February 1, 2016
Bringing a diamond’s sparkle to millennials
By Jacquie De Almeida
Leon Peres believes in travelling light, although he sometimes has little choice in the matter.
If you’ve caught him visiting a jewellery store, it’s likely because he’s hosting a diamond-cutting event for Ofer Mizrahi Diamonds, for which he serves as senior vice-president, marketing and business development. With him is about a tonne of diamond-cutting equipment, which includes a bench, polishing wheel, and laser scanner to determine the best yield on the rough. At the centre of all the action, you’ll find one of the company’s diamond cutters, who is happy to answer questions guests may have about his craft.
The events are meant to not only showcase how a diamond’s sparkle is enticed from its rough form, but to create a memorable experience. It’s a tactic that also happens to appeal to millennials, a key purchasing demographic for the diamond category.
“We have a few Canadian retailers who have signed up for our diamond-cutting events this year,” Peres tells Jewellery Business from Ofer Mizrahi Diamonds’ Chicago office, one of six in North America, including Vancouver. Other locations can be found in Panama, Hong Kong, and India, while its main manufacturing facility is in Israel.
“Millennials see the technology we bring with us and it’s something they respond to. They photograph the event and put it on Facebook. In the end, they understand a diamond is cut by an artist’s hand.”
Ofer Mizrahi founded his namesake company in Israel in 1995, following in his family’s footsteps of operating a diamond-cutting and trading firm. Also known as OM Diamonds, the company traded mostly with large wholesalers in the United States at the time; anything Mizrahi couldn’t manufacture himself, he bought on the market.
By 2007, the United States was tumbling into the Great Recession and luxury goods were taking a beating. Recognizing the tough economic times ahead, the growing appeal of diamond e-tailers, and the ensuing shrinking margins, Mizrahi changed his business model, selling direct to retailers through Polygon and RapNet, and landing on the coveted first few lines of the grid. He also set up a new company—OM Diamonds Group—which is headquartered in Chicago, and sent Peres to the United States to oversee the operation, along with Ben Redansky, the company’s CEO, and Avinoam Kimchi, its senior vice-president of sales. Mizrahi’s one-time wholesale clients were now his competitors, which is exactly what he wanted.
OM Diamonds was able to thrive during the recession, fuelled by smaller margins, high volume, and aggressive pricing, Peres says. It also bought only what it needed and focused for the most part on bread-and-butter goods. The plan seems to have worked. In 2007, OM had 600 retailers. Today, it has more than 4000 worldwide with a heavy focus on independents. That count also includes Canadian retailers. Before opening the Vancouver office in 2013, the company sold mostly to wholesalers in British Columbia and Toronto. It wasn’t long, though, before OM started getting calls from retailers. Mizrahi decided to sell direct to stores and set up shop on the West Coast.
No doubt, the diamond industry’s current struggles are serious. Rough prices continue to outpace that of polished and consumers seem to have become disenchanted with the idea that a diamond is forever. To help bring the sparkle back, OM developed its ‘Diamond DNA’ program, which provides consumers with an additional certificate that tells the tale of their particular diamond.
“Each diamond has a story,” Peres says. “How much did the rough cost? How much time did it take to cut the diamond? What was the initial planning for the cut? The certificate gives the diamond added value, and when you’re talking about marketing to millennials and getting them to buy a diamond over a luxury trip, you focus on how special a diamond is; a trip lasts for a week and it’s gone. A diamond lasts forever.”
So how is Ofer Mizrahi Diamonds handling the pricing crisis? “We are not disconnected from the market, but we turn over goods very quickly, which lowers our exposure to fluctuating prices,” Peres explains. “Since we’re not sitting on inventory, we are much less sensitive to these problems. We also analyze everything and reprice our goods almost every day on items that have gone out a few times and haven’t sold. We focus on the best-selling items, the bread-and-butter stones, rather than anything that’s speculative.”
What’s OM’s plan for Canada? Building its inventory of Canadian diamonds is a priority. And one day, it may even set up its own cutting facility in the Great White North. “We would need to be established with more Canadian rough,” Peres explains. “But we have the people and professional knowledge to train cutters.”
It sounds like there’s still plenty of sparkle left in diamonds.
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