Industry faces change at GIA Symposium.

The theme of the International Gemological Symposium 2006, "Navigating the Challenges Ahead," also described the overwhelming message of the three days of presentations and discussion: that our industry is facing massive change.

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Speaker after speaker

at Symposium, organized by the Gemological Institute of America in San Diego at the end of August, addressed the global economic shifts and changes in consumer behavior that are driving this transformation. Consumer confidence issues came up in many sessions, as panels examined what the future holds for retailing, luxury brands, diamonds, pearls, colored gemstones, and other industry segments.

Symposium opened with a presentation by former U.S. Secretary of State Madeleine Albright, who talked about current affairs, including the troubling situation in the Middle East, as well as her diplomatic use of her extensive brooch collection. Albright gracefully answered questions on issues ranging from the global divide between rich and poor to conflict diamonds.

"I think the Kimberley Process is important. It's working and it needs your support," she said. "Companies will not prosper without being good citizens, which means giving back. It's important for corporations to set a good example. I don't think diamonds were responsible for what happened in Sierra Leone but as an individual you need to do whatever you can to make sure that you aren't part of the problem."

Change in retailing was the topic of a presentation by Paco Underhill, retail anthropologist and author of Why We Buy: The Science of Shopping. He described the changing demographics and psychographics of the consumer today and challenged retailers to improve the shopping experience. "Retailing in this industry is tired and the jewelry store needs a refresh," Underhill said. "New wealth does not have the same appetite for the traditional luxury product mixes. You are scaring people away. Other merchants have invaded and they are having your lunch."

He had concrete tips for improving jewelry stores, including shifting from nose-to-nose selling over a counter to side-by-side selling, having event space for parties in the back of the store, and adding mirrors and try-on areas to make shopping more fun for women. He urged jewelers to adopt an Internet-to-phone marketing strategy. "If you are a jewelry store owner who doesn't use the Internet, goodbye, because you won't be around in 2010," he said.

Two of the panel sessions at the heart of the program seemed emblematic of the issues facing the industry today: "Diamonds: Mapping the Future," and "Consumer Confidence: It's All About Trust."

The session on diamonds focused on the structural changes and lack of liquidity that are putting pressure on the whole pipeline. "It's blatantly obvious that our industry is deep within a cycle of commoditization," Glenn Rothman of Hearts On Fire said. "Throughout the industry, margins are being squeezed out, the distribution chain is becoming more efficient. The party's over, the musics stopped, and there are not enough chairs for everybody." Rothman urged the audience to find creative ways to add value and excitement to the diamonds they touch.

Martin Rapaport followed with an impassioned plea for the industry to add values as well as adding value by supporting the welfare of everyone who touches a diamond, including the impoverished miners in countries like Sierra Leone.

The consumer confidence panel addressed consumer activism, NGO campaigns, industry transparency and governmental regulation, the Kimberley Process, and the possible impact of the publicity surrounding the movie "The Blood Diamond" on the image of the industry.

Symposium closed with a keynote address by Maurice Tempelsman, chairman of the board of Lazare Kaplan International. Tempelsman frankly discussed current diamond industry difficulties. "Some correction does seem inevitable," he said.

"I believe that our present industry course is just not sustainable. Boiled down to basics, the reason it is not sustainable is that there is simply not enough margin capturable downstream to support the new investment that I agree must be made in this segment of the pipeline--investment in stimulating consumer demand, investment in technology and markets, and investment in the systems and practices to cater for greater transparency and outside scrutiny. Nor is there enough margin to offset the structurally enhanced risk we face now that the old, traditional industry foundations of price stability underwritten by a single dominant player are no more," Tempelsman said.

"It would be irrationally exuberant, if you allow me to borrow this phrase from Alan Greenspan, to believe that discretionary consumer spending will be unaffected by higher interest rates and higher oil prices, or that credit lines will be unaffected by a higher perception of risk in financial markets."

Symposium attendees also had a chance to drive the discussion in debate centers addressing topics like ethics, country of origin, synthetic diamonds, gem treatments, Internet retailing, and appraisals. The networking continued at lavish evening events including the institutes 75th anniversary celebration at the GIA Carlsbad campus, which featured an exhibition of gemstones and jewelry, a performance by Grammy-nominee Chris Isaak, and fireworks in the moonlit sky over the ocean.

To order a DVD of the 2006 Symposium sessions, visit www.gia.edu.