October New Pearl Book Debuts New Scoop Wedding Bands. Red Box Diamonds featured on National TV Show

October 2008 New Pearl Book Debuts New Scoop Wedding Bands Red Box Diamonds featured on National TV Show

Say yes to customization... Stuller gives you more ways to say yes to your customer. From new styling and timesaving techniques to value-added services and innovative selling tools, we always strive to supply exactly what you need to meet the demands of a changing industry. Say yes with Stuller s customized solutions, alternative choices, and 24/7 availability on stuller.com. Stuller. The beauty of it all. Bridal Jewelry Finished Jewelry Mountings Diamonds Gemstones Findings Metals Tools Packaging & Display

C O N T E N T S contents O C T O B E R 2 0 0 8 I s s u e # 7 9 1 Stuller & Industry News 6 catalog resources new pearl book 6 CGA 50 years of educational success 7 cover shot stuller products on Instore 8 what s new sterling silver fashion bands 9 what s hot stuller first collection charms features 16 Gemstones & Pearls with Swirls for Fun & Play 10 Red Box Diamonds designing spaces appearance 11 Black Box Gemstones the story of white 14 magical gifts of nature cultured pearl association 15 customer testimonial how stuller saved my sale trends & fashion 18 color stories 2008 LuminoCity 20 what every girl wants diamonds & pearls 22 stuller studio clasp configurator at the bench 3b 4b 5b 7b 7b 9b stuller expert brett northcutt perfect stringing tool resource master s touch pearl tricks custom designs your creative bench designs shine reviver personalized ultracloths dressing up clasps for all occasions On our cover: V Necklace by Stuller, #66221; Matching earrings #66222 6b Create Unforgettable Displays with Stuller Packaging Check out www.stuller.com for everything your business needs! OCTOBER 2008 www.stuller.com the stuller standard

Advertising Made Easy with Stuller Marketing Services at stuller.com Whether it s customized television, direct mail, over-the-counter materials or the high-resolution images found in our latest catalogs, we have everything you need to increase traffic to your store. Terrific Television Spot Runner makes TV advertising simple for your store: Select and personalize your professionally produced TV ad, featuring Stuller products. Run your ad affordably on major television networks. Watch your business grow. Powerful Print Promotions Generate traffic with easily customized professional print promotions. You pick the product from our extensive product image gallery. You personalize the ad template for your brand. You profit from customized direct mail. More Product Promotion Tools Promote your store with the full range of marketing materials and services available at stuller.com. Click on the Marketing Services tab to access all of these services, and more. Stuller Selling Systems offer a cost-effective way to extend your inventory and fill your showcases. Browse our product catalogs online. Utilize high-resolution jewelry images from our catalogs available on disk so that you can develop your own promotional materials. Visit stuller.com and click on the Marketing Services tab to see how easy we can make it for you to advertise your store!

E D I T O R I A L notes from Matt have you ever considered what differentiates your store from the one down the street? In marketing, this is called your brand. The American Marketing Association (AMA) defines a brand as a name, term, sign, symbol or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of other sellers. According to marketing consultant Laura Lake, branding is not about getting your target market to choose you over the competition; it is about getting your prospects to see you as the only one that provides a solution to their problem. To build a strong store brand, you must ensure that it moves and motivates your customer, and that it underscores the credibility of your business. Your brand will strengthensconsumer loyalty. And, it has to become a part of every customer contact in your store, from presentation to sale to service. Your regular customers already know your brand; it s part of every purchase they have experienced in your store. It s the promise of quality and value that your customer has come to expect from the time they spend with you. One of the best investments you can make in your store is how you define and build your brand. It is a basic premise of your business, and the one thing that attracts and keeps customers. For this reason, we ve developed a comprehensive marketing services program (see page 4) to help you brand your store in your local market. Are you ready to differentiate yourself from the store down the street? If you haven t already, let us help you build a brand of service and style. Why not start today? matthew g. stuller, sr. CHAIRMAN & CEO OCTOBER 2008 CEO AND CHAIRMAN Matthew G. Stuller, Sr. president/coo Dr. Chuck Lein EXEC. VP, MERCHANDISING & Marketing Harold Dupuy, G.G. EXEC. director, marketing services Kerry Hand editor in chief Miriam Werquin stullerstandard@stuller.com staff contributing writers Keri Barousse Lori Carter, Mgr. Leslie Dumatrait, D&G Asst. Marketing Manager Ramona Gautreaux, D&G Marketing Director Sarah Bradshaw Susan Kiefer design Jacqui Cheramie, Director stuller standard online Trenton Bolfer, Mgr. Ron Domingue Kim Thibodeaux, Mgr. info@stuller.com contact us stullerstandard@ stuller.com www.stuller.com Stuller Standard Magazine P.O. Box 87777 Lafayette, LA 70598-7777 800.877.7777 337.262.7785 fax photography Frank Centrilla, Sr. Photographer Maggie Hidalgo Noelle White, Photographer Marie Vest production Maureen Benjamin Lori Bouillion Leslie Dumatrait Shannon Guidry, Mgr. Missy Kruger Brenda Landry, Mgr. Yolanda Laviolette Robert Lawson Stephanie Pellerin Kisha Thompson contributing writers Ken Gassman Stuller, Inc. is a Diamond Trading Company (DTC) Sightholder. product management contributors Kathleen Blanchard, Diamond Fashion Nathan Button, Findings Chookie Diaz, Metal Fashion Vanessa Calais Jones, Moissanite Finished Jewelry Dottie Lukaszeski, Metals Eleanor Lipps, G.G., Bridal James Louviere, Symbolic Mary Mouton, Mountings Denise Quebedeaux, Color Fashion Troy Racca, Tools Sandi Segura, Packaging & Display Virginia Stuller, Stuller Pearls Kelly Tauzin, Gemstones Jim Wright, Findings Jodi Venable, Tools Xathena Carter, Diamonds editorial advisory board Linus Cortez, EVP, Finance Bob Cox, EVP, Sales Jay Jackson, EVP, Logistics Jack McKay, EVP, IT Chuck Bowman, BVP, Mountings Elizabeth Brehmer, BVP, Findings Michael Clarke, BVP, Finished Jewelry Joe Orlando, BVP, Gemstones J.P. Walrond, BVP, Bridal Jewelry Darrell Warren, BVP, Tools & Supplies/Metals Stanley Zale, BVP, Diamonds 2008, Stuller, Inc. All rights reserved. www.stuller.com the stuller standard

