(a De Beers ad from 1970 - source)
To avoid looking the part of your typical well-heeled but monstrously uncreative fashion-zombie/label whore, fashionistas will often mix their labels, combining the high with low. Which is a great strategy for appearing stylish but less successful if you're a brand attempting to market luxury. "While in the past luxury brands attempted to offer multiple price-points, brand confusion and erosion of luxury credentials was often the outcome," notes the just-released Global Trends in Luxury Retail report by LuxHub, luxury consulting arm of Havas Media Group. "Now, luxury is being pulled in two opposite directions, and brands will need to choose sides: accessible or Ultra-Luxe."
Since "ultra" is a basically an alternative word for "money", the question is this: how to engage the consumers with the financial wherewithal to afford the luxe that comes with an "ultra" price tag? According to Luxury Society, gold continues to shine brightly for these individuals and diamonds still dazzle. "Wealthy individuals still have plenty of cash reserves to spend on luxury," they note, "and in the case of diamonds and gold, they often see luxury consumption as an investment opportunity."
Which is weird in my opinion, given that diamonds are, well, "bullshit" - to quote Priceonomics. To qualify as an investment, Wall Street wizards typically wave their wands (fancy finance apps on their smartphones) to make educated guesses as to how much an asset will be worth in the future. This guesstimate includes factors both tangible and intangible - everything from current selling price to perceived value of branding, etc. - and once all the various aspects are tallied up, the resulting total is the "actual" or intrinsic value.
What underlies all this financial fanciness, however, is one key assumption: that you can actually lay hands on the intrinsic value of the asset by being able to sell it. Which is hard to do with diamonds. "The “keystone,” or markup, on a diamond and its setting may range from 100 to 200 percent, depending on the policy of the store; if it bought diamonds back from customers, it would have to buy them back at wholesale prices," wrote Edward Epstein in a famous piece published by The Atlantic in 1982. "Retail jewelers, especially the prestigious Fifth Avenue stores, prefer not to buy back diamonds from customers, because the offer they would make would most likely be considered ridiculously low."
So unless you're a dealer, buying diamonds means paying retail and attempting to resell at wholesale. "A diamond is a depreciating asset," adds Priceonomics, "masquerading as an investment."
Plus there's the fact that majority of diamonds on the market are anything but investment-grade. Most are "slightly flawed, off-color, commercial-grade diamonds." According to one appraiser, “the sort of flawless, investment-grade diamond one reads about is almost never found in jewelry.” Another oddity, given the sheer quantity of diamonds. No, diamonds are not rare.
Oh, they once were, prior to 1870. But that year, enormous diamond deposits were discovered in South Africa. As these stones from Kimberley flooded the market, the price of natural diamonds began to tank, only to be saved by one Cecil Rhodes. He egan buying up mines - including one named after its founders, the De Beers brothers - to control output and keep prices high. By 1888, he controlled the country's entire diamond supply.
This control continued throughout the 20th century. When De Beers didn't own a particular mine, they would buy out all the diamonds - using means both upfront and downright shady - and then transfer the stones to the Central Selling Organization (CSO). Which they conveniently owned (and own). The CSO then selects diamonds they want to sell, boxes them and presents them to their 250 selling partners. As is. Any selling partner deciding not to take the non-negotiable "deal" but instead leave it is out of the diamond business.
Unscrupulous business practices aside, diamonds also have unconscionable amounts of conflict blood obscuring their glitter plus the incalculable eco-damage caused by mining operations.
However, even though diamonds are in fact BS, I find it intriguing that the shoppers with the deepest pockets are swayed by diamond marketing bullshittery. Created back in 1938, when De Beers hired ad man Gerold Lauck of the N. W. Ayer advertising agency observed that: "Since “young men buy over 90% of all engagement rings” it would be crucial to inculcate in them the idea that diamonds were a gift of love: the larger and finer the diamond, the greater the expression of love. Similarly, young women had to be encouraged to view diamonds as an integral part of any romantic courtship."
Lauck did something ingenious when he turned a diamond into more than just a sign of being betrothed but "a more widely sought symbol of personal and family success — an expression of socio-economic achievement." So engagement diamonds were invented by Madison Avenue and De Beers and the stones themselves aren't actually scarce. While they make a great status symbol, they're actually a terrible investment.
Diamonds aren't forever...but diamond marketing sure is.
- Lesley Scott
(image)
NOTE: The copy that accompanied the striking De Beers ad (top) reads: Knockout diamonds. To have fun with. To add razzmatazz with. Not just to dress up the evening with. Because today's diamonds come in every price and design. From sparkle plenty to piquant little stone. A diamond is for now.
This post was about the Supremium fashion tribe - spendy, style-conscious fashionistas that enjoy jetsetting, globetrotting and shopping their way across the globe. For more of my posts about the Supremiums, CLICK HERE. To learn more about each of fashion's four mega-tribes that I track, START HERE.
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