RAPAPORT...When it comes to diamonds, The House of Graff is associated with some of the most famous and prestigious sparklers in the world. From the Windsor Diamonds to the Begum Blue, diamonds of significance often make their way to Graff. But keeping up with the demand for the best and the finest to supply 18 stores and nine Saks Fifth Avenue Graff boutiques takes a team of 800 globally, three sights and a constant hunt for amazing rocks. Uniquely structured to bring each customer a rarified shopping experience, Graff owns all of its inventory — billions of dollars distributed globally — ensuring that each diamond is exclusive to the firm.
“We are in a market where it is harder and harder to get anything of quality. Whatever is being produced is way below demand,” explains Henri Barguirdjian, president and chief executive officer (CEO) of Graff Holdings Inc. “When we have something very special, we keep it in the store just until we have an appointment; then it is gone. Six or seven years ago, if a customer wanted something, we would say ‘give us a few days’ and we would put together a collection. Now we say, ‘If we get it, we will call you.’”
According to Barguirdjian, the reason it is so much harder to find really fine stones these days is because there is so much new wealth in the world and demand is coming from places where it wasn’t before — China, Russia, Eastern Europe, India. In some of these cultures, he says, it is customary to have a certain percentage of wealth in jewelry.
“We are reaching prices that none of us ever thought we would reach. But when you think about it, a Rothko painting sold for $75 million, so even when a blue diamond sold for $8 million [at the Hong Kong Sotheby’s Magnificent Jewels auction October 8, 2007], that was cheap. It’s one of a kind.”
SIGHTHOLDERIn 1998, Laurence Graff, the founder of his eponymous diamond empire, became a stakeholder in South African Diamond Corporation (SAFDICO), a sightholder based in South Africa. But one sight is not enough to gratify the voracious desire for these gems in his stores, so SAFDICO acquired a second sight in London about a year ago. That is still not enough to satisfy the lust for these sparkling stones so, through SAFDICO, Graff became a sightholder in Botswana, as well.
SAFDICO recently opened its new diamond facility in Gaborone, Botswana, situated in the Diamond Technology Park, a campus developed by SAFDICO and designed as the central hub for the country’s burgeoning diamond cutting industry. When completed, the project will have pumped about $50 million into the Botswana economy. The firm has created new employment opportunities and is currently working to develop skills for its workers, including special training. According to Shanee Orbach, director, SAFDICO Botswana, the facility will cut and polish diamonds of 2 carats and larger.
“By focusing on top-end diamond manufacturing, we are able to create a middle-class employee,” remarks Orbach. “We’ve created a truly beautiful working environment suited to polishing the product we specialize in.”
“We had the once-in-a-lifetime privilege of starting with a blank page, giving us the opportunity of creating a facility that is viable and sustainable in Africa,” adds Brian Gutkin, CEO, SAFDICO.
GRAFF STANDARDSAFDICO polishes diamonds for Graff in South Africa, Antwerp, New York and Botswana and is currently cutting and polishing the 603-carat Lesotho Promise, the world’s fifteenth-largest rough diamond. When complete, the rough will yield 26 polished stones ranging in size from a half-carat up to 75 carats.
The various SAFDICO facilities produce thousands of carats each month. The polished diamonds then travel to the U.S., where they are sent to the Gemological Institute of America (GIA) for certification. Whatever is of Graff quality goes to the stores via the London workshop, where all of the jewelry is made. The balance is sold to other important customers.
What makes a stone “Graff quality”? “Graff quality is whatever is beautiful,” states Barguirdjian. “As long as it is a beautiful stone, it will be in a Graff piece of jewelry.”
Make no mistake about it — Laurence Graff is very demanding about how he wants his stones cut, comments Barguirdjian. “The vast majority of diamonds in our store must be excellent, excellent or very good, very good. If he doesn’t think a stone is as brilliant as it should be — even a D flawless — it will go back to be recut for a better make. That is the trademark of Graff and its stones.”
Yet it is not necessarily color and clarity grade that determine whether or not a diamond is up to Graff standards. “It is the crystal itself, the cut, the way the light bounces through it, the shape — all the things that are difficult to quantify,” says Barguirdjian. “The GIA report gives you information, but you can have two DIFs and one can be fantastic and one can be mediocre. There is no bonus for the exceptional stone; they are graded alike. We have to know the difference and explain to the client why one stone is truly a gift of nature and one stone is just a diamond.”
IMAGEMost of the customers who shop Graff are self-made men and women in their forties and fifties who are eager to own the best, whether it is jewelry or something else. While the opening price point at Graff is $5,000, the average sale is $400,000. And Graff is very protective of its moneyed clientele. While some well-known celebrities shop at the store, there is no name-dropping, and the firm stays away from loaning out jewelry for high-profile events, focusing instead on a more low-key approach. The one notable exception was Donald Trump.
“Mr. Trump contacted us to buy an engagement ring for Melania. It was a 12.50-carat DIF emerald cut that he bought and paid for at fair market value,” clarifies Barguirdjian, who notes that at the time of the purchase, there was much misinformation in the media. “He also bought diamond wedding bands.”
Graff was later featured on Donald Trump’s television show, “The Apprentice.” As a reward for one of the reality show’s challenges, the winning team was awarded a shopping spree in the Madison Avenue store. “‘The Apprentice’ was negotiated with the producers of the show after Mr. Trump gave us the referral, which happened after the rings were bought and paid for. It gave us fabulous publicity. We try to be low key because we are what we are — we are about quality product and quality service. We bend over backward to give the client the best possible product and service to make it fun. If it’s not fun buying a piece of jewelry, something is wrong,” says Barguirdjian.
Certainly, The House of Graff has come up with a winning formula. Since the U.S. flagship was launched in 2001, the retailer has multiplied its business by five times, both in the U.S. and globally. The secret for all of this success is in the stones themselves. “To sell an exceptional stone is easy; to find one is hard,” concludes Barguirdjian.
Article from the Rapaport Magazine - December 2007. To subscribe click here.