C ATA L O G R E S O U R C E S Pearl Look Book Arrives Just in time for Fall Sales The holidays are rapidly approaching and what better time to have a pearl look book on your counter with beautiful pearl jewelry? Due out this month, this 16-page pearl book is dedicated to your customer s love of pearls. We draw your customers right into the book, starting with the gorgeous V Necklace on the cover, a blending of carefully selected pearls and gemstones that makes you want to see what other new and fashionable product is inside. As you browse through, you will see pearls on chains, earring/necklace ensembles, and elements from the Sea Sprite collection, a liberal mix of beautiful gemstones and South Sea pearls. In keeping with this fall s elegant monochromatic styling, we have an excellent selection of Tahitian pearl strands, and Tahitian pearl and diamond jewelry. Delve deeper and you will see pearl stud earrings, chocolate and multicolor strands, as well as coin pearl ensembles. The Stuller First Collection set with pearls also makes a strong showing. Start showing your customers the exotic beauty and styling range of the pearl the minute your new pearl book arrives at your store! Editor s Note: High-resolution images from Wedding Bands from the Bridal Collection, Vol. 68; The Finished Jewelry Collection, Vol. 67; The Platinum Book, Vol. 61; The Bridal Book, Vol. 48; The Moissanite Book, Vol. 53; and The Mountings Book, Vol. 55 are available for purchase by clicking on the Marketing Services tab at www.stuller.com. Catalog Resources Catalog Resources Canadian Gemmological Association Celebrates 50 Years Golden Jubilee conference, Anniversary logo, and new website mark milestone In November, the Canadian Gemmological Association (CGA) will celebrate 50 years of bringing educational excellence to the science and study of gemology in Canada. To help commemorate this major milestone, the Canadian Gemmological Association s (CGA) annual conference will highlight the theme Honouring Our Past, Sharing Our Future. The conference, to be held on November 7, 8 and 9, 2008, at the Dominion Club at One King West in Toronto, will feature displays and activities to mark the 50th anniversary. John Koivula, Chief Gemmologist, GIA (Gemmological Institute of America), will be the keynote speaker. Also speaking at the conference will be: Clark McEwen of Gemesis Diamonds; Dr. Jack Ogden, CEO of the Gemmological Association of Great Britain; Brad Wilson of Alpine Gems; Richard Drucker of Gemworld International; Willow Wight, Canadian Museum of Nature; Duncan Parker of Harold Weinstein Ltd., plus many others. To commemorate the event, The Canadian Gemmologist will publish a special 2008 edition. This publication is distributed quarterly and is the only gemmological journal in Canada. The edition will cover the development of the CGA s 50-year history and will feature color photo layouts. Events include diploma and academic awards presentations to successful students of the CGA, a live auction and a silent one, and the launch of a new CGA website. The site will include a full e-commerce suite, supplementary learning features for distance students, news features, online conference registration, and membership information. To further celebrate this occasion, a special anniversary logo (shown here) has been designed and will appear on all correspondence sent from the CGA office, as well as on the web site, the 2008 Professional Gemmologist Window Decal, and the 2008 editions of The Canadian Gemmologist. The CGA represents its members in liaison with government in developing guidelines for the sale and marketing of diamonds, coloured gemstones and pearls, and in the establishment of guidelines for gem and jewellery appraising in Canada. For more information, contact Conference Chair Anita Beardwood at 416.785.0962 or go to www.canadiangemmological.com. the stuller standard www.stuller.com OCTOBER 2008

W H AT S N E W & H O T Opal Birthstone Jewelry Makes a Fashionable Point Cool white metal meets luminescent opal in this beautiful new fashion ensemble. All pieces in this grouping are priced below $800 each. Order from the website at www.stuller.com or by calling 800.877.7777. Sterling Silver Fashion Rings Make Accessorizing Easy Smooth, simple styling makes these bands a must-have for fall wardrobes. Gold insets give 50793 and 50794 a sleek modern look. Order from the website at www.stuller.com or by calling 800.877.7777. 66617 Genuine Opal & Diamond Ring, 8mm x 8mm,.03 ct tw, 14kt white, 158, 110 $781 66618 Genuine Opal & Diamond Earrings, 7mm x 7mm,.015 ct tw, 14kt white, 158, 110 $601 per pair 66619 Genuine Opal & Diamond Pendant, 8mm x 8mm,.025 ct tw, 158, 110 $430 (Shown with CH765, sold separately) 50793 Fashion Ring, sterling silver/18kt yellow/18kt red inserts, Size 7, $552 50794 Fashion Ring, sterling silver / 18kt yellow inserts, Size 7, $404 50791 Fashion Ring, sterling silver, Size 7, $171 What s New What s Hot Eternity Bands for a Lifetime An eternity band set with round diamonds is a special purchase to commemorate a love for a lifetime. Make it really special for the customers who enter your store looking for a piece of jewelry to signify that commitment. To order eternity bands, call 800.877.7777, or go to www.stuller.com where you can view and order from our full selection of available eternity bands. 121530 Eternity Band, 19-3.4, 14kt white, size 7, $273, Mounting only. (Also available in 14kt yellow, 18kt yellow and platinum.) (Stones sold separately.) the stuller standard www.stuller.com OCTOBER 2008

