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Buffett: A quarter of all jewelry companies will be gone within year

Warren Buffet is forecasting that 25 percent of all fine jewelry companies, across the distribution pipeline, will be out of business within 12 months. I received this information on deep background from a very trustworthy source.

As you're probably aware, Buffett's Berkshire Hathaway has been buying up both supply and retail fine jewelry companies over recent years. And to state the obvious, this is not a man who makes statements like this lightly. He is fully aware of how much impact his opinions can have on a marketplace.

I dislike being the bearer of bad news as much as anyone, but I believe I wouldn't be living up to my responsibility if I didn't bring this to your attention.

Here at Las Vegas trade show market week, there's an eery feeling of disorientation the likes of which I've never experienced since I started coming here in 1991 when the shows were first established. There's both more traffic than I expected, to be honest, and there are exhibitors reporting that they're writing business.

Conversely, there are way too many industry members missing from the mix this year who, until this year, I could not have fathomed a Las Vegas show week without. 

 

The biggest question, as always at a trade show, but far more important this year, is that of inventory. As retailers live off existing stock to help maintain feasible cash flow, ordering from the supply chain has essentially been at a standstill. Many just can't imagine how suppliers are managing to pay their own bills, especially when you consider the difficulty of obtaining financing thrown in.

There was a panel here yesterday on the "evolution of the business." Unfortunately, and not surprisingly, there wasn't a heck of a lot of visionary insight provided. Nobody knows. Except Buffet, I guess. I really hope he's wrong.

Jewelers taking to social networking

Yesterday, Friday morning, was the first in our series of four breakfast educational sessions at the 2009 Couture show. Held at the opulent Wynn Hotel, the breakfasts are part of our America's Best Jewelers program, which not only recognizes top-performing companies but also brings them together to work toward solutions to common challenges.

Yesterday's topic was social networking, and it was the first time I witnessed live the extent to which forward-thinking jewelers are embracing these newly available tools. Four panelists joined me, as moderator, and interacted with a room of a hundred or so jewelers in covering topics from Facebook to the even newer phenomenon of Twitter.

The model for successful jewelry retailing is changing so rapidly that it's hard to see how companies that don't embrace--and excel--in social networking will really be able to survive profitably in the new marketplace. It would be as if a traditional jeweler had never learned the basics of advertising and marketing. You just can't run a business without the standard tools of operation, and today, this includes social networking to build relationships with customers and stay connected.

The thing is, it's not difficult to get started on it. And some of the amazing success stories I heard yesterday confirmed my belief that this is truly the wave of the future.

There's a lot more to be said on the topic, obviously, but I need to get downstairs to this morning's session, which will focus on employee training and compensation. It's being led by our educational sponsor, Jewelers of America. 

If you're here in Las Vegas, join us for today, tomorrow, or Monday's sessions. I'll be back moderating tomorrow, when we'll share and discuss in-store events. We'll finish up on Monday with inventory management. These are great sessions, and everyone always walks away wiser.

You can also join the America's Best Jewelers Network online at ABJNetwork.com. To become a member, you must be a JBT-listed North American fine jewelry retailer. I'll approve you, and you can join in discussions with 500 of your peers on our industry's only jeweler-to-jeweler social network.

Silver no stranger to Couture

Early yesterday morning, scanning through my Google News Alerts, I came across a headline that read “Silver Jewelry--Is It Fashion Or Fine Jewelry?” After finishing up my first Couture 2009 appointment, I quickly answered that question for myself.

The Couture show is titled Couture for a reason, so a bounty of one-of-a-kind wonders with five-figure price tags is pretty much par for the course, yet one of my expectations for the show this year was that I would be seeing a greater-than-normal amount of silver pieces. Despite the high-end nature of the show, when I interviewed retailers at trade shows earlier in the year, designs crafted in the price-friendly metal were among their most sought-out pieces. And given today’s tough economic conditions, I couldn’t imagine that those concerns wouldn’t translate over to Couture.

After wrapping up the first day at the show, it seems designers are exhibiting no small dearth of the metal.

