The CEO of De Beers is strategizing to transition the diamond mining company into a prominent luxury jewelry retailer amidst challenges stemming from a downturn in the industry.
While De Beers currently operates jewelry retail stores worldwide, Chief Executive Al Cook intends to increase the number of outlets, aiming to compete with established luxury brands like Tiffany and Cartier.
The company plans to evolve into a mining-to-retail operation, leveraging its position in the gemstone market. This shift comes as the owner, Anglo American, prepares the group for potential sale or listing following the failure of BHP’s attempted takeover.
Last year, De Beers faced a significant decline in diamond sales due to various factors including high interest rates, inflation, and competition from synthetic lab-grown gemstones. These challenges led to a decrease in core earnings, marking the worst performance since 2001.
To counter the threat posed by lab-grown diamonds and tap into emerging markets like India, Cook unveiled the “Origins” strategy, aiming to expand the company’s retail footprint and introduce new product lines.
As part of this strategy, De Beers plans to increase the number of its own-brand stores and explore new avenues for sales, including subcontracting manufacturers to produce polished diamonds for its retail channels.
Despite interest from potential buyers, including sovereign wealth funds and luxury houses, the sale of De Beers could face hurdles due to a decade of slow growth.
Cook’s plans also include selling polished diamonds outside of the traditional “sightholder” system, although initial sales volumes are expected to be modest.
While expanding into jewelry retail presents growth opportunities, it also poses risks such as competition with existing customers. Additionally, De Beers intends to shift its focus from selling lab-grown diamonds for jewelry to targeting technology applications.
Overall, De Beers seeks to adapt to market challenges and capitalize on emerging opportunities in the luxury jewelry sector.
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