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October 2008
Sparkling Success
By Ellison Clary

    It’s a retail formula that works for cars and groceries and myriad other products, but you don’t associate it with diamonds. Yet one Charlotte jeweler has set itself apart with high volume and low margin.

    Numbers show people like it. From its 6,000-square-foot showroom on Sharon Road across from SouthPark Mall, Diamonds Direct plans to sell more than $30 million in diamonds and diamond jewelry in 2008. For 2007, Diamonds Direct logged nearly 8,000 sales.

     Such sparkling success results from adhering to the formula, says Itay Berger, vice president and part owner of Diamonds Direct.

     “We focus on being a diamond powerhouse and on what we do best, the bridal business,” Berger adds.

     Typically, a Diamonds Direct sales person helps a couple pick a diamond, then select an engagement ring, and finally, decide on wedding bands. And he or she dispenses a healthy dose of customer service, a Berger point of emphasis, while dealing in these three items that make up 70 percent of the firm’s business.

     Berger insists that his sales people seriously consult with customers as they browse the $15 million inventory—which includes $10 million in loose stones—with an eye for what is truly best for them. If that means advocating a $5,000 engagement ring over one that costs $9,000, so be it, Berger says.

Customer Care

     “If you’re not ready to work hard for the customer and have fun, you don’t belong here,” Berger says.

      One of the most successful of his 25 full-time sales people is a person who started as a receptionist. “She knew zero about diamonds,” he smiles. “But she had the heart, she wanted to learn, she had the spirit and the attitude.”

      Most of the Diamonds Direct sales force has worked at other jewelers and, even though they make a salary rather than a commission, they often earn nearly double what they were accustomed to. Berger says volume sales make that possible.

Along with price, Diamonds Direct’s selection is also impressive.

     “When you have over 100 stones at one carat,” Berger explains, “you can show the customer 10 and he can understand if he wants to go up in the color and down in clarity, or if he wants to go down in both and go up in size. Maybe he wants to go smaller but he wants the highest quality he can get.”

     His sales people prove their price is right, Berger says, by explaining the industry’s wholesale sheet—the Rapaport Diamond Report. “No other jeweler will show it to you,” Berger says.

     Most Diamonds Direct customers save 30 percent to 40 percent on what they buy, he adds, and they benefit from the work of the shop’s four master jewelers. These craftsmen build the designer settings for the precious stones and create other pieces such as bracelets and pendants.

     “Anything we do in the shop is free,” Berger says. “Service, repairs, sizing, cleaning, resizing. If you bought a ring here seven years ago and one of the tiny diamonds fell from the setting, we replace it at no charge.”

     “Our guarantee is second to none,” Berger says. “If we sold you a piece, we will stand behind it 100 percent. If something happens and it’s not right for you, you are not going to be stuck with it. We will just take it back and give full credit. It’s the right thing to do.”

     That builds referrals, which Berger values higher than the $1.5 million on advertising Diamonds Direct does annually on radio and in magazines.

     “A happy customer who is a walking billboard for us means the world to me,” he says earnestly. “A happy customer will tell 10 people. An unhappy customer will tell 30 people.”


All Facets of the Marketplace

     A Charlotte diamond buying trend is more couples shopping together. Usually, the prospective groom returns alone. “The lady narrows it down for him,” Berger says. “But she gets a surprise, because he still makes the final decision.”

     Another trend is women buying for themselves—often big pieces. “We see it in the second marriage or ladies who are single and want to spoil themselves,” he says.

     The biggest stones Diamonds Direct has sold since Berger came to town were a 22-carat square emerald and two diamond rings, both over 10 carats. The most expensive sale he’s seen was $500,000, although that was for  several items.

     So if the high-volume, low-price formula works so well, why don’t the other hundreds of jewelers in the yellow pages also use it?

     “The simple answer is they can’t,” Berger explains. More than half the diamonds sold in the United States come from Israel. Diamonds Direct is owned by Arabov Group Ltd., an Israeli firm operating in a Tel Aviv suburb.

     The Arabov Group started over 60 years ago as a small diamond cutter and has evolved into a world-renowned force in the diamond industry. Berger is a minority partner with owners Alon and Doron Arabov.

     The Arabovs belong to the Israeli Diamond Exchange, which counts only a few more than 2,000 members. Their company maintains crews near Siberian mines that supply rough stones. It keeps other employees in Israel. In both countries, the firm cuts its own diamonds.

     “It is a big advantage in the diamond industry when you control both ends, the mines and the retail,” says Berger, who travels to Israel several times a year to personally select stones for Diamonds Direct.

     “I will probably buy $5 million in diamonds just for the season,” Berger says, explaining that the busiest season lasts from Thanksgiving until Christmas. A traditional diamond store will turn 40 percent of its revenue in that month. Yet Diamonds Direct counted just 22 percent of its 2007 sales during the holidays.

