Small Is Beautiful — Still — in the Diamond Game

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When LVMH Moët Hennessy Louis Vuitton handed its diamond ring back to De Beers in March, severing a 16-year retail joint venture known as De Beers Diamond Jewellers, the markets shrugged. After all, everyone — De Beers, LVMH, the diamond consumer — had already moved on. Analysts described it as an experiment that didn’t work, and they were right: During those 16 years LVMH and De Beers, which had planned to create one of the largest jewelry companies in the world, had both found more efficient ways of building scale in the fine jewelry space: LVMH bought the megabrand Bulgari and De Beers put its muscle behind Forevermark, its collection of branded diamonds and jewels. The market changed drastically, too, in those 16 years. In 2001, when the joint venture was first announced, both LVMH and De Beers believed they could grab and consolidate part of the vast, unbranded jewelry market and compete with the likes of Tiffany & Co., which has since been notching sales declines and come under fire from activist investors. What they failed to foresee was that a new generation of skeptical and sustainability-minded jewelry consumers would decide that big wasn’t necessarily beautiful, and that the local, neighborhood jeweler

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