W H AT S N E W & H O T Lightweight, Great Quality Bands Price-sensitive consumers now have a quality option. Let gold and platinum be your alternative metal choice in new lightweight scooped bands. High polished and milgrain styles available in 14kt yellow, 14kt white and platinum in 4mm, 5mm, 6mm and 8mm. Ask your sales consultant for pricing information or go to www.stuller.com. Amari by Stuller Jewelry Collection Fresh from their debut at the summer shows these pieces from the Amari by Stuller collection are sure to be exciting choices for your customers. This fashionable sterling silver and 14kt yellow gold ensemble is available in two other shapes, round and oval, with two popular motifs, alligator and snake. You can get them in your store by calling 800.877.7777, or by going to www.stuller.com. SCIR11 Scooped Comfort Fit Wedding Band, 4mm, 14k yellow, $430 SCIR9 Scooped Comfort Fit Wedding Band, 6mm, 14k yellow, $549 SCIR11 Scooped Comfort Fit Wedding Band, 5mm, 14k yellow, $520 SCMGR11 Scooped Milgrain Comfort Fit Wedding Band, 8mm, 14k yellow, $721 SCMGR9 Scooped Milgrain Comfort Fit Wedding Band, 4mm, 14k yellow, $343 SCMGR9 Scooped Milgrain Comfort Fit Wedding Band, 5mm, 14k yellow, $425 66538 Diamond Pendant, 1/3 ct tw, sterling silver/14kt yellow, 110 $1,019. (Shown with CH705, sold separately) 66547 Diamond Earrings, 3/8 ct tw, sterling silver/14kt yellow, 110 $1,523 per pair What s New What s Hot Charming Details Our expanding Stuller First Collection now contains this beautiful charm bracelet. Sterling silver/14kt yellow gold charms are set with beautiful gemstones. You can purchase the completed bracelet as shown on the left, or customize your own charm bracelet, purchase charms and bracelet individually for versatility. Wear them on a charm bracelet or for a different look as a pendant on a chain. Order at www.stuller.com or by calling 800.877.7777. Charm Bracelet: 66608 Genuine citrine, dyed red jade, swiss blue topaz, amethyst, rhodolite garnet, turquoise & peridot charm bracelet, 7.25 inches, sterling silver/14kt yellow, 48, 136, 77, 43, 63, 137, 61 $1,321. BRC390 also sold separately Individual Charms: 66609 Genuine dyed red jade heart charm, 4mm, sterling silver/14kt yellow, 136 $157 66610 Genuine citrine charm, 5mm x 3mm, sterling silver/14kt yellow, 48 $157 66611 Genuine turquoise charm, 4mm x 3mm, sterling silver/14kt yellow, 137 $158 66612 Genuine amethyst charm, 4mm, sterling silver/14kt yellow, 43 $173 R45127 Genuine peridot cross charm, 4mm, sterling silver/14kt yellow, 61 $157 R45128 Genuine swiss blue topaz cross charm, 3mm, sterling silver/14kt yellow, 77 $159 R45129 Genuine rhodolite garnet cross charm, 4mm, sterling silver/14kt yellow, 63 $164 OCTOBER 2008 www.stuller.com the stuller standard

A B O U T D I A M O N D S lights, cameras, action Red Box Diamonds on National Television 80 million viewers expected to watch program! stuller has contracted with Designing Spaces, a national television show, for a feature segment on its 2008 Designing Spaces Holiday Edition. With the potential to reach 80 million households, we are confident this program will be a benefit to our participating retail jewelers. The time has never been better to invest in a Red Box Diamond Moments marketing kit. Your wise investment of $64.95 will give you access to a product selling system for loose diamonds that provides trust, confidence and security to your customers. What better way to celebrate important moments in life than with the gift of a diamond? Celebrating significant moments in life, whether it be small everyday blessings or occasions that are more monumental, is the cornerstone of this exciting marketing package. Our Red Box Diamond Moments package is designed to help lead customers to your store. Containing marketing materials that target six select moments, you can use this marketing package throughout the year. Each featured Diamond Moment has emotional resonance and is targeted at important consumer market segments. Consumer advertising is an integral part of making this marketing campaign a success for your store. Stuller is committed to helping you build upon your initial purchase of this kit. A unique feature of your marketing kit is redboxdiamondmoments.com, an informational website designed to drive business to the retail jewelry store through its Locate a Jeweler option. This area of the site allows customers the ability to find a jeweler near them who sells Red Box Diamonds. Red Box Diamond Moments With the purchase of a Red Box Diamond Moments marketing package, comes a wonderful opportunity for your store to be listed on redboxdiamondmoments.com. As you can see, the time is now to take full advantage of all the wonderful marketing opportunities that come with the purchase of a Red Box Diamond Moments marketing kit. Share the beauty of it all with your customers unforgettable moments celebrated with the trust, confidence and security of Red Box Diamonds and say yes to increased diamond sales. Call your sales consultant today and ask for KIT:90212:T and help your store take center stage during the 2008 Holiday Season! Ideal-Cut Red Box Diamonds SERIAL CLARITY COLOR WGT. SALE/CT % OFF RAP 119081 SI2 G 1.02 $4,590 15.00% 111421 VS2 G 1.04 $6,545 15.00% 118011 VS1 E 1.05 $9,720 10.00% 121540 SI1 H 1.08 $5,015 15.00% 118718 SI2 E 1.08 $5,015 15.00% 119107 I1 F 1.15 $3,230 15.00% 121549 SI2 H 1.18 $4,680 10.00% 117969 VS1 G 1.18 $7,395 15.00% 114460 I1 F 1.23 $3,420 10.00% 119085 I1 G 1.51 $3,960 10.00% 117890 SI2 F 1.51 $6,570 10.00% 114177 VS2 F 1.51 $10,800 10.00% 85244 SI2 H 2.10 $8,240 9.45% 95734 SI2 G 2.13 $8,730 10.00% 117973 SI2 I 2.25 $7,380 10.00% 113207 SI2 G 2.51 $8,730 10.00% 121579 SI1 G 2.61 $11,115 5.00% 121065 SI1 H 3.01 $11,875 5.00% 121059 SI2 H 3.67 $10,450 5.00% 121064 SI2 G 4.09 $15,865 5.00% Reports: All diamonds are AGS. Pricing is jeweler cost and subject to change without notice. Information on availability and pricing is valid as of 8/18/08. If a diamond listed is no longer available, please visit www.stuller.com or contact your Diamond Sales Specialist at 800.877.7777, and press 5. Special Parcel Pricing Build inventory for holiday season repairs! ROUND PARCELS Color: G-H, SI2-SI3 Size 1 ct tw 3 ct tw 5 ct tw 10 ct tw.005 -.07 Mixed Sizes $1,710 ct $1,680 ct $1,650 ct $1,590 ct.08 -.12 Mixed Sizes $2,010 ct $1,995 ct $1,980 ct $1,965 ct.01 -.03 Straight Sizes $1,695 ct $1,665 ct $1,635 ct upon request.04 -.07 Straight Sizes $1,725 ct $1,695 ct $1,665 ct upon request ROUND PARCELS Color: I-J, SI2-SI3 Size 1 ct tw 3 ct tw 5 ct tw 10 ct tw.005 -.07 Mixed Sizes $1,470 ct $1,440 ct $1,410 ct $1,365 ct.08 -.12 Mixed Sizes $1,755 ct $1,725 ct $1,695 ct $1,635 ct.01 -.03 Straight Sizes $1,410 ct $1,380 ct $1,350 ct upon request.04 -.07 Straight Sizes $1,605 ct $1,575 ct $1,530 ct upon request *Enhancement Code: Natural 10 the stuller standard www.stuller.com OCtOBer 2008

