Monday, 23 May 2011

A Call for Integrity - Diamond Certs gone Wild

This stinkin’ thinkin’ has got to go.  Our industry needs a check-up from the neck-up.

A few weeks ago, I started on a rant that won’t die.  I personally witnessed several cases of fraudulent diamond certs; which have effectively taken food off of my children’s plates.  I work for a company that seeks to do the right thing and offer properly graded diamonds at fair market pricing.  Apparently that’s not “competitive enough.”  Evidently some have chosen to take a $1000 diamond and pay someone to certify it as a $1500 diamond and then sell it for 33% off the certified value.

That sounds like an old story.  Chances are you either know a retailer who does this or you are one; having certain product like gold chain “40% off” all year long.  Are we really talking about the same thing?

If I go to The Brick furniture store to buy a sofa, would you think me a shrewd consumer to purchase it at full price?  What about going to Stitches and buying a single shirt for $79 instead of buying 3 for $89?  These retailers create pricing and marketing schemes aimed at maximizing bottom-line profits.  It’s not the way I would endorse running a retail operation because it is against all Canadian consumer guidelines and the competition act to inflate prices and create deceptive discounts.

Our government has more important things to do than to monitor these relatively minor sins.  HOWEVER, if Stitches sells a rayon shirt as a “silk” shirt and sells it at a silk price, that fraud grows from a misdemeanor to a felony.  If The Brick sells a naugahyde sofa as a “genuine leather” sofa, that too would be felonious. 

Adam Smith’s invisible hand should allow a savvy consumer to sort-out the best price no matter what the pricing and discount schemes at work; as long as they can compare apples to apples.

Why do we think that buying an I2-N poorly cut diamond as a SI3-I ideal-cut (with a credible-looking certificate) for an I2-N price is justifiable?  That has nothing to do with the discretionary pricing options that a retailer can exercise.  It’s outright fraud.  It’s fraudulent of the diamond distributor to accept the bogus paper from the grading organization, and it is fraudulent of the retailer to play dumb and pass along that misinformation to the retail client.

Let’s face it folks.  Diamond cutters and dealers know what they’ve got.  They send it to grading labs so that they have a second-hand witness to justify the price they want to charge.  In recent years we have discovered that even the supposedly inviolate GIA was subject to issuing false grading.

At the retail level, how do we truly win the battle against the internet?  We do it by offering a better customer experience.  Customer satisfaction is more than price.  It’s great service, it’s high-quality design, it’s the advantage of seeing your product before you buy, it’s expert advice, it’s after-sale service, it’s creativity, it’s personal contact.  It’s about making yourself a “trusted advisor”, and proving to your market that they’d have to be a fool to deal with anyone else but you no matter what the price.  It’s NOT about trying to match the deceptions and pricing schemes employed on-line.

In a recent discussion with newly hired CJA president, David Ritter I asked him about the issue of Burger King certs (have it your way).  Having come from outside the jewellery industry, his response was, “heaven forbid that the media gets ahold of this issue.”  Imagine the headline in the Globe and Mail, “Massive Fraud Among Canadian Jewellers”, or “Diamond Deception Running Rampant”. 

Could that article be written?  Could I go to 10 cities across Canada and buy a diamond ring whose reported quality was massively overstated?  If I took those diamonds to four different grading labs and got differing results each do you think our industry might look really bad?

The big question is not if that article will get written; rather when.  When it does and consumers become even more suspicious of their local retailer, how will we answer their concerns?  Who’s going to write that script?  We’re in deep doo-doo and we don’t know it yet.

If you want to become part of the solution, here’s what you do:

1.     Stop buying from dealers who constantly try to defraud your customers with their grading

2.     If you belong to a buying group or jewellers’ organization, report such dealers to your organization and work towards cutting them off on a larger scale.

3.     Like my friend Matt in Lloydminster, go take some diamond grading courses so that you can authoritatively tell your customers that you can verify the quality of their new diamond.

4.     Don’t sweep anything under the carpet.  If that article is written, everything we do will be scrutinized by the public, so implement new policies to ensure the highest level of professional integrity is in your store.

5.     Make sure to forward this message to other retailers; especially your enemies.  The more people hear this message, the better for our whole industry.

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