UAE jewellers expand cash buybacks to diamonds as well

They expect to create the same residual value for diamonds as with gold

Image Credit: Gulf News Archives
In the last three years, local jewellery retailers had been making a determined push to drive upthe share of diamond jewellery in their top-line numbers.
Gulf News

Dubai: hat’s good for gold jewellery — the guarantee of an exchange scheme or buyback from the retailer — can have its uses with diamonds as well. UAE’s jewellers are testing the market to see whether they can expand the consumer base for diamond-studded pieces as well by doing so.

Pure Gold has confirmed a “lifetime buyback guarantee” on any diamond jewellery bought from its outlets in the Gulf. But it does come with the provision that consumers will lose 30 per cent of the original value of the jewellery in such a transaction.

“The 30 per cent deduction relates to the manufacturing cost of the jewellery and incorporation of our margins,” said Karim Merchant, Managing Director and CEO of Pure Gold. “But a guaranteed buyback offers the same reassurance that consumers have with gold purchases, and we launched this seeing there’s a gap in the marketplace.

“It’s the reassurance that is needed to get those who would have never considered a diamond jewellery purchase in the past. Also, for those shoppers who already have bought, it’s an opportunity to go for an upsell.” (To qualify, the jewellery must be in an “original condition and accompanied by original laboratory grading document or purchase invoice”. Currently, diamond purchases make up around 55 per cent of the overall top-line sales at Pure Gold.)

In the last three years, local jewellery retailers had been making a determined push to drive up the share of diamond jewellery in their top-line numbers. It was backed by the leading names in the global diamond business, and coincided with a period when gold values were pushing up to new highs for the better part of the period.

It was felt, by retailers, that those shoppers who would have only gone for gold in the past could be compelled to shift some of their buying interest to diamonds and other precious stones. Matters were helped that diamond prices globally remained stable on steady supply coming into the market after going through an extremely volatile phase in 2011.

“Supply has been consistent and so too are prices — these are conditions ideal for a shopper looking to make an entry-level purchase of a diamond piece,” said Merchant. On whether schemes such as guaranteed buybacks wouldn’t make diamonds into a commodity, as is the case with gold, he said: “I don’t think that’s likely to happen. What buybacks create is a residual value for diamonds, in much the same way that a luxury car brand retains a certain value despite the number of years in service.”

There are other jewellers who are offering exchange programmes on diamonds, each with its own caveats attached. For instance, Bafleh Jewellery exchanges or upgrades jewellery “which are purchased from us or any shop with a valid proof of purchase, as per prevailing market prices of the content,” said Chirag Vora, Director.

“Diamond Jewellery purchased from Bafleh can be exchanged within 30 days without any deduction. We also have a facility in which customers can get 100 per cent cash refund within 30 days of purchase if they wish to return for whatever reason.

“For exchanges happening more than 30 days later and within a year, the buyer can do so without any deduction on their next purchase. However, if a customer wants to sell the jewellery for cash, a 15 per cent depreciation will be applied.

“As far as diamond prices are concerned, we have a seen a slight decline in 2014 due to the considerable output in smaller stones. However, we predict a stable price, or even an increase of up to 10 per cent, for loose stones due to a growth in sales during the last quarter of this year.”

More jewellers could come out with aggressive gamelans for the diamond side of the business in the near term. They do so as with gold prices extremely soft, consumers could be persuaded to buy up on this metal at the expense of diamonds. Leading jewellers on their part would much prefer if an equitable mix is maintained. Diamonds must have their lustre after all.

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