diamond industry Essay

990 Words 4 Pages
The value of diamonds lies on their physical properties that make them suitable for many applications. Natural diamonds are only of high value if they are scarce in nature. Realizing this, De Beers Consolidated Mines was formed to control the supply of diamonds from mines across the world. The diamond market is influenced by mine production, rough diamond distribution, preparation/cutting, and retail markets. The project will be concentrating on the retail markets for diamonds and other high end jewelry.
Jewelry purchases are highly discretionary because they are heavily affected by adverse trends in the general economy and are measured by disposable consumer income. The first half of fiscal 2003 can be described with a lackluster
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(Please refer to exhibit C)
The success retailers in this industry depend on various factors. This includes general economic and business conditions. In 2001, as US retail sales as a whole across all markets took a steep hit so did the jewelry market. This market of luxury goods is highly dependent on consumer spending. It is crucial to find a balance with the performance of a retailer’s operations and the acceptance by consumers of the merchandise and marketing programs.
Industry competition is expected to increase with the consolidation of the retail industry that is occurring. Competition with other general and specialty retailers is based primarily on trust, quality craftsmanship, product design and exclusivity, product selection, service excellence and, to a certain extent, price.
In 2000, the consumer market for fine and costume jewelry rose 5% over 1999 levels to total $39.8 billion. Contributing to the growth in the jewelry market is the expanding availability of jewelry at the retail level. Nevertheless, there seems to be an interesting organic growth trend in this cyclical market. According to the National Jeweler, top 50 retailers plan to open 263 stores in 2004 vs. 292 stores in 2003, a decrease of 11%. These jewelers do not plan to add new units, but instead, aim to work on improving sales, margins and operating efficiencies within their existing stores. The following Porter’s five forces analysis will shed light to the market conditions

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