The new trend of renting designer items instead of buying them seems bound to extend into the jewellery arena sooner or later….

I would like to discuss this trend from the point of view that the role of luxury is to enhance person’s self esteem.

Today, people seem attached to their “things” as a defensive tactic. However, on its face, it seems as if by renting a “thing” for a day would not do the trick as the temporality of the action will not allow for the needed emotional attachment.

In the ‘old days’ brands that lasted forever, as the London shoe designer that promised that his shoes will exist even after their owner will die, were built around this idea of building a lasting relationship with their owner.

However, with fashion statements that keep on changing every six weeks, luxury brands have had to change their strategy. Good brands have ‘a look’ and then create new incarnations of that look to maintain freshness and exlusivity. For example, my mother in law liked to buy Celine whereas my wife finds this line unsuitable for her. In other words, people start to be identified with certain brands and even when fashion changed, “their” brand supplied them with their needed look and feeling part of a stable fashion.

Nevertheless, we can see people who are able to establish their own brand or statement. In this case, the brand that they use does not have a real meaning in that we talk about a “Chanel” woman as in such a case, it is the woman who decides on what fits her.

Thus, we can see two trends that derive from the development of luxury brands. The older trend is a message of security and power where the woman can make her own statement, regardless to the message that the brand is interested in.

The newer trend is one of instability and temporality when a woman is looking for her own identity. With mounting costs of luxury and designer’s items this identity-seeking exercise became exorbitantly expensive.

Thus, these women will look for more economic solutions and will prefer to test their look before committing to purchase or even not buy at all as they lack security.

If they are from the latter group, they do not need to purchase as they can create their own contemporary look.

A luxury marketers what we need to check is whether this trend announces a change in the market in that the luxury market will not grow per se, but change its patterns…
or does this trend open more opportunities that will bring into the market people that otherwise would not be part of it.

We should not think, for one minute that this trend will not change internal patterns, though.

Sales of diamonds, at least from the consumer’s point of view, are almost uninfluenced by the world’s economy. After all, the global diamond jewelley market is very small – $60 -70Bn and it is a drop in the bucket when compared with the size of the world economy. Say it differently, there will be always wealthy people who will buy these diamonds.

Speaking about the price of a diamond, the question is what is really its price? Let us ask even a more fundamental question: why do people buy diamond in the first place or what need does a possession of a diamond satisfy? Unfortunately, it seems as if nobody in the industry bothered to find an answer for these questions.

It took me several years of research to find out that the reason for buying diamonds is the enhancement of self-esteem. This is a complicated issue that needs to be studied in detail as to understand the role of price in marketing of diamonds and other luxury. It is enough to say that selling luxury in a discounted price is an oxymoron or shooting in the seller’s leg. Luxury has to be expensive or it will lose its attractiveness.

I have to add here two notes: first, one needs a bit of Chutzpah when asking a high price and not giving up. Second, while people will ask for a discount, they do not want it. What they say is not what they mean. They need the bargaining as they feel respected, an activity that enhanced their self-esteem but, paradoxically, they want to pay the full price for the very reason that when paying more their self-esteem increases. Unfortunately, once the jeweler imagines that the buyer might ask for a discount he is offering it immediately.

As this discounting backfires when the luxuriousness of the diamond disappears, its value declines. The decline in price is a clear indication that the industry fails to understand what it markets. While an entire generation lacks a proper education in marketing of diamonds, causing the industry to shrink in the last 25 years, the last few years were disastrous.

Organizational

The main point is that there is no leadership and the market does not know how to cope with paradoxes. You have more than enough there.

Financial

Idem. The key is that people try to close the sable when the horses are away. There is no money available and people try to raise funds even when they have to assume losses with the hope that tomorrow will be a better day. It is looking at the past, trying to fix things instead of looking at the facts, as bad as they are and ask: “what can we do now with these lousy facts?”

I would finish with two comments:

First, what surprises me is the resilience of the market. While the diamond industry is unique and cannot be comparable, I would anticipate a total collapse and low morality to happen long time ago. I am proud to be part of such an industry that show that robustness and morality are rooted deeper than the level of the balance sheet.

Second, we should be able to assess the facts without fear. The facts are there and hiding from them is useless. Trying to change them, or “fixing” them is impossible as the problems are more fundamental. Thus, it is important to face clearly the facts and ask: what can we do? There is always an alternative for those who have the courage to face reality.