8 months ago

Jeweller - April Issue 2018


COLOURED DIAMOND REPORT over-priced. Such a story reinforces the importance for jewellers to educate their customers. A COLOURED POINT OF DIFFERENCE Retailers who choose to stock coloured diamonds are already ahead of the game because they will attract customers looking to fulfil a special request. E W P 02 9290 2199 BOLTON GEMS comparable at all. “It depends on the colour, it depends on the shade and there is a different price structure,” he explains. Chen confirms it is much harder for the average consumer to understand what makes them valuable. “The value of a fancy-coloured diamond is impacted by many parameters that are very different from those used to estimate the value of a colourless diamond,” she says. These complexities have helped coloured diamonds to retain their mystique, for the most part shielding them from ‘price hagglers’. So not only are coloured diamonds rarer, more unique and more likely to be graded as high quality, but consumers also know less about them. This makes them one of the better products for increasing retail gross margin. Another benefit for bricks-and-mortar retailers is that coloured diamonds are much harder to properly assess on a computer screen. “Coloured diamonds are something that customers really have to see to appreciate,” Chen says. “How accurate is a website description? Has the colour in the photo been re-touched or colour enhanced? With coloured diamonds, clients have to come into the store to see for themselves exactly what is on offer.” Holloway stresses the importance of the jeweller’s knowledge with a striking anecdote. At a trade fair last year, he viewed two yellow diamonds that were thousands of dollars apart in price, but the lighting had effectively reversed their appearance, making each look excessively under or Chen says “offering fancy-colour diamonds helps retailers position themselves at a whole different level. Because of their rarity and the fact that each fancy-colour diamond is different, they allow a much more interesting dialogue with the client who will want to understand what he or she is buying.” Shah agrees: “In white diamonds there is a lot of competition and similar stones available, but every coloured stone is different and unique so it will be easier for retailers to make a sale and a mark-up. It’s not easy to find something exactly the same at another jeweller.” Price says low supply will always fuel demand. “There is a marked increase in the desirability of coloured diamonds with a very restricted supply so prices can be much higher for these diamonds,” she explains. “Argyle pink diamonds are a particular example; as the mine is closing very soon and is the world’s major source, supplier prices are revised regularly.” The attractiveness of Australian pink diamonds isn’t just about rarity. Der Bedrossian says demand for ethically sourced stones is increasing. “It’s what people want in Australia. It’s called a chain of custody…from ‘the ground to the finger’ they say. Argyle diamonds are always worth more. You can find the same stone on the market with a GIA certificate – it will be argyle material, you can tell – but if it doesn’t have the inscription or any paperwork saying it came from Argyle, it will be at least 25 per cent cheaper than exactly the same stone with Argyle paperwork,” he explains. Bolton Gems are delivering on that demand from consumers: “If a retailer is an exclusive stockist of Australian Chocolate Diamonds, they get a stone with a story that starts from the day the diamond is mined. They

also get diamonds at a price that allows flexibility in creativity to make a statement piece with larger diamonds.” It’s also good news for customers of Ellendale. “We supply coloured diamonds with origin, namely from the Argyle and Ellendale Mine – Argyle pinks, yellows, champagne, cognacs, Ellendale yellow and whites. Our diamond inventory covers melee size, matching sets, single stones to investment stones and are all supplied with certificate of origin in addition to a lab certificate where available,” Price says. This demand also means customers who can’t afford a large stone would still rather walk away with a small one than nothing at all. Therefore, even smaller stones are fetching higher prices over time. “Fancy-colour demand and supply go in opposite directions,” Chen says. “Supply is dwindling and demand is rising sharply. As such, we see that in the last three years, clients who look for rare colours and cannot afford them anymore are willing to settle for very low clarities or very small sizes.” THE FUTURE IS BRIGHT There’s no denying that coloured diamonds are in a class of their own, and more unique than white diamonds in many ways. Holloway also points to a lucky break the industry may gain thanks to technology: “A lot of yellow diamonds that used to be on the market were in the ‘D to Z’ scale… but those diamonds, by virtue of the cutting technology, could be turned into fancy and fancy light.” For now though, most of the focus remains on the shrinking yield of Australian coloured diamonds, particularly pinks. “In the past year, World Shiner has increased its inventory of Argyle pink diamonds, because demand will definitely increase. People are buying lots of coloured diamonds for reasons of culture and fashion,” Shah says. Der Bedrossian couldn’t agree more, saying that prices have climbed so much in recent years that he wonders just how high they can go. “Every year these diamonds are getting rarer. I don’t know what’s going to happen to prices once it closes because it’s already going up all the time.” Price sums it up elegantly: “The famous ‘diamonds are a girl’s best friend’ slogan is still very accurate; the demand for coloured diamonds is forever increasing. In recent years, the fancy-coloured diamond market has been reaching record sales.” Chen, however, turns to numbers to make her point: “The price of smaller fancy-colour diamonds between 1.5 and 9 carats rose over 400 per cent in the past five years, and it looks like this upward trend will continue. Also, rare colours in low clarity – SI2 and lower – used to be hard sellers, but in the last three years, they have been in high demand as they are more affordable. These two phenomena will keep gaining momentum for years to come.” In a challenging retail climate, coloured diamonds offer retailers an exceptional opportunity to make healthy sales. Salespeople who are armed with expert information will be able to woo customers with these unique beauties. i