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THE NEW ROCKS ON THE BLOCK
By Vanessa Friedman
FT
May 10 2006 03:00
Take a walk down London's Old Bond Street and you will pass the
38-carat yellow diamonds of Graff, the "dancing" diamonds of Chopard,
the stylised diamond flowers of Van Cleef & Arpels and the diamond
watches of Cartier.
The casual onlooker might be forgiven for thinking there is no room
in the market for another diamond retailer.
Yet this year three new jewellery houses will open their doors on
this already-crowded chunk of commercial property: Moussaieff, which
discreetly offers its elite clientele the opportunity to purchase
extremely rare coloured stones; Harry Winston, the American diamond
brand famous for its big traditional rocks; and Leviev, a name new to
retail but renowned in the industry as the largest private producer of
stones in the world, selling about $3bn (£1.6bn) a year to the trade.
Of the three, Leviev will be the most closely watched, and not just
because of its manufacturing power. The opening of its Bond Street
boutique last month is part of a trend towards consolidation along
the diamond-selling supply chain: producers, polishers, traders and
retailers are coming together to market their wares, from the mine
to the shop window. If its rapid-fire expansion succeeds, Leviev will
set the pace for its rivals in a turbulent market.
The strategy carries potential pitfalls, however. Guy Leymarie, chief
executive of De Beers LV, Leviev's rival, says: "The verticalisation of
the industry is clearly its long-term trend; it's absolutely the way
to grow a business and build a brand. Retail clearly adds value. But
there are several different kinds of know-how involved in the different
levels of the chain, and you have to respect, and learn, all of them."
Lev Leviev, the 49-year-old chief executive of the Leviev Group,
which also owns property ventures, the Gottex swimwear brand, petrol
stations and media outlets, has his own theories on the risks facing
diamond retailers.
"There are two main reasons why diamond retailers fail," he says,
speaking from the Bond Street shop. "Lack of innovation - they have
the same stones in the same settings in the window year after year -
and dependence on one supplier for their stones. Then you can never
plan your sales even one year ahead, because you can only work with
what they give you, and they decide."
His comment is a thinly veiled criticism of De Beers, the mining group
that operates independently of retailer De Beers LV. The South African
company established a system by which certain privileged polishers
bought their rough stones from the Diamond Trading Company, De Beers'
London-based marketing arm, sight unseen.
It is not, however, an issue for Mr Leviev, who owns mines in Angola,
Namibia, South Africa and Russia. The Uzbekistan-born Israeli also
runs polishing factories in those countries, as well as in India,
China, Ukraine and Armenia, producing an estimated one-third of the
world's polished stones.
"We have an unlimited supply of rough and polished stones," says
Mr Leviev.
"So we can spend the three years it takes to create a necklace of
perfectly matched D flawless diamonds."
It is not just access to the stones that sets Leviev apart, however;
its role as supplier means the company also has close relations with
many trend drivers in the industry. Though Mr Leviev will not name
the brands to which he sells - "it's not good business practice" -
his market share suggests he would have to provide the stones to at
least one in three jewellers on Bond Street.
As a brand that would appeal to well-heeled consumers, however,
Leviev is in an odd position. He is known to the cognoscenti of
the world's rarest stones: in Israel, where he is the richest man;
in eastern Europe, where he has a chain of stores retailing small
stones; in Russia, where he is close to Vladimir Putin; and in the
worldwide Jewish community, where he has given away millions.
But his name is not as familiar in the west, the market he has chosen
for his first foray into fine jewellery retail under his own name. And
when it comes to retail, the name on the door matters.
"The name is quite important; people respond to what it represents,"
says Ian Rose, UK managing director of Moussaieff, which has launched
its own marketing drive, participating in museum shows including
"Diamonds" at London's Natural History Museum, as well as running
private events, in order to build public awareness before opening. "The
clientele has to know and respect you," he says.
