As service providers to an industry under pressure from worldwide economic turmoil, gemological laboratories are doing . . . remarkably well.
With the holiday season fast approaching, weakness in the credit markets is hammering the value chain at both ends. Cash-strapped retailers are losing access to memo goods that historically stock holiday shelves, as retail sales plummeted for the third straight month, sightholders are reportedly leaving top-shelf rough on the table, and a range of voices are calling for fewer diamonds on the market: “It’s imperative and necessary not only for the diamond industry,” says WFDB president Avi Paz, “but the rough producing countries, the global banking system, and the diamond mining companies themselves.”
“But I ask myself,” says GIA chairman Ralph Destino, “if that’s the case, why are we getting so many more diamonds in for grading, to the extent we’ve been adding a great deal of overtime for graders? Double-time, weekends?”
The answer goes directly to the nature of a gemological labs’ business, but also to the jewelry industry’s likely salvation in this crisis. “In a soft market,” as Destino puts it, “quality will always win out over mediocrity.”
For service providers, quality is easily measured by an ability to add to the value equation. In the above example, the value-add is liquidity. “At a time when cash flow can be make or break,” Destino simplifies, “turnaround times become crucial.” That ability, particularly in fast-moving times, is enabled in two ways:
1. The austerity measures typical to a financial crisis, which can only prove ruinous to a luxury industry (witness the diamond slowdowns of the early ’80s and ’90s and how quickly they spiraled out of control).
2. Innovation. It happens only when people are unafraid to think out of the box, not only for services provided but how they market those services.