New York—Differentiation and being able to change with the times are keys to survival—both for diamond wholesalers and retailers—according to a panel session held yesterday at the Diamond Dealer's Club in New York City as part of its Grand Market Week.

"Certainly we have a niche, and having a niche and knowing what you're niche is, is going to be the main thing that will get everybody—small diamond dealers and small retailers—into the future and into the next several decades," said Fortunoff Executive Vice President Esther Fortunoff, one of the panelists speaking on "The Future of Small and Medium-Sized Businesses in a World of Emerging Giants."

"If you don't know who you are, and you're not sure who your customer is, then certainly you're not going to succeed," she added.

The importance of understanding the market applies to all businesses, regardless of size, she said. One reason for Fortunoff's success has been its ability to create and stick with its particular niche, which she described as "halfway between Tiffany and 47th Street."

That said, she noted that it has become more difficult for players in the middle that don't have great economies of scale or the ability to be as nimble as the smaller players.

One piece of good news is that demand for jewelry continues to grow, offered industry analyst Ken Gassman, who compiles jewelry-industry research for IDEX online.

"The jewelry industry is going to grow faster at retail than other segments of retail," he said.

But that's coupled with bad news, which is the rapid rate at which independent retailers (as well as wholesalers and manufacturers) are going out of business.

"We're losing independent jewelers in America," he said. "Last year, we lost 3 percent of our specialty independents. We lost 700 or 800 specialty jewelers."

With the U.S. economy expected to soften this year, Gassman said the number of jewelers that could go out of business is around 1,100, with about 300 start-ups.

He said jewelry sales will grow between 5 percent and 6 percent annually over the next decade, which means there will be a larger share of the pie for those that do survive.

In terms of succeeding, the panelists said it will be important for businesses to think about other opportunities. For instance, Pravin Mehta of Diamond Days suggested looking to opportunities for growth in India, and Sam Merksemer of the Natural Color Diamond Association noted how that product category is both hot and resistant to commoditization given the unique nature of the stones.

At all levels of the business, paying attention to customers is key.

"If you're not behind your counter talking to your customers, you're not going to make it," Merksemer said.