using color as the starting place for your gemstone sales puts you on the road to profitability. Colored gemstone jewelry serves as a stunning fashion accessory that finds appeal amongst those consumers who look to color as a way to enhance their beauty, their identity and their wardrobe. If you are not sure what to say about color, read on! White is our color focus for the month of October. Below is our Top 5 list of things to tell your customers about white. Get them excited about color and then help them find a gemstone that fits within their budgets and lifestyles. 1. Color Communications White is symbolic of purity, peace and tranquility; however, due to the brilliance of white, it also suggests strength. crisp. cool. captivating. The Story of White Softer, opaque whites offer a gentle, fresh approach to jewelry and are ideal for customers wanting to be bold, yet subtle. Gemstones that display optic phenomena such as Pearls, Opal and Moonstone are unique gems that captivate the viewer and enhance any outfi t. To help you and your staff focus on a color-centric message, order your gemstone marketing package today. Just ask your sales consultant for KIT:90217:T, just $64.95. A B O U T G E M S T O N E S 2. The White Personality Those who adore white tend to be fastidious by nature. Many prefer life to be straightforward and love recalling the innocence and simplicity of youth. White can also signify a person who is selfsuffi cient and assured. 3. White in Fashion White is a fashion staple whose subtleties change with the seasons. Crisp and cool white is a refreshing escape from summer heat while warm, winter white is a comforting hue for the long winter months. Look for bleached, bone-whites this fall and winter and pearlescent whites in the spring of 2009. 4. Sultry, Stylish Designs 4. Radiant Designs Find out from your customer what kind of white they are seeking. Do they want a softer, pearlescent white that gives the glow of youth? Or are they interested in a pristine, crisp white that is tailored and sleek? The design possibilities are endless when it comes to white, as white goes with just about anything. From beautiful to amazing, customize your jewelry with stuller s selection of loose gemstones and mountings through stuller studio. 5. Gem Varieties If your customer is looking for a bold, crisp, powerful gem, suggest any of the white transparent stones. Diamond is usually the fi rst choice, but don t forget about White Sapphire and Topaz. Diamonds, Gemstones & Pearls: Black Box Gemstone serial #83109 1.43 ct pear shaped White sapphire. red Box diamond serial #109129 1.52ct cushion-cut diamond, G; Vs2. Circle and baroque shaped south sea cultured pearls Set Pieces: #65842 14kt white semi-mounting, shown with a Charles & Colvard Created Moissanite center. suggested retail, $3,331. #83764 14kt white, shown with aaa Opal and diamonds. suggested retail, $2,441. OCtOBer 2008 www.stuller.com the stuller standard 11

S T O R E S T R AT E G Y store strategy IDEX Online Research: Challenges 2008 Online Jewelers Poised to Change the Industry hile IDEX Online Research believes that it will not be possible for store-based jewelers to emulate the financial model of online merchants, we believe that they must learn how to lean on their suppliers for merchandise and credit. They must learn how to operate more efficiently and generate better margins. The table below summarizes some key financial metrics of online versus store-base jewelers. wfinancial Comparison Store-based Online Retailers Financial Independent Such As Ratio Jewelers Blue Nile Gross Margin 48% 20-22% Pretax Margin 5% 9% Annual Inventory Turn 1x 12x Debt/Capital 34% 0% Vendor Float 32% 250% Source: Company Reports The table below compares some key merchandising metrics of online jewelers versus their store-based counterparts. Merchandising Comparison Store-based Online Retailers Independent Such As Merchandising Metric Jewelers Blue Nile Average Ticket $350 $1,500 Engagement Ring $3,250 $5,700 Marketing Spend 4% 4% Bridal Sales 35% 75% Source: Company Reports The table below compares some key operating efficiency and productivity measures of online jewelers versus store-based merchants. Productivity Comparison Assets Needed to Generate $1 Million Sales Volume Store-based Online Retailers Independent Such As Productivity Jewelers Blue Nile Full-Time Personnel 5.4 0.6 Facility - Square Feet 2,400 200 Source: Company Reports Online Jewelry Outlook: Slowing Growth The internet is only a channel of distribution. It does not create new consumers (the birth rate isn t up since the internet has become mainstream), and it does not create any new money (the printing presses at the U.S. mint aren t spinning any faster these days.) So, there are some basic constraints to growth of non-store online sales. Furthermore, retailing is basically a sum-zero game. As an economist, we understand the concept of the velocity of money. But as our grandmother said, You can only spend that dollar once. The bottom line is this: online sales growth will slow. Our forecast calls for slowing growth of online jewelry sales, for some very practical reasons: Mathematics Percentage gains diminish as the numbers get larger. The graph on the next page summarizes our forecast for percentage gains in online jewelry sales. Maturity Like every other channel of distribution, as the online distribution channel begins to reach maturity (defined as fewer and fewer new customers opting to purchase online), growth will slow. The early adopters (that s a term demographers use to distinguish a subset of consumers who want to be the fist to use anything new, like new technology or the iphone) have already logged on and are shopping at their favorite online merchants. Thus, the low-hanging fruit has been plucked. The next group of consumers won t sign up for online commerce at the same rate as the early adopters. Other categories Assuming that some other jewelry categories, such as pearls, precious metals jewelry, estate jewelry, etc., will begin to sell online (there is some question about the validity of this assumption), the lower average ticket of most of those jewelry categories will slow the pace of online jewelry sales growth. Store-based retailers fighting back Merchants have livened up their stores to be more alluring. Traditional stores are creating a more interactive shopping experience. Online shopping is work Online shopping, because it involves a computer, feels like work; online shopping is more of a chore than an escape. Online sellers price advantage diminished Higher shipping fees and sales taxes have begun to level the retail playing field between online merchants and store-based retailers. There is a theoretical maximum for online sales versus in-store retail sales. Some online trade magazines tend to suggest that 10 percent of all U.S. retail sales is the theoretical maximum level for online retailing. Others scoff at this number, suggesting that it is way too low. Either way, we are in virgin territory, and no one really knows the answer. Assuming that online jewelry sales top out at 10 percent of industry sales, this means that 90 percent of all jewelry industry sales will still be made via traditional bricks-and-mortar stores. This fact seems to be lost 12 the stuller standard www.stuller.com OCTOBER 2008

