As the world changes around us, the diamond, gemstone and jewelry industry continues to face challenges, as it always has.
Today, the ground beneath us seems to be undergoing a tectonic shift. The rise of lab-grown diamonds, impacts from Russian sanctions, regulatory governance, supply chain and responsible sourcing protocols, as well as rapidly changing consumer behavior all mean we have unprecedented opportunities to devise more powerful solutions, more quickly, for not only survival, but success.
The leadership team at Hill & Co., including Elle Hill, Hayley Jeannel de Thiersant, Pamela Bernstein Gulla, Andrea Pooler, Stanley Zale, and Amy Curran, recently convened to tackle the industry’s primary concerns, untangle and make sense of emerging trends, and strategize ways to safeguard and adapt our industry’s diverse businesses for a dynamic future.
Q: What are the key challenges today for our industry? But perhaps more importantly – what are the opportunities?
One of the topics on everybody’s mind now is ESG. It’s a complicated arena.
Most people in our industry want to do the right thing, they want to be honest and authentic. But they aren’t clear about how to do the right thing, the steps to take, and how to measure their progress once they begin; and they’re afraid to communicate about what they can and cannot do, and what that progress looks like, in practical terms. It’s daunting to a lot of companies, especially the smaller ones.
Then there are companies that know what to do, and understand what they are capable of, and know how to measure it, and are making great progress on all these fronts, but don’t know how to communicate all of that effectively. Or they’re hesitant to communicate it at all, for fear they’ll do it wrong and be accused of greenwashing – which can lead to losing credit for all the good work that they actually have done.
So I see two main challenges when it comes to ESG for businesses.
First, there’s the matter of clarity: Where should a business start with ESG? What’s their current standing? What steps should they follow? Many businesses find this overwhelming and hard to navigate.
Secondly, there’s the challenge of communication: Whether a business is just starting with ESG or is already on the path, they often struggle with effectively conveying their initiatives. It’s crucial for businesses to communicate accurately and transparently, attracting customers who value these efforts, all while avoiding accusations of greenwashing when they’re genuinely trying to be honest.
If you can’t figure out how to communicate what you’re doing, you’re not inspiring people to follow your lead, you’re not educating people, you’re actually limiting your progress and the progress of others.
The conversations I have with companies often lead to discussion about Integrity — of both the individual product and the broader supply chain.
There are two contradictory perspectives. One approach says, “I’m doing this because either my suppliers or the regulatory bodies require or mandate me to.” The other viewpoint is, “I’m doing this because it’s simply the right thing, and I genuinely believe in upholding industry standards but not limited to what exists now.” Needless to say, the latter is much more forward-looking, and the former leaves the business open to lots of trouble to come.
What’s startling to me is that many jewelry retailers either aren’t taking action or are “blissfully unaware” of these issues, let alone how to address them.
First on the agenda: lab-grown diamonds. Are you, as a retailer, ensuring the product you’re marketing is what you claim it to be? If you’re selling a natural diamond, you’d better be certain of its authenticity. It’s not just about being transparent to the customer; it’s a mandate from the Federal Trade Commission in the U.S. And if a jeweler gets this wrong, it’s not only their reputation at stake but the entire industry’s, as consumer trust plummets.
Adding to the mix, we’re also looking at Russian sanctions regarding products from there. So, how can a jeweler be sure about a product’s origin? Thankfully, emerging blockchain platforms like DeBeers’ Tracr aim to authenticate diamonds, concentrating on those with grading reports. Another initiative, iTraceit, zeroes in on smaller goods.
These systems are promising, but a jeweler still needs to do their own due diligence. If they’re not probing their suppliers about sourcing and regulations, they’re missing a crucial step. For example, every single jeweler should be asking their suppliers – brokers, cutters, whomever – about their diamonds’ routes, verifying their origin and their destination – be it China or the US.
Furthermore, if diamonds are coming from places like Botswana or Namibia, verification through tracking programs becomes essential. Most jewelers don’t have the luxury to personally inspect these processes, so the real challenge for our industry lies in recognizing these issues and finding solutions, not just for big players but for small businesses too.
The question is, how can everyone, including the small “mom-and-pop” stores, ensure product and supply chain integrity?
The conversations I have with our clients and our network have made me realize that the main obstacle to an industry-wide call to action is still driven by the end consumers’ behaviour. Are their customers actively seeking this traceability? Are they willing to invest the time and energy to grill their suppliers on these matters? Should they be inquiring about the origins of their diamonds, especially with the rise of lab-grown diamonds? While ideally, all lab-grown diamonds are properly disclosed, the real challenge is getting the retailers at those last 18 inches of sales case to be motivated to require it.