One of my favorites for the day was jewelry brand Tara Moor, well known throughout Europe and Asia, yet a newcomer to the United States market. The brand crafts sterling silver jewelry at pocket-friendly price points, from $150 to $2,000 retail. But the best part is the balance of textures and patterns within each of the designs. Granulation (as seen in this design to the left), hand-hammering and carving are just some of the techniques that clearly designate this silver into the "fine" category.

Judging the judges

Being as much stars as the competitors themselves, the judges on reality shows such as American Idol and Dancing With the Stars are rarely at a loss when it comes to spectacular jewelry. But I was particularly impressed with pieces that Paula Abdul and Carrie Ann Inaba wore on the finales of their respective shows.

   

I’m a fan of oversized, oddly shaped knuckledusters, and Abdul and Inaba donned just that from Los Angeles-based jewelry designer Christian Tse.

For Idol’s May 19 episode, Abdul wore this square Asian-motif ring featuring a 22.06-carat emerald center stone and 4.2 carats of pave diamonds set in 18-karat white gold and blackened rhodium.

And on the same night, Inaba saved the best for last, wearing this stunning octopus ring to Dancing’s finale. Now I’m afraid of cephalopods like no other, but platinum versions featuring 5 carats of pave diamonds are fine by me. I’m raising my scorecard with a 10.

Are diamonds ready for their close-up?

I spent the bulk of Tuesday afternoon getting my schedule together for the big trip next week out to Las Vegas for the jewelry shows.  

While there’s a lot to be excited about, one of the appointments that’s most intriguing to me is my Saturday sit-down with the folks from diamond technology company Gemory LLC.

The topic at hand: their DiamondPure nano-photograph technology for diamonds.

Awhile back I wrote this cleverly headlined story about DiamondPure. But I still have a lot of questions about the technology, the main one being, will people actually be willing to pay for this service?  

From what I gather, the basic idea behind DiamondPure is to make diamonds--which are heavily marketed as the perfect gifts to mark special events such as an engagement, an anniversary or a new baby--even more remarkable.

Buying your wife a 3-carat diamond pendant as a push present? Well, why not take it up a notch by putting a super-small picture of the new baby in the diamond.

The catch is that the picture, obviously, isn’t big enough to be seen by the naked eye and must be viewed using GemmaView, a portable viewing device from Gemory.  

While the concept is cool, I just can’t picture diamond lovers parading around town with their own personal loupes, asking people to take a look at their wedding portrait shrunken onto a diamond.

But maybe I’m wrong.

Guess we’ll find out how many photo-enhanced diamonds have been sold so far when I meet with the Gemory people in Las Vegas.

In case you don't have Forever

Did you remember that postage rates went up last week? I sure didn’t, and on May 11 I found myself wishing I hadn't decided to drop off some letters the day before.

It’s times like these that the Forever stamps make a whole lot of sense, but if you want to go a different route and add a little something extra to your correspondence, the U.S. Postal Office currently has a few different 44 cent options, including this wedding ring stamp aimed at the to-be-married set.

The stamp was designed by graphic artist Ethel Kessler of Bethesda, Md., and photographed by Renee Comet of Washington, D.C.

 And as for the wedding bands, which feature a unique hand chaste pattern, they’re not just pretty things to look at on paper. In the chance that a customer comes in with a wedding invitation envelope in hand and is set on having the same bands, you’ll find them through Wright & Lato, a manufacturing company recently purchased by Novell Design Studio.

WrightAndLato.com

Zale stock rockets 28 percent Friday

Not to get our expectations out of proportion, but the indicators keep lining up in suggestion of an improving market.

After good news recently from Signet--parent of the Kay and Jared chains--and an upgrade by analysts of its stock from hold to buy, Zale followed suit last week. 

Analysts said the surge predicts that Zale will demonstrate similar strength to that shown by Signet when it reports earnings in coming weeks. Bank of America raised its outlook for Zale from neutral to buy and increased its target price for Zale shares to $5.

De Beers or Alrosa, who’s first?

As a journalist who follows the jewelry industry pretty carefully, it's always interesting for me to read articles by the non-trade press on topics as complicated as the diamond market.

Case in point this week: This now-infamous article about Russia and diamonds from The New York Times.

In the article, the writer states that “Russia quietly passed a milestone this year: surpassing De Beers as the world’s largest diamond producer.”

That’s an interesting statement, and one that certainly caught our attention over here at National Jeweler.

