, but they are not insurmountable.

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