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Achievements of Diamond Company De Beers Is a Constant Threat for Retailers

2005: Achievements of Diamond Company De Beers Will Strengthen Its Superior Position

June 2005

It started out a long time ago as a farm owned by the de Beer brothers, but now De Beers wants to open as many as 150 retail stores in the next decade, with as many as half of them in the United States, the company recently told the Times of London.

De Beers LV, the retail arm of De Beers, will open its first two stores in the United States in New York and Beverly Hills in June. Alyce Alston, head of the chain’s U.S. branch, says that after these two she plans to open 20 more, and gave Dallas and Houston as possible locations.

As ambitious as these plans are, the Wall Street Journal notes the venture “hasn’t made the splash other retailers initially feared.” De Beers LV opened its first shop on Old Bond Street in London in 2002. There are also three De Beers shops in Japan. And while some executives noted that sales are “quite satisfactory,” the article quoted executives as saying the initial stores were “too much on the fashion end” and didn’t have basics like diamond engagement rings. It also noted that De Beers has associations with apartheid and the mining industry that don’t sit well with some consumers.

The new De Beers chain will be big competition for companies like Tiffany and Bulgari — though both of those companies are themselves making deals with mining companies. Bulgari has made a deal with Leviev, and Tiffany buys directly from Canada.

Still, this raises some interesting questions. If the chain grows bigger, will it get quicker access to the better goods that now seem to be in short supply? We recently spoke to Dr. Jan W. Vandersande, president and CEO of Mountain Province Diamonds, a company in which De Beers holds 60% interest, at a recent mining conference. He told us that the current shortage of larger diamonds is real and it will likely continue.

But if there is such short supply, won’t it stand to reason that De Beers will sell stones to the people who are selling to their corporate sibling (and it goes without saying: De Beers knows exactly who its customers are selling to)?

On a related note: Will the new chain be able to make use of all the market information being gathered by the Diamond Promotion Service, not to mention all the data and information that sightholders are telling them?

The new De Beers chain, no matter how big it grows (and we should bear in mind that practically everything they have said until now has been over-enthusiastic) is definitely as a threat to retail jewelers, but chances are the cities it’s coming into are already well-stocked with name jewelers like Tiffany. But it’s just another sign of the demise of the traditional pipeline, and that the retail jewelry business in the future is going to be more competitive and tougher.



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