Laniado’s Reflections on BaselWorld

Opinion piece
28/03/2016 17:36

Diamond industry analyst Ehud Arye Laniado reflects on uncertainties and lingering questions about the direction the diamond trade is taking in the wake of BaselWorld, and wonders whether it is even appropriate to sell loose diamonds at such a high-luxury show? We have selected a few choice comments: "Business [in the diamond section] was not good. This luxury-oriented show is not a good fit for small goods or even 1-2 carat items. We have heard reports that even sales of larger goods, 20 carats and larger, were made only after prices were reduced. There is strong pressure on the prices of these exceptional goods, and insufficient demand drives these prices down. Not everything was bad. Fancy color diamonds were in demand, especially pinks and yellows that are seeing a certain resurgence in demand. For white diamonds, exhibitors that specialize in a specific niche or those that have an innovative approach had better sales than others. This, in my mind, is important. The supermarket approach is good for selling vegetables, but not specific items in a luxury market."

"BaselWorld, more than any other jewelry show, is very luxury-oriented. The top brands have booths at this one. In terms of marketing, I must ask myself, is it appropriate for the diamond industry to offer mass quantities of loose one-carat diamonds at such a location? What is the message we are sending to high-end consumers that frequent this trade fair, if they see high-end diamond jewelry pieces in one booth and then loose diamonds in large quantities offered at wholesale prices in another booth? How difficult is it for a sophisticated consumer to understand the markups on luxury jewelry? Doesn’t this behavior create discontent among consumers? Does it not lead to pressure to reduce jewelry prices? And if that is what happens, isn’t it clear to all that we are hurting our own business? Is it appropriate to offer luxury items next to their wholesale offered components? Is this not one of the reasons that the organizers of BaselWorld relocated loose diamonds from a spot adjacent to the main hall to one far behind it?"

"As stated after the previous trade show held in Hong Kong earlier this month, we are seeing the ill effects of the large rough diamond supplies in the first quarter of this year. Manufacturers have a need to move goods out of inventory to generate cash flow that pays for the rough and the manufacturing. At the Hong Kong show, this need appeared to drive prices down. This reflects an unhealthy situation for the trade." Laniado further points out that diamond traders were dissatisfied with the Basel show, "especially given the location of the loose diamonds hall and the associated costs." They are ready to give up on Basel and will likely be replaced by multi-item diamond companies, diamond 'supermarkets' with hardly any niche. "One problem is that they will only increase competition and drive prices down. Another problem is that it will further exacerbate the issue of luxury versus quantity. Where is the long-term plan?"