WWD JAPAN interview, Jan 29, 2020
An interview by WWD is now available. Our representative talks about the Lab-grown diamond market and PRMAL. Please check it out.
The head of synthetic diamond D2C jewelry talks about the "liberation of diamond jewelry"
Quoted from WWD JAPAN (with our translation)
PRMAL, the synthetic diamond jewelry brand that made headlines in the jewelry industry last year, is set to launch on February 1. A synthetic diamond looks the same as a natural diamond, but its structure, composition and characteristics are the same. It is the same structure, composition, and characteristics, so a special machine is needed to distinguish between them. The price of synthetic diamonds is cheaper than natural diamonds, and they are more environmentally friendly and ethical than natural diamonds from the mining industry, so they are attracting attention. In the jewelry industry, there is a lot of debate about natural vs. synthetic diamonds, and the market is still in its nascent stage. I talked to Mr. Go Fukushima, the representative of PRMAL, who launched D2C brand, which specializes in synthetic diamonds in such a situation.
WWD: What inspired you to launch PRMAL, a synthetic diamond jewelry brand?
Representative of Go Fukushima PRMAL (hereinafter referred to as "Fukushima"): I have been working in the jewelry industry for about ten years. In Europe and the United States, jewelry is a part of everyday life, but in Japan, it is still second only to fashion. The wholesale diamond business is my family business, and I wanted to make jewelry more accessible and to lower the threshold for diamonds. The diamond industry is small, and within that industry, we are doing business by holding onto each other. It is still mainly a business based on intermediate margins, so naturally the end prices are high. So I thought if I chose the D2C system, which is getting a lot of attention right now, I would have a better chance of getting people to invest in me and solve the problems the industry has, so I hit it off with an IT engineer friend and launched the brand. Synthetic diamonds have the same structure as their natural counterparts, are cheaper and more ethical, and are the best product for millennials like us. It's the best material for millennials like us because our way of thinking is rational. If the price is the same, I think a bigger, more ethical stone is better. So I think synthetic diamonds are interesting and I want to be the best in the market.
WWD: What is your brand philosophy?
Fukushima: The concept is "jewelry for the future". We want to liberate diamond jewelry, especially for the younger generation, who have been distant from it. In Japan, people think of jewelry as something to be worn on special occasions such as weddings, funerals, and parties, but I want people to value their own style and incorporate it into their daily fashion. Through social networking sites such as Instagram, I would like to tell the story behind the jewelry and also propose fashion coordination. In addition to sending out stories, I plan to make it possible to interact with consumers.
WWD: What's the target customers? How do you attract them?
Fukushima: Our target audience is millennials. We want to create a system that makes people want to introduce our products, such as by allowing them to write reviews and comments on our website. Ideally, we also want to grow with people who identify with the brand. I don't think there's any point in using influencers who aren't interested in the brand. We want to value empathy.
WWD: What is your strategy and what are your sales goals for the first year?
Fukushima: Our business is a D2C business, so we don't rely on traditional sales promotion methods, and we plan to create our own system. We will create a brand with the same positioning of products and IT (the D2C mechanism). We don't just want to make and sell products, we want to build a community. About 60 models will be released at the time of the debut, and a new model will be introduced every week. I want to make the brand to be an e-commerce site where people who used to buy jewelry once a year buy it every month. Since jewelry is not seasonal, it is important to have contact with consumers. Initially, they are expecting a turnaround time of three to four weeks for made-to-order products, but they plan to shorten this time frame. The company will also offer a 30-day return and exchange policy so that customers can try on items at home, eliminating the time and effort required to visit expensive jewelry stores, and managing wish lists, browsing and purchase histories digitally, which is possible because it is a D2C business. Our sales target for the first year is 80 million yen, and we plan to make 60 million yen from e-commerce and 20 million yen from pop-up shops.
WWD: How do you source synthetic diamonds?
Fukushima: We procure smaller carats from a synthetic diamond manufacturer in India. In the future, we want to produce large-carat products such as bridal wear, so we contracted with Diamond Foundry in the United States. Diamond Foundry is a highly reliable hydroelectric power producer. The cost will be higher, but we want to pay as much attention to the ethical background as possible.
WWD: Which countries are currently producing synthetic diamonds?
Fukushima: America, India, China, Russia, Singapore, etc.
WWD: What is the selling point of synthetic diamonds that they are more ethical than natural diamonds?
Fukushima: It is said that about 64.8 kg of carbon dioxide is emitted to mine one carat of natural diamonds. Many manufacturers in India use solar power to produce diamonds, but even if they use normal electricity to produce them, the amount of carbon dioxide emitted from mining natural diamonds if they are synthetic is only 5-10% of the amount of carbon dioxide. A synthetic diamond produced using a low environmental impact method is about 15 to 20 percent more expensive than a synthetic diamond that is not.
WWD: What makes the grade a G or higher in color and a VS2 or higher in clarity?
Fukushima: We want to deliver the best possible product. Also, the supply of synthetic diamonds is not yet stable, so we need to have some range.
WWD: What are the main carats of diamonds used?
Fukushima: Most of the products are made with melee diamonds, but there are also products with 0.3 and 0.5 carats.
A start-up entering the synthetic diamond market
WWD: What is the market for synthetic diamonds in Japan?
Fukushima: Synthetic diamonds are not yet widely distributed. The fact is that the barriers to starting a business are high because procurement is not stable. Jewelry makers don't want to mix natural and synthetic, and it's hard for the big guys to get into it. So we see it as an opportunity. We were able to enter the market because we are a start-up.
WWD: Why do your brand use two types of gold, 10 and 18k gold?
Fukushima: We want to respond to a variety of demands. Some people may choose 10-karat gold because of the price, and some people are allergic to metal and can only wear 18-karat gold.
WWD: Do you think the market for synthetic diamonds will grow in Japan in the future?
Fukushima: It will definitely expand. Consumers should be interested in them because they are less expensive and more ethical than natural diamonds and they look the same as natural diamonds. According to Morgan Stanley's research, the market size of synthetic diamonds was about $1.5 million (about 163.5 million yen) in fiscal year 2016, but it is expected to grow to $1.05 billion (about 114.4 billion yen) by 2020; the market will grow about 700 times within five years. This is the outlook. Wholesalers and jewelry manufacturers who are currently shunning synthetic diamonds will soon have to supply them. The jewelry industry itself needs to change its mind about synthetic diamonds. Overseas, celebrities such as Britain's Meghan Markle, the Duchess of Sussex, and actress Emma Watson have been wearing synthetic diamond jewelry, and recognition of synthetic diamonds is on the rise. If this kind of opportunity arises in Japan, the market for synthetic diamonds should expand.