"The most important consideration is location," says Mr Leymairie of De
Beers LV. "But having a name consumers recognise obviously helps." Mr
Leviev agrees on the vital role of location, noting he felt it was
important to be on Bond Street, but is less convinced by the idea
of needing to educate customers. "People who buy $100 diamonds don't
need to know our name; people who buy $1m ones already do."
"It doesn't take long for word to get out," says Thierry Chaunu, head
of Leviev's retail operation, adding that an advertising campaign is
planned, as well as in-store events. In Mr Leviev's view the store
is effectively an outreach operation. "We see the store as an art
gallery, and we want to show our art to people," he says. "Generally,
people can only see truly special stones in a museum but we will make
them accessible to the public."
The "stones" to which he is referring are some of those that Mr Leviev
has kept for the store, including a rare red diamond (there are 10 in
existence; of those, two are in the Smithsonian and one is owned by
Moussaieff). In the shop window sits a 110-carat gem, the Mir Jumlah,
from the same mine in India that produced the Hope stone, one of the
most famous diamonds in the world; an 83-carat emerald cut diamond
is on display in the lift; and assorted rare blue, pink and green
diamonds sparkle from cases. "They did put some show-stoppers out,"
says Mr Rose. "It was pretty stunning."
Inside the store, an effort has been made to keep the retail operation
small. Unlike, say, Asprey's enormous 4,650 sq m Bond Street selling
space, Leviev is constructed like an intimate town house. No counter
is visible, but couches and coffee tables nestle against a wall of
pewter-coloured silk.
"I don't believe in big stores," says Mr Leviev, who plans to
open a similar boutique in New York in the autumn. "We are not a
supermarket." At the same time, however, he admits, "we don't expect
the store to have much impact financially speaking; that's not the most
important part of it. The most important thing is that it is a stage."
Still, the bottom line may be boosted by plans to introduce a more
accessible range, priced between $50,000 and $1m. In any case,
Mr Leviev notes, his company is already diversified. No matter how
big they are, apparently, you should never put all your diamonds in
one basket.
--Boundary_(ID_egMn/C8nm9VTsuNtqIYG6g)--
By Vanessa Friedman
FT
May 10 2006 03:00
Take a walk down London's Old Bond Street and you will pass the
38-carat yellow diamonds of Graff, the "dancing" diamonds of Chopard,
the stylised diamond flowers of Van Cleef & Arpels and the diamond
watches of Cartier.
The casual onlooker might be forgiven for thinking there is no room
in the market for another diamond retailer.
Yet this year three new jewellery houses will open their doors on
this already-crowded chunk of commercial property: Moussaieff, which
discreetly offers its elite clientele the opportunity to purchase
extremely rare coloured stones; Harry Winston, the American diamond
brand famous for its big traditional rocks; and Leviev, a name new to
retail but renowned in the industry as the largest private producer of
stones in the world, selling about $3bn (£1.6bn) a year to the trade.
Of the three, Leviev will be the most closely watched, and not just
because of its manufacturing power. The opening of its Bond Street
boutique last month is part of a trend towards consolidation along
the diamond-selling supply chain: producers, polishers, traders and
retailers are coming together to market their wares, from the mine
to the shop window. If its rapid-fire expansion succeeds, Leviev will
set the pace for its rivals in a turbulent market.
The strategy carries potential pitfalls, however. Guy Leymarie, chief
executive of De Beers LV, Leviev's rival, says: "The verticalisation of
the industry is clearly its long-term trend; it's absolutely the way
to grow a business and build a brand. Retail clearly adds value. But
there are several different kinds of know-how involved in the different
levels of the chain, and you have to respect, and learn, all of them."
Lev Leviev, the 49-year-old chief executive of the Leviev Group,
which also owns property ventures, the Gottex swimwear brand, petrol
stations and media outlets, has his own theories on the risks facing
diamond retailers.
"There are two main reasons why diamond retailers fail," he says,
speaking from the Bond Street shop. "Lack of innovation - they have
the same stones in the same settings in the window year after year -
and dependence on one supplier for their stones. Then you can never
plan your sales even one year ahead, because you can only work with
what they give you, and they decide."
