A profile of Australia’s diamond market and some key pointers to succeeding in the business there, presented by Rami Baron, President, Diamond Dealers Club of Australia (DDCA).

How do you get a sense of the size of Australia? In simple terms Australia is 2.3 times the size of India.

The amazing fact is that our population is less than half of that of Gujarat’s 50 million .

There are no exact numbers determining the size of the Australian Diamond Industry but the latest figures for 2010 suggest a total jewellery industry turnover of $3.5 billion dollars ( Jeweller magazine Dec 2010 ). $2 billion would have diamond content.

Australia was perceived as doing better than most countries during the GFC , this was a result of its exporting of raw materials. However the retail market suffered like most developed western economies.

According to the latest statistics, there are approximately 4000 retail jewellery stores. They are broken down into an estimated 3000 independent stores, 1000 chain stores (not including a small number of brand only stores

From the 3000 independent retailers there are just under 700 who are part of buying groups.

The three main buying groups in Australia are Nationwide who have 60% of this segment, Showcase at just under 30% and the Leading-edge group with just over 10%.

One privately held company is a retailer which has the largest penetration and actual storefronts in Australia and for that matter in the Southern Hemisphere. This chain consist of combination of three brands; Prouds, Angus & Coote and Goldmark, together they control 469 stores.

The Australian jewellery market in terms of its consumer profile is fairly conservative, In terms of engagement rings, the classic solitaire still rules, and there is a 80% trend in capital cities to white gold and platinum, with this dropping to 50/50 when one supplies regional Australia.

There is a very small segment of consumers who purchase large goods, and the definition of large goods in Australia in 2ct plus.

The general engagement ring market does not want heavily piqued goods. Top light browns, capes and silvers are common in the low to middle range with H PLUS, SI2 PLUS, as we move up the scale.

In terms of clarity, the market has become very disenchanted with the SI 2 grading seen on certificates from the well known labs, as these stones would be considered P1in Australia, and are causing a lot of frustration when goods are purchased sight unseen.

The market caters to the whole spectrum of grades, but tends to be more centralists, meaning it is not interested in very low quality goods, whether in melee or larger stones.

Where to from here?
The diamond segment in Australia is suffering the same problems as the rest of the world. The market which has a small population is limited and therefore could never sustain a large dealer network.

Often Indian suppliers perceive the Australian market as having untapped riches…….. (we are all still looking )the need to invest in building a local distribution network is expensive and time consuming, and there are no short cuts or quick wins.

Australia is a magnificent place to live and raise a family and no doubt one can build a successful business here, but it can never do the turnover of Hong Kong and one must take a long term view if the aim is to enter this market.

The market is very heavily geared to goods on consignment, and few retailers will invest in goods for stock. Extended credit is already available which creates further obstacles for new players in the market.

Although a small market it is a very competitive one.

This is a recipe for failure, we all appreciate the traditional supply lines have changed and the need to re examine how the industry can deal with this change is critical. Leadership and vision must be shown, and the dealers themselves must decide which direction they want to take.

There is a window of opportunity, bringing together key players to consider a different perspective and looking to communicate with the consumer in the new forms of mediums we have today, we can reinvigorate our industry.

Like all classical industries change is happening, Is it happening fast enough in our sector? I don’t believe so.

Too many are still trapped, whether for financial reasons or that the older generation which can’t begin to fathom the speed in which the internet is changing our world, are not allowing the next generation to make the necessary changes.

The theory that Diamonds are forever maybe true, but will they be the stone that every women wants to wear on her finger as an engagement ring?

Maybe that stone will be red….. And have the hallmark of an apple.