Competition Is Forever

on NYT

Mom-and-pop stores are being squeezed by giant chains like Wal-Mart Stores, now the world's largest jeweler, and Costco, which increasingly sells diamonds over two carats. Department stores, too, are upgrading their jewelry counters.

De Beers, the South African conglomerate, had a lock on the market, supplying about 80 percent of the world's diamonds.But within the last decade, De Beers's grip has loosened. It now controls less than 50 percent of the market, analysts say, and no longer has a firm grip on prices. New and independent mines in Australia and, most recently, Canada, have begun producing diamonds, small and large. Yet supplies from the new mines can be unpredictable.

Jewelers say that traditional ring buyers like Mr. Smyth are no longer shy and insecure. If they still visit the small-town jewelry store, they have probably done their homework on the Internet: 90 percent of those who log on to bluenile.com, a popular diamond site that says it sells as many engagement rings in America as Tiffany does, do so just to become educated, not to buy.

"They don't want to deal face-to-face with the salesperson where they feel at a disadvantage because they're not as knowledgeable." He paused. "There is a tremendous debate, a confrontation, on how to cope with the Internet presence. It's a very, very hot-button topic."

The industry recently sought to dispense with one of its biggest scandals: introducing a warranty program aimed at cutting off the retail supply of "blood diamonds" or "conflict diamonds" - those mined in Angola and Sierra Leone by revolutionaries bent on using diamond profits to buy bombs and guns.