Spotting opportunities in emerging markets
One could argue that the jewelry industry was a vehicle for globalization long before the term came into vogue. After all, the modern jewelry business has its roots in the colonial era, when gem merchants from Europe combed Africa, Asia and the New World in search of rough material that they eventually brought back to the continent and sold in its polished form.
The gem trade hasn’t strayed tar beyond that model, the big difference being that today globalization has created a marketplace where low-cost sourcing opportunities are available to almost everyone in the pipeline. The elimination of trade barriers coupled with advances in communications and technology are bringing the latest trends and developments from emerging jewelry markets around the world directly to the jewelry store, often with few or no middlemen. In the coming year, countries that you may never have considered important to rings your business are going to become so. Here are three to keep tabs on:
CHINA:THE ONCE AND FUTURE KINGDOM
It’s no coincidence that nearly every major organization in the jewelry industry has positioned itself to capitalize on China’s rapidly emerging jewelry trade. When the country was approved for membership in the World Trade Organization (WTO) last year, “cha-thing” occurred to more than a few enterprising souls.
Not only have gemological labs like the Gemological Institute of America (GIA) and the International Gemological Institute rushed in to stake their claims on the extremely lucrative Chinese jewelry market, so have trade associations such as the International Diamond Manufacturers Association, which recently welcomed China as a full member.
“China is undoubtedly the market with the greatest growth potential for the decade to come,” says Shmuel Schnitzer, the newly elected president of the World Federation of Diamond Bourses. “We will see China form direct business ties with diamond manufacturers. Today China is only in the eighth place in the purchase of polfished diamonds, but I foresee that within two to three years it will be among the top three markets.”
For American retailers, China’s position as the world’s most promising consumer market may be cold comfort. But plenty of opportunities abound. For example, some small jewelers are already working directly with manufacturing shops in China to produce custom work for their customers.
“Send them a sketch or a CAD file and you’ll get a finished piece pronto-well-made, ready for your stones to be set and it’ll cost you way less than half of what any local shop (or you) can do,” writes Wayne Emery of the Jewelry Design Studio in Tacoma, Wash., in a recent online jewelry forum. “Can you see a reason why I should not do this from my small retail store? I have a family to feed, bills to pay and the big boys are beating me up pretty badly.”
BRAZIL:A DESIGN REVOLUTION AT YOUR DISPOSAL
Ask a typical American what he or she knows of Brazil and you’re likely to get the stock answer: “beautiful women.” But if the Brazilian Institute of Gems and Precious Metals (IBGM) has its way they’ll soon be saying, “beautiful jewelry.”
The Brasilia-based jewelry confederation has channeled its energy into providing technical support, market research and promotional incentives for Brazilian jewelry designers at international trade fairs, as part of a larger effort to increase jewelry exports to $500 million by this year. What that means is that the country’s talented pool of designers is at bracelets your disposal.
In other words, if you are truly interested in offering jewelry that no one else has-and that your customers can’t price-shop-then consider displaying the inventive, award-winning gemstone pieces that characterize the Brazilian style. It shouldn’t be difficult. Over the past several years, IBGM has made a huge push to ease trade restrictions and to make inroads to American retailers.
In 2001, the organization sponsored several members of the trade press on a weeklong trip to Brazil, where they learned firsthand just how hungry that country is for the American market. IBGM’s Technical Director Fernando Souto says reaction to the articles they wrote has been “stupendous.”
“Within four years, we turned out to be creators-we’re not just copying designs,” says Souto, referring to the country’s young but innovative community of designers. “Everything is growing. At least two big retailers have gotten in touch with us to get names of designers.”
For easy access, retailers can visit the Brazilian Pavilion at trade shows including the winter and summer JA New York shows, the Basel World Watch and Jewellery Show, the JCK Las Vegas Show and the September Hong Kong Jewellery and Watch Fair.
CANADA:THE BRAND BOOM UP NORTH
Closer to home, Canada’s thriving diamond industry is sure to have an impact on a retail jeweler’s business this year as Diavik, another mega-mine in the frozen Northwest Territories, comes online in April. Predicted to produce two times the volume of the BHP-owned Ekati mine, the $1.3 billion Diavik diamond bonanza is expected to yield approximately six million carats annually for 20 years.
If that isn’t enough to convince you that Canadian goods are going to continue to change the business, then this might: Tiffany & Co tiffany and co. is setting up a factory in the tundra town of Yellowknife to cut part of the mine’s production, which it sources through an agreement with junior partner Aber Resources. When one of the world’s most recognizable luxury jewelry brands forges a mine-to-market scenario like this one, it suggests that the jewelry industry is becoming more and more streamlined every year. Another consequence of a globalized economy? You bet.
But how are you, as an independent retailer, supposed to react?
For starters, you might familiarize yourself with the branded diamonds pouring out of the Canadian Arctic. Because even if you’re not ready to climb aboard the made-in-Canada bandwagon, you should know that your competitors may already be behind the wheel.
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