But it also raised a number of questions, including, based on what? The article provides no hard data of any kind from Alrosa, or De Beers for that matter.

In the story, the writer does mention that while De Beers shut down production at a number of its mines because of low demand, the state-owned Alrosa kept its mines open to keep workers on the payroll and avoid unrest. (What the article doesn’t mention, however, is that De Beers paid its workers their full salaries during mine shutdowns.)

It's unclear if the writer is giving this tidbit as an explanation for how Alrosa might have surpassed De Beers, though this doesn’t appear to be the case as the two statements aren’t linked together in the story.

We asked De Beers spokeswoman Lynette Gould what De Beers had to say about this article, and here’s her response.

“No, it’s not correct,” she said when asked if Alrosa has surpassed De Beers in terms of being the world’s largest diamond producer.

She went on to say that she believes this statement stemmed from a “misunderstanding that De Beers production is ‘down 90 percent’ which, although true for the first quarter because Debswana was closed for most of that, is misleading if they think that production for the full year is down 90 percent."

Gould said De Beers plans to reduce its 2009 production by more than 50 percent (more than 25 million carats) versus 2008, noting, “This could be increased if trading conditions merit it.”

In any case, it's an article that certainly got the industry talking, and the issue of which companies are gaining on De Beers--which is no longer the undisputed king of the diamond jungle--is worth keeping an eye on in the future.

Style File: Only hue

Gemstone jewelry featuring vivid, intense hues has an allure that transcends the seasons. Here are a few of our favorites, from everyday items to bridal and couture-level masterpieces.

Kirk Kara

Platinum hand-engraved engagement set from the “Charlotte” collection, with engagement ring featuring 0.09 carats of diamonds and 0.85 carats of baguette-cut tsavorites, and matching band crafted with 0.06 carats of diamonds and 0.85 carats of baguette-cut tsavorites; suggested retail price is $3,765 for engagement ring without center stone, and $2,715 for band. KirkKara.com

Jewelmak

Ruby, sapphire and tourmaline necklace with green chalcedony drop in 14-karat gold; suggested retail price is $294. Jewelmak.com

 

Paula Crevoshay
Cuff bracelet in 18-karat yellow gold with opal center and blue zircon accents; suggested retail price is $57,100. (505) 898-2888 or Crevoshay.com
 

Yael Sonia
“Circle” earrings from the “Perpetual Motion Collection” in 18-karat yellow gold with rubellite and diamonds; suggested retail price is $5,470. (212) 472-6488 or YaelSonia.com
 

Mathon Paris
“Ring Tortue” with mandarin garnet and champagne and colorless diamonds; suggested retail price is $30,056. Mathon-Paris.com
 

Mark Silverstein Imagines
Necklace with pink tourmaline and 2.82 carats of diamonds, available in platinum or 18-karat gold; suggested retail price is $18,750. MSImagines.com
 

Akiva Gil
Handmade platinum ring with a 0.79-carat oval-cut Brazilian Paraiba tourmaline and 0.61 carats of oval-cut diamonds; suggested retail price is $22,000. AkivaGil.com

Editor's note: To read what the color experts at Pantone are saying about the hot colors for fall, visit NationalJeweler.com.

Star Sighting: Marisa Tomei

While watching the film The Wrestler for the first time the other night, I couldn’t help but comment to my fiancé that I felt like I’d recently seen actress Marisa Tomei au natural more often than clothed, what with her performance in that flick, combined with her notorious role in Before The Devil Knows You’re Dead.

So maybe it’s a testament to her acting chops that I always find myself a little surprised to see her looking so full-on glamorous on the red carpet, where it becomes obvious that she’s a lady who also looks very good in clothes.

At the Metropolitan Museum of Art’s recent Costume Institute Gala, Tomei channeled a glam, tan Bianca Jagger in her Studio 54 days, all dressed up in Halston with plenty of places to go.

Tomei opted for a 1940s vintage Adrian gown plus vintage jewelry from Van Cleef & Arpels, including the 1967 Estate diamond-center earrings featuring twisted yellow gold, and a 1958 Estate bracelet with an 8-carat cabochon sapphire and 4.5 carats of diamonds.
 
Photo: Courtesy of Van Cleef & Arpels