Tuesday, Oct 27th

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We’re all the same boat

During the past months, I have closely followed the developments in the global fashion industry, the luxury sector, and the diamond and jewelry business. The bottom line is that they are all connected. Sales of high fashion, luxury products, such as branded leather bags and shoes, as well as the fine jewelry business, all have been severely affected by the Covid-19 health crisis.

In the USA, department stores such as JC Penney and Neiman Marcus – beacons of the American retail landscape - have filed for bankruptcy.

It’s all connected

In Europe, Inditex, the world’s largest fashion retailer, reported its first quarterly loss since it was taken public in 2001. While Inditex said it would close some 1,200 stores, it also announced that it would invest €1 billion IT upgrade as well as the opening of 450 new stores. Inditex, which owns Zara, stated it intends to gain 25 percent of its total revenue through e-commerce sales by 2022.

In a recent article written by Vikram Alexei Kansara on Business of Fashion, he noted that brands are realizing they may be able to more profitably serve certain customer segments via e-commerce, allowing them to right-size their retail networks by closing underperforming stores and focusing on locations and formats that are more productive.

In the diamond industry, we are already seeing how digital tools help us to continue doing business. Alrosa held a digital rough diamond tender, as did Grib this month (see below). Further down the supply pipeline, we will see transformations happening we would not have thought possible or feasible just a few months ago. Yes, polished diamond dealers will adapt, adopt, and apply digital technology to sell their diamonds. Buyers, hesitantly at first but soon afterward confidently, will buy their polished diamonds online.

The technology is already available.  Sarine Technologies, for example, not only supplies its clients with the necessary tools but also adds value by integrating traceability, among others, through blockchain technology, into the process.

More than ever before, the diamond industry and trade will find that innovation and sophistication can and will benefit its business performance.

Of course, not all operators in the diamond business will be comfortable, willing, or even able to make this necessary transition. On the other hand, those who will adapt and change their business models to fit the “Next Normal’ business environment will find their customers to be receptive and, so I believe, eager to take their businesses forward.

Last week, IDMA President Ronnie VanderLinden quoted the Greek philosopher Heraclitus, who said that “change is the only constant in life.” More than 2,500 years later, this still rings true. Another famous saying by Heraclitus is “Character is destiny.” It suggests that we shape our own future because our character is the manner we perceive and respond to the world.