S T O R E S T R AT E G Y on too many merchants. Online commerce isn t going to put store-based jewelers out of business, other than the weakest merchants who are already on Death Road. The graph below illustrates the range of our projections for online jewelry sales in the U.S. market through the end of the current decade. What Can Store-Based Jewelers Do About Online Retailing? Last year, we developed a presentation titled, Online Commerce: Be There or Be Square. This presentation is available at no charge from IDEX Online. Here are some of the salient points from the presentation. If you, as a store-based jeweler, don t have an online presence, you are very late to the party. You will have a difficult time catching up. Unless you have millions of dollars available for marketing, you don t stand a change of replicating Blue Nile s success. You need to have some online presence at the very least, an electronic calling card. Store branding is best for your website; it reinforces a single name in the consumer s mind. Your online price and your store price should be the same. More jewelers have found success with this formula versus a twotier pricing concept. Creating a website is not a do-it-yourself project. Your niece Sally who is studying graphics art in college, can t do the job. Despite claims to the contrary, no one has successfully rolled out internet kiosks in jewelry stores. There s a cultural barrier with your current sales force. Don t put your whole store online. Tease shoppers with enticing merchandise which will lure them into your bricks-and-mortar store. Make sure you have a unique selling proposition. A half-carat diamond pendant at any price is not a competitive differential. Lean on your suppliers to help you build your website. Make sure you sell jewelry online, in addition to diamonds. The margin is in jewelry, not diamonds. Study the online merchants financial model. It is the wave of the future. What Will The Future Bring? Consumers are not committed to one channel of distribution versus another; they will switch back and forth. Thus, it is no surprise that a clicks-and-bricks hybrid model seems to be emerging. Some retailers offer in-store pickup of items purchased online; this tends to raise the average ticket since shoppers often buy additional merchandise when they come to pick up their items. However, while the hybrid retailing model seems to be working in some retail categories, we haven t seen it implemented successfully in the jewelry industry, yet. Percent Change Y/Y +21% +20% +19% +18% +17% +16% +15% +20% +19.4% +19.2% +19.5% Diamond suppliers have the greatest opportunity to exploit the power of online commerce. Why? They own the diamonds. Look for your diamond suppliers to open web stores. The mine-to-market model is still the most profitable. Look at Aber, De Beers and Leviev, if you don t believe it. These merchants are in the best position to leverage online commerce. To Reiterate: Don t Compete on Price Remember the discounter who said he loses a little money on each sale, but he makes it up on volume? He went bankrupt. And you will too, if you try to compete with online jewelers solely on price. Editor s Note: This is the final installment of a 3-part article reprinted with the permission of Ken Gassman and IDEX Online. This article is part of a series that expands on the points IDEX Online s director of online research, Ken Gassman has raised in his analysis State of the Jewelry Industry. Online Jewelry Sales Growth Rate Actual & Forecast +18.8% +17.5% +17.3% +17.2% 2003 2004 2005 2006 2007E 2008E 2009E 2010E Source: Department of Commerce & IDEX Online Year Percent Change Y/Y 10% 8% 6% 4% Mid-Teen Growth Internet Jewelry Sales Projections Percent of Total U.S. Jewelry Sales Low-Teen Growth Current Growth Rate By 2010 8.1% 6.3% 5.1% 2% Current 3.9% Online Jewelry Sales 0% 2000 2001 2002 2003 2004 2005 2006 2007E 2008E 2009E 2010E Source: Department of Commerce & IDEX Online OCTOBER 2008 www.stuller.com the stuller standard 13

