Varda Shine, managing director, DTC
By Varda Shine, managing director, DTC
Our focus in 2010 must be on making sure that we are prepared to grow as an industry. The outlook is excellent in the medium term but we need to remember that every long journey starts with a small step. We should aim to use the tough market conditions of 2009 to our advantage. Although last year gave us levels of financial turmoil unprecedented in our lifetimes, it has also provided us with a once-in-a-lifetime learning opportunity, from which I have taken five key lessons.
Cash is king. In such a capital-dependent industry, those maintaining the strongest cash flows will always be well placed to grasp opportunities as they arise. This will require strict management of costs and a measured and long-term approach to business.
People will always want hard assets, and there are none harder than diamonds. We saw an increased level of interest in diamonds due to their unique ability to act as an enduring store of value. This is testament not only to the product, but also to the fact that we have managed to generate continued growth in the value of our industry. If effectively positioned, the notion of sustained value growth provides us with compelling new marketing opportunities in emerging markets for diamond jewellery.
The world just got bigger. For several years there has been talk about the growth of the Chinese and Indian consumer markets but in 2009 we saw strong evidence of how a geographically diverse distribution network can provide insurance against difficulties in one particular market. We also saw further strides being made in internet sales of diamonds. Those who embrace these web-based techniques for their customers will be likely to hold an advantage.
We need to drive consumer demand. Although we have created some insurance against this through tying diamond jewellery to key occasions such as weddings, we must continue to drive consumer demand for diamonds as this will be the eventual arbiter of our success. New consumer groups and tastes are emerging and if we do not keep our focus trained on consumers then we risk losing out to competing industries as the new normal beds in.
Your core business is at the core of your success. Diamond jewellery held its value relatively well through the downturn thanks to our focus on maintaining diamond equity, and those who kept their focus on their diamond operations actually found a great degree of opportunity. The diamond business demands the sharpest focus, however, if one wishes to succeed.
There are real rewards to be had, but faith in your product and your business’s core strengths is necessary. Those who looked for easy money in activities which are outside their sphere of expertise have generally found that taking their eye off their core business has led to missed opportunities or bad investments in assets that are less liquid, less tangible, less secure or less valuable.
In the diamond industry, even when trading activity stalled, the fact that we deal with treasures of nature meant that we were holding hard assets which will only become more and more valuable in the years ahead. We should all make sure that we concentrate on our core strengths and build on these during this year of transition.