July 29, 2016
By Hemdeep Patel
The best way to gauge the growth, direction, and trends of any industry is by listening to what is being spoken about at the retail level. Even though companies and industry leaders aim to drive the market by introducing new products and trends, ultimately, retail sales associates and consumers play a significant part in determining the success or failure of any business decision.
Over the last several years, I’ve made a point of visiting jewellery stores in and around Toronto to get a sense of what people are talking about, see what new jewellery is being offered, and experience how products are being represented either by sales associates or through an informative web presence.
In the case of a brick-and-mortar store, I approach my visit as any other consumer—I simply ask questions regarding interesting products I see in their showcase. The purpose of the visit is not to trick or catch the salesperson misrepresenting or lying about a product, but rather to see how information available at the trade level is presented to a potential customer.
Since my strength is in the area of gemmology, I focus my interest and questions on gemstone and diamond products exhibiting a particular gemmological trait. In many cases, I have found the salesperson is quite knowledgeable about the products the store carries. However, there have been a few instances where the person behind the counter was ill-prepared, misinformed, or just ignorant about what they were selling. Even though the salespeople had weaved a convincing explanation, I would think that in an age where information is readily available over the Internet, a potential customer might have been able to determine the accuracy of their statements and made a decision not to trust them or the retail business.
These days, customers are hard to come by, and losing one because your staff is misinformed about the products you carry can be extremely damaging to your store’s reputation. I will describe three instances that occurred to me that highlight this issue.
The first instance happened a few years ago when I walked into a store featuring a wide collection of Mystic topaz. After my initial “Ohhs” and “Ahhhs,” I asked the salesperson a question any curious customer would ask, “Is Mystic topaz naturally occurring?” She replied, “Yes.” I was floored. I then rephrased my question just in case I might have been misunderstood. “Wow, you mean this stone comes out of the ground with this colour?” The salesperson answered once more in the affirmative. At that point, I knew I was going to have a field day. So I moved over to the part of the showcase featuring blue sapphire. The flyers on the counter stated the coloured stones on display may have been treated in various ways, including colour diffusion, which is a process where a blue sapphire’s colour is not natural, but rather imparted through a treatment that only colours the stone’s outside surface. During my discussion with the sales associate, I was told the stones were all of natural colour. I’m sure many of you reading this article will probably laugh or scoff at the incident I’ve just described. However, I would urge you to consider your staff and how they would fare in comparison.
This next instance made me chuckle out loud. It occurred during a visit to a store with a nice display of earrings and a pendant set with mother-of-pearl. The salesperson described how these pieces were manufactured in the United States by trained staff with a minimum of 10 years’ experience working with mother-of-pearl. Interesting fact, but hard to believe since these items were likely made in Asia where workers at most jewellery manufacturing factories can be as young as 17 to 20 years old. I recall being offered to buy similar items on a trip a few years earlier. In addition, the salesperson offered the following tidbit. “Each mother-of-pearl is soldered into place and then polished,” she said. “Wait, you mean mother-of-pearl can take the heat of solder? And it wouldn’t just burn since it is organic?” I tried hard not to fall over as I asked this question. “Yes,” she replied. Suffice to say, I didn’t think highly of the staff or any of the products they had to offer.
This final incident could best be described as blatant misrepresentation and possible fraud. This visit started like any other. I walked into the store and saw a prominent display of bridal jewellery described as featuring ideal-cut diamonds and stones that when viewed through a proportion scope, exhibited the hearts and arrows pattern. The first question I had for the salesperson was, “What’s the difference between the ideal-cuts and the premium hearts and arrows cut?” He informed me the ideal-cut stone has exceptional fire, brilliance, and scintillation. In contrast, the premium-cut is far more unique since, in addition to having an ideal-cut grade, you will be able to view the hearts and arrows pattern under a scope.
Unfortunately, what they described didn’t match what was in the showcase. Of the 10 stones I saw on display, most had a cut grade of very good, which was indicated on their gemmological reports. Further, the so-called ideal-cut stones had dimensions that would be considered deep-cut diamonds. Now along with the gemmological report, each stone also had a cut-grade analysis report. These showed a breakdown of the diamond’s fire, brilliance, and scintillation using a bar graph. Unfortunately, only one or two of the three keys elements on the cut-grade reports were marked ‘exceptional.’ As I continued to ask more detailed questions regarding how the analysis is done, why it is important, and how cut impacts a stone’s look, the salesperson invited the store manager to participate in our conversation. It’s at this point I feel the information provided could be considered fraud.