S T U L L E R N E W S JA Holds Executive Roundtable at Vegas Show Industry leaders discuss how the needs of socially-conscious customers affect their businesses Jewelers of America s Executive Roundtable, held at the JCK Show, Las Vegas, discussed how retailers have moved beyond simply asking for the best price to asking suppliers a variety of legal, ethical, social and environmental questions in order to satisfy their customer s needs. Ensuring consumer confidence may mean that you, as a retailer, must begin asking your suppliers more probing questions. Some of those questions will be driven by legal obligations. Others concern ethical, social and/or environmental obligations that may or may not be required by law, but are being required in the court of public opinion, said Jewelers or America s Director of Public Affairs Peggy Jo Donahue, chair of the roundtable discussion. John Hall, general manager, external relations, Rio Tinto Diamonds, said heightened business responsibility is now a required part of a modern miner s license to operate. From the communities that live around mines to civil society groups, there are new demands that go beyond the demands of government. John Hayes, owner of Goodman Jewelers, Madison, WI, said he s been able to address consumer concerns with guidance materials provided by Jewelers of America. He uses that information to empower his staff to educate their customers, increasing confidence in their purchases. He pointed out the importance of staying aware and informed as a retailer. I have the integrity of our 75 years in business to protect, a responsibility I don t take lightly, Hayes said. He added that the store s commitment to responsible business practices, and its membership in the Council for Responsible Jewellery Practices, has set it apart. When you do the right things, people will notice and it will build your business, he said. FATF Produces AML Guidance Publication for Jewelers JVC s Gardner instrumental in drafting publication FATF, an inter-governmental body that develops and promotes national and interntional policies to combat money laundering and terrorist financing, has published guidelines to help dealers in precious metals and gemstones ensure compliance with anti-money laundering laws. This is the first AML agency to create a publication specifically for the jewelry industry. The FATF guidance will be used by government regulatory agencies including the Internal Revenue Service in their examinations of jewelry dealers to determine whether businesses are adequately addressing risks for money laundering. FATF developed this guidance with a drafting group consisting of government representatives and industry members. It was published on July 18, 2008. The U.S. Treasury Department asked Cecilia L. Gardner, president, CEO and general counsel of the Jewelers Vigilance Committee (JVC), to help to ensure that jewelry dealers are aware of this guidance and that they act in accordance with its recommendations. Current U.S. laws are consistent with the FATF recommendations; therefore any company would not necessarily need to make any adjustments to their AML program. However, companies do need to be aware of the principles included in this document. Said Gardner: Participation of industry representatives in the FATF drafting group to develop AML guidance for dealers in precious metals and stones ensured that the guidance was useful and practical. JVC has been instrumental in helping jewelers to develop AML programs to comply with the USA PATRIOT Act. I encourage dealers in precious metals and stones to review the FATF AML guidance and to contact me with questions at askamlquestions@aol.com. In addition to Gardner, the FATF drafting group included officials and representatives of international governments and representatives from the International Precious Metals Institute and the Antwerp World Diamond Center. The complete FATF guidance is available on the JVC web site. www.jvclegal.org. Seen on the October InStore Cover When you Pick up your october instore magazine, you will notice the cover model is wearing an elegant Tahitian cultured pearl strand from Stuller. See our full line 65505 of pearls at www.stuller.com. plan now to attend MJSA Expo New York, March 8-10, 2009, at the Jacob K. Javits Convention Center in New York. Hours are 10 a.m.-6 p.m. Sunday and Monday, and 10 a.m.- 3 p.m. on Tuesday. This is one of the largest and oldest trade shows in the U.S. New Dates for Expo 09 dedicated to the design and manufacturing of jewelry. The show features more than 400 booths, thousands of national and international buyers, and a full roster of educational seminars and training. Two annual presentations will also given: the MJSA Vision Awards, and the MJSA Innovation Awards. For more information about MJSA Expo New York, visit mjsa.org. OCTOBER 2008 www.stuller.com the stuller standard

S T U L L E R PA R T N E R magical gifts of nature Cultured Pearl Association of America a shows traveling exhibition at AGTA Tucson n incredible traveling Cultured Pearls for the retail community and the consumer exhibition of extraordinary level. Through promotion, education, public relations cultured and natural and unwavering commitment it aims to inspire an pearls will be exhibited authentic passion for all Cultured Pearl varieties. by the Cultured Pearl The currently seated Board of Directors includes: Association of America Sonny Sethi, president; Fran Mastoloni, vice president; (CPAA) at the AGTA Peter Bazar, secretary; and Aziz Basalely, treasurer. Tucson Show, February 3- Currently CPAA has 65 members, but it always 9, 2009. The collection is called reaches out to the finest manufacturers, wholesalers, dealers Magical Gifts of Nature. This is the second year that such an and suppliers of cultured pearls in the United States to become exhibition travels to the show. general members of the association. Designers of fine pearl jewelry Members of CPAA will show their best works featuring natural are also invited to join as affilliate members, giving them the right pearls and cultured pearls. Look for the exhibit on the main floor to attend pearl association activities and attend social events. The of the exhibition hall, where it will form a pavilion area with the ultimate goal is to facilitate the exchange of information between Smithsonian Exhibit. These pearl masterpieces have never been put designers and the general membership. on display together before. Membership in the association lends company stature and credibility The Cultured Pearl Association of America is a nonprofit in the pearl industry mainstream. group founded in 1957. Its intention is to cultivate For information about joining CPAA as a general or associate awareness, interest, demand and successful marketability of member, contact Bo Perry or Kathy Grenier at www.cpaa.org. Stuller Charm Bracelet 66298 Also available in 14kt white Stuller, Inc. is honored to become a member of the Cultured Pearl Association of America, says Harold Dupuy, executive vice president of merchandising and marketing. We are also pleased that our steady growth as a major supplier of cultured pearls is being acknowledged by acceptance into this respected organization. Stuller is a direct source for all that is fashionable in the pearl world, from price-accessible freshwater, to classic akoya, and all the way to high-end aspirational Tahitian and Australian cultured pearls. The full line is accessible on the company s website, www. stuller.com, or in The Diamond & Gemstone Book, Volume 66; The Finished Jewelry Book, Volume 67; and the new Pearl Preview Collection featured on page 6. 14 THE STULLER STANDARD www.stuller.com OCTOBER 2008

Pam Abramson with P.J. Abramson, Inc. in Winter Park, FL is a firm believer in Stuller s Red Box Diamonds and Red Box Diamond Moments. And, she has the Red Box Diamond Moments materials displayed in her store. She s also very excited about what stuller.com does for her business. When I bring out the Red Box Diamonds, with the red packaging and certificate and the box with the diamond in it, my customers are really impressed with the presentation, I really like the feature for a year s free loss protection for my customers. My customers have been very impressed by it. And, it s been a positive thing for my store. We use your Red Box Diamonds quite a bit as our business tends to revolve around sales of larger stones and large matched pairs. A gentleman recently came into our store looking for really high-quality matched diamonds for earrings, and you had an exceptional pair of ¾ ct diamonds available. He was very happy." One of the best things about working with Stuller is the website. It s the convenience factor seeing what s available quickly and so effectively it s so easy. I can refine searches, especially when searching for those matched pairs." Pam just couldn t say enough about Stuller s services and materials to aid the sale. Then she told us the kind of story we really like to hear. Last Christmas, I sold a 2 ct, heart-shaped diamond for an engagement ring, and when he gave her the ring, she really wanted something bigger. So, within a month of the first sale, he came back in to talk with us. I told him we could trade up his Red Box Diamond. So, I used your trade up program to get her the larger diamond. And the transition went very smoothly. Stuller saved the sale and the customer for me! Say Yes with Stuller.