His comment is a thinly veiled criticism of De Beers, the mining group
that operates independently of retailer De Beers LV. The South African
company established a system by which certain privileged polishers
bought their rough stones from the Diamond Trading Company, De Beers'
London-based marketing arm, sight unseen.
It is not, however, an issue for Mr Leviev, who owns mines in Angola,
Namibia, South Africa and Russia. The Uzbekistan-born Israeli also
runs polishing factories in those countries, as well as in India,
China, Ukraine and Armenia, producing an estimated one-third of the
world's polished stones.
"We have an unlimited supply of rough and polished stones," says
Mr Leviev.
"So we can spend the three years it takes to create a necklace of
perfectly matched D flawless diamonds."
It is not just access to the stones that sets Leviev apart, however;
its role as supplier means the company also has close relations with
many trend drivers in the industry. Though Mr Leviev will not name
the brands to which he sells - "it's not good business practice" -
his market share suggests he would have to provide the stones to at
least one in three jewellers on Bond Street.
As a brand that would appeal to well-heeled consumers, however,
Leviev is in an odd position. He is known to the cognoscenti of
the world's rarest stones: in Israel, where he is the richest man;
in eastern Europe, where he has a chain of stores retailing small
stones; in Russia, where he is close to Vladimir Putin; and in the
worldwide Jewish community, where he has given away millions.
But his name is not as familiar in the west, the market he has chosen
for his first foray into fine jewellery retail under his own name. And
when it comes to retail, the name on the door matters.
"The name is quite important; people respond to what it represents,"
says Ian Rose, UK managing director of Moussaieff, which has launched
its own marketing drive, participating in museum shows including
"Diamonds" at London's Natural History Museum, as well as running
private events, in order to build public awareness before opening. "The
clientele has to know and respect you," he says.
"The most important consideration is location," says Mr Leymairie of De
Beers LV. "But having a name consumers recognise obviously helps." Mr
Leviev agrees on the vital role of location, noting he felt it was
important to be on Bond Street, but is less convinced by the idea
of needing to educate customers. "People who buy $100 diamonds don't
need to know our name; people who buy $1m ones already do."
"It doesn't take long for word to get out," says Thierry Chaunu, head
of Leviev's retail operation, adding that an advertising campaign is
planned, as well as in-store events. In Mr Leviev's view the store
is effectively an outreach operation. "We see the store as an art
gallery, and we want to show our art to people," he says. "Generally,
people can only see truly special stones in a museum but we will make
them accessible to the public."
The "stones" to which he is referring are some of those that Mr Leviev
has kept for the store, including a rare red diamond (there are 10 in
existence; of those, two are in the Smithsonian and one is owned by
Moussaieff). In the shop window sits a 110-carat gem, the Mir Jumlah,
from the same mine in India that produced the Hope stone, one of the
most famous diamonds in the world; an 83-carat emerald cut diamond
is on display in the lift; and assorted rare blue, pink and green
diamonds sparkle from cases. "They did put some show-stoppers out,"
says Mr Rose. "It was pretty stunning."
Inside the store, an effort has been made to keep the retail operation
small. Unlike, say, Asprey's enormous 4,650 sq m Bond Street selling
space, Leviev is constructed like an intimate town house. No counter
is visible, but couches and coffee tables nestle against a wall of
pewter-coloured silk.
"I don't believe in big stores," says Mr Leviev, who plans to
open a similar boutique in New York in the autumn. "We are not a
supermarket." At the same time, however, he admits, "we don't expect
the store to have much impact financially speaking; that's not the most
important part of it. The most important thing is that it is a stage."
Still, the bottom line may be boosted by plans to introduce a more
accessible range, priced between $50,000 and $1m. In any case,
Mr Leviev notes, his company is already diversified. No matter how
big they are, apparently, you should never put all your diamonds in
one basket.
--Boundary_(ID_egMn/C8nm9VTsuNtqIYG6g)--