Technology has never been more important for the jewellery industry, but with the recycled economy and the age of trade-ins coming soon, it will be vital.
The jewellery business has changed dramatically since the 1970s when I left school and worked in the jewellery industry in Sydney under the watchful eye of my diamond merchant uncle. When the internet arrived, everything changed. The age of information was upon us. Last year, online global jewellery sales were estimated at $22 billion1 which is around 10 percent of total sales and growing exponentially.
The 2006 movie blockbuster, Blood Diamonds, forced the diamond industry into a new era of greater transparency. Lab grown diamonds are attempting to disrupt the traditional market.
Banks are walking away from funding the diamond industry due to some bad actors. They have lost trust. There is a credit squeeze in the diamond supply chain. Luxury brands controlled by the likes of LVMH and Richemont have taken market share from the estimated 250,0002 retailers worldwide.
Auctions conducted in Hong Kong by Sotheby’s and Christie’s have seen massive increases in prices and share of the overall global secondary market, surpassing New York and Geneva.
While the industry struggled to accept the changing needs of its customers, we then had the Covid crisis.
What does all this mean? The bottom line is that the trade must adopt new technologies to maintain relevance and sustainability.
Why are we all here? I am going to focus on retail. We mine, we manufacture and we trade so that an end user customer can one day buy the finished product from a retailer, whether that purchase be from a bricks-and-mortar or online merchant. Covid forced the trade to learn about new technology-based sales channels fast. In some respects, Covid was good in that it forced change that may have otherwise taken much longer.
The demographic of the customer has also changed dramatically. Millennials and the generations that follow want a different kind of service. They want to know about provenance, and more competitive and transparent pricing.
I believe a new age of trade-ins will become increasingly relevant. In the US alone, a hundred million Baby Boomers will pass on a trillion dollars3 of jewellery and other luxury goods over the next 10-15 years. Young beneficiaries will need to get this jewellery valued for probate and, in many cases, will dispose of it.
This could provide retailers with an exceptional opportunity to get “bums on seats”. Recycled jewellery is going to be a big deal. A retailer could promote the concept of accepting trade-ins creating a new sales channel. The retailer will need to be able to reach outside their comfort zone and invest in this process. They are going to need the support of technology. For example, yourdiamonds.com has built the only app that enables a retailer to calculate a current realisable auction value of a diamond, in seconds. The retailer cuts a trade-in deal with the customer helping to sell new goods in their window.
Provenance is on everybody’s lips. The likes of Everledger, GIA, Sarine, Tracr and others have made great progress in tracking diamonds from mine to finger. At some point, a retail customer will be able to use their smartphone to obtain the history of a diamond and probably other stones using a barcode.
Since 1978, New York-based Rapaport has dominated data information for the diamond industry together with an online wholesale asking price platform. Others like Get Diamonds, IDEX Online, Uni and Virtual Diamond Boutique have followed. We have also developed technology providing similar pricing benchmarks and data.
All this fast-evolving availability of information is vital for the industry to enable it to keep up. The trade needs to be better informed so people can make the right commercial decisions when assessing, buying and selling goods.
The industry is growing. The environment is changing. It is not the fittest or the strongest who will survive – it will be the ones who are most adaptable to change.
Tim Goodman is the founder of yourdiamonds.com, a Software-as-a-Service business for the diamond industry. Tim owned and operated Bonhams in Australia, Leonard Joel and the Australasian business of Sotheby’s. He reviews the role of technology in the fast-changing jewellery market.
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