The store manager described to me Tolkowsky’s proportions and how the stones they had on display were cut to those parameters. Further, the manager told me about the uniqueness of the hearts and arrows-cut stones and invited me to view one of the diamonds under the proportion scope. As I got ready to do so, he let me know I should be able to view the eight arrows while the stone is facing up and the eight hearts when the stone is turned over. Was I disappointed! What I saw through the scope were six and a half broken arrows and possibly one heart. Rather than telling the manager I could not view the pattern he described, I confirmed I was able to see it. He then made a statement that convinced me he and the salesperson were deliberately manufacturing information and possibly representing their diamonds in a fraudulent way. The manager informed me the hearts and arrows diamond I was looking at was cut in the same factory as a very well-known branded stone with the same pattern. The obvious premium in price, he told me, was only due to the additional marketing costs of branding and advertising the stone to consumers. Fair enough, except for the fact their stone did not display the appropriate pattern and therefore, could not be considered hearts and arrows by any stretch.
I would love to say these are isolated incidents, but unfortunately, this type of misinformation happens every day in our industry and helps to erode consumer confidence. As I’ve pointed out in previous articles, the veil of secrecy on the inner workings of our industry has already been pulled away. Information that was once only available to the trade is now online for all to read. Jewellers must accept there is a better-than-average chance their customer will be well-informed about the product they are about to purchase. As such, sales staff should either be equally knowledgeable or be able to say, “I’m sorry. I don’t know the answer to your question, but I will certainly find out for you.”
At first glance, you would not think online retailers could pull a fast one on unsuspecting consumers, but that’s not really the case. Most e-tailers have built their business based on providing as much information as possible. By creating pages and pages of information, it is quite easy for an online retailer to build legitimate content just by cutting and pasting. With the growth in the number of e-tailers, however, the online world has become highly competitive. The only way they are able to set themselves apart is by providing as much information as they can about the products they sell without putting the information in context. Consider the following.
Numerous large-scale e-commerce sites focus on loose diamonds and bridal jewellery, listing hundreds of stones within the same grading criteria. However, these online retailers fail to provide context as to why stones of similar quality can vary widely in price. This creates a false sense among consumers that all things being equal, legitimate deals are available online. Consumers don’t realize all grades are not equal and that within a certain grade, a wide range of possible scenarios exist. Some diamonds are at the upper end of a grade, while others are at the lower end—each stone’s price should reflect this range. And so perceived deals are only reflective of the sliding price scale that exists at the wholesale end. In other words, you get what you pay for.
Another area currently being exploited by a few online retailers is the use of appraisal reports as a selling tool. We witnessed this firsthand at our lab a few years back when a client came in to get an appraisal for a rare natural fancy-colour diamond he had purchased. Since the stone was very unique, we asked our client to leave it and the accompanying report with us for a day. With the stone and report on-hand, we reached out to a number of dealers throughout North America to get a sense of a reasonable wholesale price for the diamond. After collecting a number of quotes, we felt the stone’s uniqueness justified an additional premium of 10 per cent. We completed our report and provided the client a detailed appraisal.
A couple of weeks later we received an irate phone call from the e-tailer who had sold that fancy-colour diamond to our client. He claimed we had undervalued the stone and cost him a sale. After the phone call, I searched for this person’s name online and managed to find his website. His e-store featured a large collection of fancy-colour diamonds—one of them was the stone we had appraised. This diamond was accompanied by an appraisal that valued it at more than double what we indicated. In this case, the seller relied on an overstated appraisal report to justify his selling price. He refused to take into account that in a highly competitive retail market, profit margins in the hundreds of percentages do not exist, unless you are a well-established brand or have exclusive access to a product that cannot be easily compared in price to another.
As information becomes more readily available, it is increasingly apparent businesses need to put their best foot forward every single time they interact with a consumer. Knowledgeable staff can make or break a sale and misrepresenting a product is a sure-fire way to ultimately destroy a business. With all the time and money that goes into running a profitable operation, a lack of education should not be the one thing that destroys your efforts.
Hemdeep Patel is head of marketing and product development of Toronto-based HKD Diamond Laboratories Canada, an advanced gemstone and diamond laboratory with locations in Bangkok, Thailand, and Mumbai, India. He also leads Creative CADworks, a 3-D CAD jewellery design and production firm. Holding a B.Sc. in physics and astronomy, Patel is a third-generation member of the jewellery industry, a graduate gemmologist, and vice-president of the Ontario chapter of the GIA alumni association. He can be contacted via e-mail at firstname.lastname@example.org or email@example.com.
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