Are De Beers LV Stores Competing With You? - April.2006

We recently visited the De Beers LV store on Rodeo Drive in Los Angeles, De Beers’ second store in the U.S., which just opened in December. It was sandwiched among the other carriage trade jewelers and boutiques. The store is very impressive; it was early in the morning, and we were the only customers, so we got a lot of attention as well as excellent service.

We asked for the least expensive item in the store, and were shown an 18-karat gold pendant for $750, plus $50 for the black string. When we asked about the quality of the diamonds, we were told it was between D and H, and between flawless and VS2.

We learned two lessons: One is that, at these prices, most of the 30,000 independent jewelers in the U.S. don’t have to worry about competing with De Beers LV on price. The second is that they are trying to de-emphasize the Four C’s, and concentrate on the general aura of the store and the brand.

This is a departure for De Beers, which in its ads used to tell consumers to look for the Four C’s — and we all know that the difference between D and H, and Flawless and SI is quite substantial.

But now it’s telling people to look at the entire package, including the name and the assurances behind it. This is something other jewelers can learn from, as they seek to compete with the Internet and other price-oriented outlets.

At her presentation at the JCK Invitational Show De Beers LV American CEO Alice Alston seemed to indicate that the De Beers stores are trying to show how to sell diamonds without just selling on clarity and color. If there is any competition, it will be on the upper end of the Rodeo Drive type of stores.

Alston indicated in her remarks at JCK, that her prices are "somewhere between 47th Street and Tiffany’s." Having been there, we can see they are closer to Tiffany’s. She also emphasized that they are buying their diamonds on the open market, and the main differentiation between them and other very high-end jewelers is in the way the store is presented — for example, the showcases are higher, and can be walked around 360 degrees, which makes looking at jewelry easier and gives the store a museum-like quality.

Whatever happens in the US, De Beers will open other stores, including most recently in Dubai.

With all the talk about De Beers and the other mining names going retail, the real enemy may be Wal Mart, and other big size discount-oriented mass merchants like Costco and Sam’s Club. A recent report said that Wal Mart is going for a more "upscale" customer, and will begin offering more fine jewelry, as well as things like sushi and fine wine. Wal Mart is known for their buying power, and low prices; they may be the real competition for independent jewelers to worry about.

The other big names to speak at the JCK Invitational were Rudolph Giuliani and Jack Welch, former CEO of General Electric who the London Times called "America’s most admired manager."

To an overflow capacity crowd, Welch talked of his principles of leadership. He said that while leadership could be learned, ultimately to succeed in business you need "passion," which is something you are born with. He also talked about his concept of "stickiness" — developing long-lasting relationships.

When he talked of relationships, we were flattered when he mentioned Joseph Schlussel of the Diamond Registry as a long standing relationship he has in the diamond field. Welch has recommended people to us in the past, and we greatly appreciate that.  v