a c s h b d r t g k j l m p n q u v f w e x Fresh Fall Picks Feature Style-Savvy Swirls a. 84320 Metal Fashion Scroll Pendant, sterling silver, $105. (Shown with CH12, sold separately) b. 66570 Freshwater Cultured Pearl, Genuine Cabochon Rhodolite Garnet, Amethyst, Mozambique Garnet, Peridot, London Blue Topaz & Green Tourmaline pendant on 20" black leather cord, sterling silver/14kt yellow, 39, 64, 44, 58, 82, 62, 56 $699. Mounting #84278 c. 66569 Freshwater Cultured Pearl, Genuine Cabochon Rhodolite Garnet, Amethyst, Mozambique Garnet, Peridot & London Blue Topaz Earrings, sterling silver/14kt yellow, 39, 64, 44, 58, 62, 56 $769. (per pair) Mounting #84281 d. R41732 Good News Cross Pendant with Freshwater Pearl and Round Imitation Stones on 18" Cable chain, 4.5mm, 3.5mm, 32.25mm x 20.25mm, sterling silver, 39, 85, 88, 122 $62. e. 64713 Freshwater White Cultured Pearl Rope, 8mm to 8.5mm, 39, 72" $240. (no clasp) f. 50785 Metal Fashion Scroll Ring, sterling silver, $102. g. 71437 Dome Scroll Color Fashion Ring, 9mm x 7mm, 15.5mm width, sterling silver/14kt yellow, $183. Mounting Only h. 66542 Genuine London Blue Topaz Ring, 9mm x 7mm, sterling silver/14kt yellow, 55 $302. Mounting #71437 j. Round Cabochon Cut Genuine Mozambique Garnet, 5mm, AA quality. k. Round Cabochon Cut Genuine London Blue Topaz, 5mm, AA quality. l. Oval Cabochon Cut Genuine Citrine, 7mm x 5mm, AA quality. m. Oval Cabochon Cut Genuine Spessartite Garnet, 7mm x 5mm, AA quality. n. Oval Cabochon Cut Genuine Amethyst, 7mm x 5mm, AA quality. p. Oval Cabochon Cut Genuine Green Tourmaline, 7mm x 5mm, A quality. q. Round Cabochon Cut Genuine Pink Tourmaline, 5mm, AA quality. r. R42159 Freshwater Cultured Pearl Cross on 18" popcorn chain, 8mm, sterling silver/14kt yellow, 39 $240. s. 66465 Freshwater Cultured Pearl Earrings, 5mm, 8mm, sterling silver/14kt yellow, 39 $495. (per pair) t. 66436 Freshwater Cultured Pearl Necklace, 10mm, sterling silver/14kt yellow, 39 $276. u. 66593 Freshwater Cultured Pearl Ring, 8.5mm, sterling silver/14kt yellow, 39 $253. v. 65817 Freshwater Cultured Pearl, Genuine Cabochon Mozambique Garnet Bracelet, 8mm, sterling silver/14kt yellow, 57, 39 $449. w. 66466 Freshwater Cultured Pearl Cufflinks, 8.5mm, sterling silver/14kt yellow, 39 $412. (per pair) x. 64714 Freshwater Black Cultured Pearl Rope, 8mm to 8.5mm, 40, 72" $240. (no clasp)

FA S H I O N Color Stories 2008 LuminoCity s beautiful styles and colors What stories will the colors of 2008 tell? Trends are reflections of society s concerns and their desires -- influenced by current THE LUMINOCITY COLOR PALETTE LOVELY GENUINE ONYX & DIAMOND ENSEMBLE PENDANT 66623; EARRINGS 66622 AND RING 66624. events such as politics, growing concerns for the ecology, even the entertainment industry. Where do trends start and how do they trickle down to the products consumers purchase? Trend forecasters research consumer behavior, monitor politics and have their fingers on the pulse of the global market. They search for core influences, such as the elections in the United States, the Olympics in China, the rising consciousness of renewable, sustainable resources and life in balance with nature. They also consider the impact of the entertainment industry, art and architecture. From this, they predict the seasonal transitions of colors. Researchers pass their findings on to fabric weavers and manufacturers who in turn create the designs of the future. Designers then apply their magic to their creations, interpreting trend patterns that will evoke an emotional response from consumers. Eventually, these trends filter down to the mainstream, massthe various products consumers s market where concepts are reinterpreted and applied to purchase. The knowledge that trend research and forecasting provides is a valuable tool that you can use to reach the emotional side of consumers. s. By understanding consumer mindsets and desires, you can merchandise effectively with products and marketing that instantly induce a feeling or mood that reinforces a clients desire to purchase. LuminoCity The LuminoCity story is our final story for 2008. This color or palette reflects the desire consumers have for attainable luxury products the luxuries they can touch and afford. The LuminoCity color story is one of contrasts contrasts s between light and dark, smooth and textured, relaxed and formal. The era reflected in this contrasting palette also speaks to the desire people have for modern renditions of 18 THE STULLER STANDARD www.stuller.com OCTOBER 2008

FA S H I O N STRIKING COLOR GENUINE CARNELIAN, MOTHER OF PEARL & ONYX CUFF LINKS 66557 classic creations. The word LuminoCity, a combination of luminous and city reminds consumers of the glowing examples of humankind s innovation. The colors of this story complement classic and vintage fashions. Colors include gray-tinged pastels and rich jewel tones offset by brilliant reds, whites and blacks colors that represent success and elegance. These colors seem to glow from within and accentuate geometric and modern designs, resurrecting the innovative architectural landscape of New York City from 1920 to 1940. The gemstones listed will be appealing in designs that incorporate vintage patterns, paisleys, open filigree work and Victorian motifs. Geometric forms, including Art Deco styles will be especially attractive with LuminoCity colored gems. Gray-tinged pastels Natural Pink Diamond Natural Yellow Diamond Pale Amethyst Aquamarine Blue and Lavender Chalcedony Rich Jewel Tones Emerald Tsavorite Garnet Rhodolite Garnet Lapis Malachite Blue Sapphire Tanzanite Coral Morganite Opal Pastel Pink Sapphire Pastel Yellow Sapphire Contrasting hues of brilliant reds, whites & ebony blacks Diamond Moonstone White or Black Pearls White Sapphire White Topaz Black Diamond Onyx Ruby SHOWCASE SUGGESTION FOR LUMINOCITY COLOR STORY SIMPLE ACCENTS ARE AVAILABLE AT LOCAL CRAFT STORES. DISPLAY AND PACKING AVAILABLE FROM STULLER. JEWELRY ITEMS: NECKLACE ON NECKFORM 64713; RING IN BOX (below) 65668; EARRINGS 65762; TRIPLE STRAND 66599; RING IN BOX (left) 64182 OCTOBER 2008 www.stuller.com THE STULLER STANDARD 19

