With This Ring
Following the Worldwide Diamond Trail: Manhattan Middlemen
Listen to Jacki Lyden's report on Manhattan's Diamond District and the industry's challenges.
View a photo gallery of Manhattan's Diamond District.
At a recent "Breakfast at Tiffany's" event in Manhattan, models posed with gems from the jewelry store's vaults. The diamond industry has begun an intense marketing push to raise more consumer interest in diamonds.
Photo: Bill O'Leary
View a photo gallery of the Diamond District
Nov. 17, 2001 -- The desire for diamonds shines bright in America. Half the world's jewel-quality diamond sales take place here. And most of those gems pass through merchants in New York City's Diamond District.
Centered at 47th Street and Fifth Avenue in Manhattan, the district is an exclusive world where diamond dealers seal their deals with a handshake. But even this once closed-off world is changing. On a walk through the district, snatches of Hebrew mingle with Spanish, Japanese and even Urdu.
As NPR's Jacki Lyden discovered, the diamond industry is shifting along with the district that bears its name, as Americans buy fewer luxury items and diamond sales slump.
Lyden's guide through the maze of markets, bazaars and jewelry stores was Joe Schlussel, a 40-year veteran of the Diamond District and owner of DiamondRegistry.com. Times are tough for diamond dealers, he said. Retail sales of diamond jewelry totaled $56 billion last year. Worldwide, profits in the retail diamond trade are expected to be down by a $1 billion. Half of the 800,000 diamond cutters in India have lost their jobs. And the diamond industry is sitting on excess merchandise it can’t sell.
The largest diamond ever found is the Cullinan at 3,106 carats -- or 2.8398197 pounds.
The diamond is the hardest natural substance on Earth, rated 10 on the Mohs scale of hardness. Diamonds are made from pure carbon under extreme heat and pressure between 75 to 120 miles below the surface.
The stones are brought to the surface through volcanic activity. Most are found embedded in a volcanic rock called Kimberlite.
80 percent of the world's diamonds are not suitable for jewelry.
The Greek root word for diamond means unconquerable, but a diamond is not indestructable -- it is extremely resistant to scratching, but can be broken or cleaved.
Rough diamonds are classified as gem, near gem or industrial in quality. Even the most efficiently cut gem retains only about 40 to 50 percent of its rough weight.
Rough diamonds can range in value from under $1 per carat for small industrial diamonds, to more than $1,000 per carat for large gem-quality stones.
Diamonds range in color from black to white. The average diamond sold in the United States is tinted a slight yellow.
Large diamonds are very rare. A three-carat diamond can cost up to seven times more than a one-carat diamond of equal color and clarity, and only one polished diamond in a thousand is over one carat.
The once-solid monopoly on the diamond trade held by the South Africa-based DeBeers cartel has been challenged by diamond producers in Russia and Canada. Now the cartel is forced to rethink its strategy. DeBeers' new focus is marketing.
Luxury retailers like Gucci spend about 15 percent of their profits on marketing. Until recently, the diamond industry spent about 1 percent. But that is about to change.
The DeBeers motto "a diamond is forever" is the one of the most-recognized advertising line of the 20th century. The new marketing strategy still focuses on the diamond itself -- not the DeBeers name -- and the company is using the Internet to pump up sales.
Ann Ritchie, senior partner for the J. Walter Thompson ad agency, says the ADiamondIsForever.com Web site gets 200,000 visitors a month, and most visitors spend an average of 20 minutes on the site. And most of the visitors are the preferred target market: women 18 to 34 years old.
"A lot of (diamond middlemen) don't know how to market," said Rob Bates, who follows the diamond industry for Cahners publications. "And DeBeers is forcing them to learn."
But traditionalists aren't happy with the marketing push. Schlussel believes that advertising, price competition and the push to sell more diamonds will squeeze out the middleman, because the diamond itself will lose its cachet, its emotional quality.
A gem dealer in Manhattan's Diamond District examines a stone for a customer.
Photo: Davar Ardalan, NPR
View a photo gallery of the Diamond District
So the new buzzword for diamond dealers is "added value." Alan Reh says gone are the days when a dealer could make a 2 percent profit in five minutes by selling a diamond to a dealer across the street. He's trying to boost profits by moving from cutting and polishing stones to making finished rings.
The epicenter of change in the diamond industry, if there is one, is at the local Costco. A few years ago, the bulk-shopping retailer began selling jewelry along with cases of toilet paper and soda. Costco’s diamonds come with a guarantee that they will be half the price of an appraised diamond anywhere else, or your money back -- plus $100 and the cost of the appraisal.
Perhaps a more apt slogan for the industry, Lyden reports, should be "a diamond is for everyone.” The diamond industry is betting that the American consumer will retain its love of the stone - no matter where they can get their hands on one.
"With This Ring" is a special report following the international diamond trail -- a joint production of NPR and American RadioWorks. The producer for the Manhattan Diamond District segment of the report was NPR's Davar Ardalan, and was edited by Deborah George for American RadioWorks and NPR.
Search for more NPR broadcast coverage on diamonds.
A Diamond Is Forever.com, created by J. Walter Thompson, features interactive guides to help select and identify quality diamonds.
Diamond Registry.com, an online market in loose diamonds created by industry veteran Joe Schlussel.