Trade shows still seen as crucial, but diamond firms steering clear of Baselworld

The advantages and disadvantages of taking a booth at the world’s diamond and jewelry tradeshows are well known to diamond industry participants. The expenses are relatively high as companies bear the cost of creating the booth with all the graphics work involved.

Then there is the cost of flying staff to the show and putting them up at hotels for the duration of the event, plus a day or so on either side of the fair. Add to that the cost of them being away from the office where they deal with day-to-day issues. Either other staff are brought in or the work, including responding to potential clients gets pushed back for possibly a week, and sometimes even more.

The cost of exhibiting at tradeshows has become an increasingly problematic issue for diamond companies in recent years in the aftermath of the global financial crisis and the economic slowdown that followed, particularly in the United States and Europe. With sales more difficult to make, one of the first and largest casualties at many firms has been the marketing and advertising spend.

“It’s ironic,” explains one marketing executive. “If sales have dropped, there is really little choice but to increase your marketing spend. You have to win back existing clients who have cut back, and you need to go and win new customers. And tradeshows are usually the place to do that.

“They are actually one of the most effective ways of reaching clients. Think about it: you have access to hundreds, and even thousands ,of clients, all in one place, all looking for the same thing more or less and for a concentrated period of time. When you look at it from that perspective, it sounds ideal.

“But on the minus side, there is no guarantee that they will be available for meetings, and they may not be looking for the goods you can supply. They may also just be comparison shopping and seeing where the levels of prices have reached while all the time being prepared to buy from their regular suppliers. Having seen prices and goods available they may just be collecting market intelligence in order to go back to those suppliers and demand lower prices,” he added.
 
The issue of the high cost of exhibiting at tradeshows came to the fore again recently following the Baselworld show. Long known for its emphasis on watch and jewelry companies, the show has lost a considerable part of its appeal for the diamond business. Indeed, the image of the huge fair which is held every Spring is usually of the enormous “booths” that are constructed for companies such as Rolex and Cartier.

Industry sources put the cost of these grandiose booths at $1 million, and more. “I used to exhibit at Baselworld,” said one mid-to-large size Israeli diamond manufacturer. “But the cost has been rising for a number of years. In fact, the show was always known to be expensive. But in recent years the cost has become for us astronomical. I spoke to a colleague who had a booth at this year’s show and he said that not only was it extremely expensive, but that the diamond companies were placed in a very poor location in Hall 3 with very little foot traffic.”

Meanwhile another Israeli diamantaire said the fair is not worthwhile due to the financial problems facing the European economy overall. “Europe in the past was a strong market. After all, this is one of the wealthiest regions in the world. This is a mature market where love of diamonds is well ingrained in the consciousness of societies in just about every country you can mention, including the relatively recent additions to the European Union in Eastern Europe.

“But many countries are hurting financially, and even those that are not suffering the sovereign debt ptoblem are worried that they might be next. As a result, people have cut back on their spending. Germany, for example, is in a relatively strong financial position, but on the other hand the country has the highest savings rate in Europe, and one of the highest in the world. Frankly, it is extremely difficult to make headway in Europe.

“Of course, you don’t go to Baselworld just for the Europeans. You meet people there from all over the world. But the overwhelming aim is the European market. So it is simply not worthwhile anymore. There are other shows that give us a much better return on our money.

“We prefer the Hong Kong shows, for example. The demand for diamonds is much higher. There is a much larger number of buyers and potential buyers. The atmosphere is more diamond orientated. You can feel it in the air. Sales are generally much higher as a proportion of our expenses, and the contacts you make are very good,” he added.

"The Baselworld show is significantly more expensive than the other important shows. It is just about impossible to cover your expenses, which means you have to find added value somewhere else and that usually not forthcoming." He added that the already high expenses associated with the show were compounded at this year's event with Baselworld raising the price of exhibitor space by one-fifth.

Baselworld spokespeople say the show provides an excellent opportunity for firms from across the world to reach potential buyers and suppliers at a prestigious event.
 
BaselWorld reported a 17% increase in visitor numbers compared to 2012. The 41st show spread over eight days saw a record breaking 122,000 visitors from more than 100 countries, with 3,610 journalists from 70 countries, with the event attracting 1,450 exhibitors from 40 countries.

There were many innovations from some of the biggest luxury watch brands in the business. Rolex unveiled several new pieces. Among them was the first Rolex Daytona in a platinum case featuring a distinctive color scheme of what Rolex calls an “ice blue” dial and a Cerachrom ceramic “chestnut brown” bezel. While the U.S. price has yet to be determined, Rolex says the watch will retail for about $75,000.

“So far the luxury watch industry is on track for a record year. The first three months have been record months, and the industry is up two percent already for the year. The next few months will be slow, until around September when the industry will pick up growth again,” says Hal Martin, CEO of Hal Martin’s Watch & Jewelry Co.
 
Among the trends identified at this year's show by diamond company exhibitors and buyers were a vigorous market for exceptional diamonds, driven by consumers in Asia and the Middle East.‎ And despite the slowdown in Europe due to its sovereign debt problems, retailers of top-scale goods were eager to find unique diamonds and were even prepared to pay higher prices. On the other hand, the buyers were not willing to put in orders for large quantities.‎ as has been the case since the global financial crisi of 2008, members of the diamond and jewelry pipeline have been exceptionally cautious in a bid not to find themselves exposed by volatile markets.

Traders said that demand for fancy colors was also strong, especially for fancy intense pink and blue diamonds, while the even more rare colors, including orange, red and green stones, were also being sought. One trader said the demand for fancy colors was part of the trend of recent years where investors are looking for safer and more stable places to park their cash due to volatility in stocks and shares.‎

In similar vein, there was very strong demand for outstanding large stones of 10 carats and more especially high colors and clarities.‎ This demand is also seen as coming from private investors and collectors, as well as hedge funds. Demand was also seen for bigger, so-called commercial quality diamonds – stones of 10 carats and more, in slightly lower colors and clarities. in other diamonds, there high demand for fine-make fancy shape diamonds, particularly pear-shapes of three-quarter carat to 2 carats. In other shapes, well-made hearts and ovals were relatively scarce due to good demand from the Far East, emerald-shape diamonds also saw a stream of buyers.‎In the more mainstream market, diamonds of 0.3-0.4-carats in mid-range colors and clarities were popular.