Charlotte’s Sparkle

     The Arabov Group has a huge wholesale business. It has wholesale outlets in Tel Aviv, New York City’s diamond district, Rockwell, Md., and Scottsdale, Ariz. For 13 years, Charlotte has been its only retail operation.

     The Arabov Group was prompted into scouting for other locations when their New York City wholesale office that was robbed about 16 years ago. The partners saw Charlotte listed in a magazine story about America’s fastest-growing cities. They visited and quickly opened Diamonds Direct in February 1995.

    “They decided to open directly to the public, but offer all the retail experience and all the retail environment,” Berger says.

     Diamonds Direct started on the fourth floor of a suburban tower on Independence Boulevard. It moved to SouthPark in September 2003.Berger himself joined up with the outfit a year later, the result of a furtuitous happenstance. He played on the Israeli National Soccer Team, served his mandatory three years in the Israeli military, and then earned a law degree. He enjoyed the business side of law but found the detailed documents and long hours at the computer frustrating.

     Long-time family friends, the Arabov brothers convinced Berger to join their operation, a move Berger calls “the smartest thing I ever did.”

     With wife Liat and their son, now 5, Berger moved to Charlotte in early 2004. Since then, he and Liat have added a daughter and an infant son. Berger, 32, chuckles that his existence is consumed by “either diamonds or diapers.”

     When Berger took over the SouthPark store, it was going great guns but had alienated many area jewelers with its low pricing and marketing that sometimes criticized competitors.

     Now, with their sharp focus that precludes carrying watches and many other kinds of jewelry, his sales people occasionally refer customers to other retailers.

     “I will stay until 10 o’clock at night educating young kids who want to buy half a carat for only $1,000,” he says. “I think that’s what sets us apart.”

Banding with Community

     Berger has worked diligently to give back to the community and create community ties. Diamonds Direct has been the official jeweler of the Carolina Panthers for five years now. Their partnership with an NFL team has proven most successful and adds a different element of branding that can not be found in most forms of advertising, Berger says.

Beyond the sponsorship, Diamonds Direct also supports the Angels & Stars Gala, co-chaired by John Fox, Carolina Panthers head coach, and his wife Robin, that benefits St. Jude.

     “John and I could not be prouder to be partnered with Diamonds Direct,” says Robin Fox.     
“They’re very giving. Without them, we would never make our goal.”

     Berger has also established the Diamonds Direct Foundation, which has contributed approximately $400,000 to national and local charities, including the Levine Children’s Hospital at Carolinas Medical Center, the Keep Pounding Cancer Research Fund, St. Jude’s and Speedway Children’s Charities.

     Crystal Helms, Diamonds Direct marketing director, likes to tell of how the company’s relationship with Speedway Children’s Charities grew from designing the championship ring awarded to winners of the major NASCAR races at Lowe’s Motor Speedway.

     “We came up with the concept of having a charity event in our showroom to make the evening interesting and different from the normal black tie dinners and auctions,” Helms says. “We brought in world renowned designers showcasing their collections so people could purchase a beautiful piece of jewelry and donate to a worthy charity.”

     “A big draw for the showroom event is the one-of-a-kind pieces and the excellent lines of jewelry,” says Amanda Hollingsworth, director of Speedway Children’s Charities. “The pieces are absolutely beautiful.”

      Typically, 300 people attend and in the last two years the parties have raised a total of $70,000.

      Berger is convinced that giving back has helped build business. For 2007, the average Diamonds Direct sale was $4,300. For 2008 and its challenging economic climate, business is up 10 percent, he says, but adds a caveat: “We have definitely been working harder, smarter, more creatively,” he says. “We have more tickets with smaller price points.”

     Diamonds Direct restyled itself Diamonds Direct SouthPark five years ago after relocating to the Wall Street Capitol building and began to more aggressively pursue expansion into other markets. Three months ago, they opened their second showroom in the Mountain Brook area of Birmingham, Alabama, and in September they opened their third location in a former bank branch at Raleigh’s Crabtree Mall.

     “We picked Raleigh,” he says, “because it’s probably one of the best places to live in the country right now. We’re not going just to Raleigh, we are serving Durham, Chapel Hill, Cary and Apex,” clicking off names of Triangle municipalities.

     In five years, Diamonds Direct may also appear in Texas, Florida, or other southeastern cities.

     “We are trying to find markets that don’t have similar concepts,” he says. “We want a growing market, not one that has reached its full potential. Our vision is to build a company that will stand on five megastores. Each store, in revenue volume, will be at least $20 million.”

     For Berger, who calls himself “very competitive,” there is a simple reason that, even in a slow economy, expansion makes sense. “We have a big platform here that is working,” he smiles. “We’re going to try to duplicate it from the marketing, advertising, and the overall way we do business.”




Ellison Clary is a Charlotte-based freelance writer.
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