a c b d k j h g m l e f a. Round, Near Round Multi-Colored Tahitian Cultured Pearl Strand, 8mm-10mm, Dark, A quality, $14, 685. b. 66604 Diamond Pearl Enhancer, 5/8 ct tw, 14kt white, 110 $2,881. Mounting #83761 c. 64554 Genuine Amethyst and Diamond Ring, 18mm x 13mm, 1/5 ct tw,14kt white, 43, 33 $1,127. (Also available semi-set) d. 66630 Genuine Green Quartz & Diamond Ring, 1/3 ct tw, 14kt yellow, 33 $1,451. e. 66631 Genuine Amethyst & Diamond Ring, 1/6 ct tw, 14kt white, 43, 33 $1,111. f. 66629 Genuine Aquamarine & Diamond Ring, 1/8 ct tw, 14kt white, 45, 33 $831. g. Antique Checkerboard-Cut Genuine Amethyst, 10mm x 10mm, A quality. h. Antique Cushion Cut Genuine Green Quartz, 14mm x 10mm, AA quality. j. Emerald Cut Genuine Citrine, 16mm x 12mm, A quality.

Exceptionally Beautiful. Jewelry she desires to own. n p t r s q k. 70534 Emerald Scroll Color Fashion Ring, 14mm x 12mm, 14.25mm width, 14kt yellow, $546. Mounting Only l. Oval Cut Genuine Pink Tourmaline, 10mm x 8mm, AA quality. m. Oval Cut Genuine Aquamarine, 10mm x 8mm, AA quality. n. 65774 Paspaley South Sea Cultured Pearl & Diamond Earrings, 11mm, 1/3 ct tw, 14kt white, 113, 33, 21 $1,497. (Also available semi-set) p. 65775 Paspaley South Sea Cultured Pearl & Diamond Necklace, 11mm, 3/4 ct tw, 14kt white, 113, 33, 21 $2,416. (Also available semi-set) q. Near Round Freshwater Cultured Pearl Strand, 9mm-10mm, A quality, $1,200. r. 6412 Ring Mounting for Pearls and Diamonds, 2-4.1mm, 47-1.0mm, 14kt white, $555. Mounting Only s. Assorted Paspaley South Sea Cultured Pearl v. 66627 Diamond Ring, 1/2 ct tw, 14kt white, 110 $1,541.

S T U L L E R S T U D I O New Pearl Strand Finishing Program Stuller s Pearl Strand Finishing Program is the newest addition to the Stuller Studio family of customization offerings designed to increase your sales, profitability, and customer satisfaction. Think of Stuller Studio as a smarter way to do business today. Round Filigree Clasp 22521 14kt yellow, 10.5mm assembled to a Stuller South Sea multicolor cultured pearl strand.clasp Only, $140. Extending Inventory Opportunities Through Stuller Studio, you have access to an extensive inventory of fine Golden South Sea, Akoya, Tahitian, and Freshwater pearl strands and beautiful clasps, allowing your customers to design their own perfect finished pearl necklace. This personalization is a great way to help make more sales without increasing inventory. A B C D A. 94 Pearl clasp, 11.1mm x 5.3mm, 14kt white, $33. B. 102 Pearl clasp, 12mm x 5.75mm, 14kt yellow, $45. C. 20225 Pearl clasp, 7mm x 14.5mm, 14kt white, $175. D. 20204 Pearl clasp, 7.75mm x 9.25mm, 14kt two tone, $648. Exceptional Level of Specialty Service Imagine having highly-skilled knotters ready to work for you at a moment s notice. Pearl stringing and knotting is our newest specialty service, now available to you through Stuller Studio. Select the perfect pearls by price point, color or shape and choose from our selection of plain or jeweled clasps that fit perfectly the strand of your choice. Our experienced stringers will create the ideal finished pearl necklace for your customer within five working days. Say Yes to Stuller s Pearl Strand Finishing Program and experience the beauty of it all exceptional selection, impeccable quality and highly skilled craftsmanship. R41907 R41907 Freshwater Cultured Pearl Rosary Bracelet, 7.5, 14kt yellow, $322 R41868 Freshwater Cultured Pearl Rosary Bracelet, 7.5, sterling silver, $87. Pearls of Prayer Rosaries are made, of course, with every kind of bead imaginable, but have you ever wondered: Is there a bead or gem that best symbolizes our lady of the rosary, the Virgin Mary? To properly answer the question, you only need to ask which gem comes to mind when you think of the humility, sweetness, tenderness and purity of a mother s love. That makes the answer easy: pearl. Whether your customers keep a rosary in their pocket, purse, or wear it, like their love, on their sleeve, let them know that you carry these lovely pearl rosary bracelets, and that you have hundreds of rosaries of all kinds and styles available. Just visit stuller.com and search rosary bracelet, rosary ring, or simply rosary to see the entire collection. Mountings: Pricing is suggested retail in U.S. Dollars at a $900 gold market; $2,000 platinum; $20 silver, and subject to change without notice. Sold by DWT, plus labor and invoiced by exact DWT shipped, blank, without stones. Most items available set Stuller Studio with your choice of stones from our exclusive inventory within five days and are non returnable, non cancelable. Photography: Most products enlarged to show beauty of detail. Finished Jewelry: Pricing is suggested retail in U.S. Dollars at a $900 gold market; $2,000 platinum; and subject to change without notice. Sold by piece, not weight, with stones featured. Product stone code descriptions can be found on pages 499-502 of The Finished Jewelry Collection, Vol. 67. Many styles are exclusive copyright of Stuller, Inc. and strictly enforced. R41868 Pricing subject to change without notice. 22 the stuller standard www.stuller.com OCTOBER 2008

Sea Sprite selling system award winning design of 2008 Paspaley south sea Cultured pearls are fashionable and price accessible! The Sea Sprite Collection, designed and crafted by Stuller, may be purchased as individual pieces or as a pre-merchandised Collection. To order, call 800.877.7777 or go to www.stuller.com. 69980 Sea Sprite Selling System with display, consumer brochures, counter cards, marketing guide and DVD with training video, $1,710.