If their customers aren’t demanding transparency, is it worth the jeweler’s effort? Retailers often perceive these additional proofs of legitimate sourcing and supply chain integrity will increase their costs, leading to either having to raise retail prices (and being less competitive) or shorter margins (and being less profitable). Whether this perception is correct, the fear is a driver.
Remember, I’m primarily addressing the retail aspect. Many are still grappling with how to best present lab-grown diamonds in their stores – where to place them, how to market them, how – or even IF – to explain what they are, and so on. When it comes to traceability, smaller retailers might feel that a GIA grading report should be enough. But, as we know, if they’re not proactively seeking more information, they will get caught out eventually.
Looking ahead, retailers need to anticipate future demands. As Stanley mentioned, understanding these intricacies and the constantly changing landscape is vital. At a moment’s notice, or at some time still to come, they also need to be prepared to modify their training methods, preparing their sales teams to field these increasingly common questions.
You’re so right, Pam. From the mid- to smaller-sized retailers and designers I’m hearing an increasing sense of urgency. Consumers are beginning to inquire about traceability and ESG, and these retailers feel out of their depth. Without the necessary resources or expertise, they’re uncertain about where to kick things off. The dilemma I often hear is: what to do, and in what order? Should they invest in a certification program? Should they seek collaboration with NGOs or other organizations that might guide them in crafting an ESG approach? Essentially, they’re overwhelmed and are seeking clarity on where to even initiate this journey.
On the topic of lab-grown versus natural diamonds, retailers are vocal about their need to clearly distinguish the two for their consumers. They’re keen on ensuring the story they narrate resonates with customers and provides clear differentiation – and that it’s fact-based and not driven by hype or marketing mistruths. The challenge they face, for those who decide to carry LG diamonds, is how to market them effectively and honestly, without jeopardizing sales of natural diamonds. And there are plenty of consumers who still want natural diamonds – and interestingly, consumer behavior is still changing daily and sometimes unpredictably. There is no clear end game for either.
To your point, too, Stanley, another point of concern that’s surfacing is the chain of custody. There’s a plethora of tracking systems and tools available, but there’s skepticism in the air. Many in the diamond industry seem to be wary, questioning if these systems genuinely deliver on their promises.
Q: What trending changes are you anticipating businesses will need to be aware of over the coming months?
Hayley Jeannel de Thiersant
The challenges and changes facing our industry are vast and sometimes daunting. Everywhere you look, there’s a sense of apprehension.
But the key is to find a starting point. It’s about choosing specific objectives, understanding what can be achieved today, setting goals for the year, and then plotting a long-term strategy.
Focusing on gender equality, I was taken aback in several panel discussions to realize that many feel we’re nearing gender parity. The fact is, if we continue at our current pace, we’re looking at nearly 300 years to close the gender gap. To put this in context, 300 years ago, we were in the 1720s. In a sector that celebrates femininity and romantic milestones, this kind of stagnation is unacceptable. We have to prioritize equitable pay and employment and foster diversity in every form.
While we witnessed significant progress pre-Covid, there have been so many recent setbacks, such as the decline in women’s education in Afghanistan and in reproductive rights issues in the U.S.. These remind us that complacency isn’t an option. As an industry that cherishes women, and where 80 to 90% of all jewelry purchases are still made for women to wear, we need a united front. We must reject the status quo and actively push for change.
We don’t need to reinvent the wheel; we can act now, using existing blueprints to drive our industry forward.
Q: What actions should/can businesses take to protect and future proof themselves?
These are all such important issues, for our industry, and for us as humans too. What’s a business owner to do to start? First and foremost, it’s essential to align with your own values. Understand what truly resonates with you on a personal level, and then as an organization, decide where you stand. This foundational step ensures that any subsequent move you make stems from a place of genuine dedication and integrity, ensuring consistency. This journey should begin with individual conviction, subsequently merging into the company’s ethos. Whether you identify with Principle X, Y, or Z as your guiding beacon, that’s your starting point.
And then you can’t make headway, progress, without initiating action. So prioritize what truly matters to you and, subsequently, to your customers, and remember that authenticity is key. Mere posturing about customer preferences without genuine concern is still insincere, and it shines through like a blinking neon sign.
Fortunately, there’s a plethora of organizations and experts, including us, the JA, the AGS, and countless others, ready to provide invaluable tools and insights. The JVC, for instance, stands out as an exceptional resource. The industry is filled with knowledgeable folks who’ve probably faced similar challenges, and who are eager and dedicated to assist us all in navigating these waters.
But everything begins with an individual’s genuine commitment to drive change, and raising your hand to ask for help. Reach out.