Tackling the economic crisis: focus on marketing
By Tom Wildhern
December 7, 2008 – As the global economy slides towards recession in 2009 amid the worst financial crisis in 80 years, jewellery sales will come under heavy strain, and the best way jewellers can fight back is by boosting their marketing and branding.
However, despite the grim economic outlook, the rarest and most splendid jewellery should command extraordinary prices.
Well-established jewellers and leading top-tier luxury retailers say their sales are holding up because customers seek the reassurance of brands in tough times.
“Very established brands give you confidence – they can stay with you and help you live through the crisis,” said Van Cleef & Arpel’s UK Brand Director, Geoffroy Medinger.
“Whenever there is a crisis, people want to be confident in the quality of what they buy. At Van Cleef & Arpels, we have a long history, and we have lived through very many crises.”
The focus is now shifting to marketing – the boldest defence strategy when times are hard.
The De Beers Group, the world’s top producer of rough diamonds, recently announced plans to double its media budget in the United States in the fourth quarter of 2008.
De Beers’ “Fewer, Better Things” campaign is a well-focused strategy built around a woman’s preference for a single special gift rather than several, smaller gifts.
This is no time for complacency. Sales do not come easy. At the Christie’s and Sotheby’s auctions of magnificent jewellery in Geneva last month, many lots went unsold. And yet some incredibly rare and exquisite items achieved startling prices.
Christie’s sold a Kashmir sapphire ring for a world record price for a sapphire at nearly $3.5 million.
“This situation is typical of a crisis period, when good results can still be achieved but only for the rarest of stones and jewels,” said Francois Curiel, Chairman, Christie’s Europe.
Results at Christie’s December 2 jewellery auction in Hong Kong were far more impressive than the Geneva sales – possibly an indication of the sturdiness of the Asian economies in the downturn. All of the buyers were from Asia.
A round diamond of 10.98 carats and a pair of round diamonds of 16.11 and 16.08 carats brought in excess of $170,000 per carat, a price very much in line with the top of the market of a few months ago.
Kashmir sapphires and Burma rubies also achieved very strong prices with two lots selling for over $1.2 million each.
“The Asian market showed its resilience and appetite for jadeite, fine diamonds and jewels,” said Vickie Sek, director of the jewellery and jadeite department, Christie’s Asia.
“This auction demonstrates that when the right selection is offered for sale at the correct price, buyers are still very active.”
Bond Street jeweller Alisa Moussaieff, who was in Hong Kong, said diamond prices had held up well.
“The good things sell and the things that are not so good don’t sell,” she said.
Moussaieff recently paid $8.8 million for a 39.19-carat rough blue diamond mined in South Africa, believed to be a world record price for such a gemstone.
She said she was confident that she would find a buyer for the diamond after it was cut and polished. The polished diamond is likely to be around 12-15 carats.
Attention now shifts to the sale of the 35.56-carat 17th century fancy deep greyish-blue Wittelsbach diamond, which goes under the hammer at Christie’s in London on December 10.
The sale will be a barometer of the state of the diamond market.
“We will see whether the estimated price of $12-15 million can be achieved in these troubled times,” said Curiel.