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Discounters dish out diamond deals
Sam's Club responds to Costco's challenge by selling a $750K pink diamond necklace at 25% off.
May 5, 2005: 10:09 AM EDT
By Parija Bhatnagar, CNN/Money staff writer
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Sam's Club is offering this $560,000 pink diamond pendant exclusively on samsclub.com.
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If you don't like pink there's a 27-carat yellow diamond ring for about $610,000.

NEW YORK (CNN/Money) - Costco and Sam's Club usually go head-to-head over which chain has the better deal on toilet paper, soda or breakfast cereal.

But now they're duking it over something more pricey -- diamonds.

For instance, Costco (Research), the No. 1 wholesale club operator, surprised customers earlier this year by offering a 10.6-carat, yellow-diamond ring for $180,000, its most expensive item ever.

Where's the big discount on that? It's about $84,000 below the ring's estimated value, according to the International Gemological Institute (IGI), a non-profit group that appraises gems and high-end jewelry.

Costco had Sam's Club sweating, but not for long. Sam's Club, a division of Wal-Mart (Research) and the No. 2 wholesale club, responded to Costco's diamond challenge Wednesday with two "one-of-a-kind" bank-breaking deals of its own.

The first is a 3.74-carat pink diamond pendant set in platinum and priced at $560,000. The second is a whopping 27-carat yellow diamond ring, also set in platinum, for $610,000.

According to Sam's Club spokesman Sean Lashley, both items are fully certified by the IGI, which estimates the value of the necklace and the ring at about $750,000 apiece.

Both jewelry items will be available for sale starting Friday, exclusively on www.samsclub.com, just in time for Mother's Day.

Although the pink diamond necklace and the yellow diamond ring are the most expensive products featured to date at Sam's Club, they're not the company's first foray into the high-end arena.

Lashley said Sam's Club quietly began testing other high-end luxury products last year, offering a $315,000 diamond necklace for sale last Christmas, for example.

But why the decision to sell high-end jewelry at Sam's Club, rather than in Wal-Mart stores? It has to do with the Sam's Club clientele, Lashley said.

"Both businesses have completely different customers. Sam's Club is a membership-only club of mostly small business owners. They've told us that they would like to be able to buy high-end exclusive items at Sam's Club."

Costco, which also charges an annual membership fee for customers, could not immediately be reached for comment.

Marshal Cohen, chief retail analyst with market research firm NPD Group, said Costco's and Sam's Club's high-end efforts are smart marketing moves meant to capture consumers' attention.

"It is working? Sure, simply for the fact that you and I are talking about it," Cohen said.

From a business prospective, he said, both companies are trying to appeal to luxury consumers -- a segment of the market where other retailers like Tiffany (Research), Nordstrom (Research) and Neiman-Marcus (Research), to name a few, have done very well.

"But more than that, this is about getting people to convert from just being curious about what a Costco or Sam's Club in and actually going into those stores," he said.

"Frankly, they have nothing to lose. If they sell these items, it's great. If not, it won't hurt them in any way but they were able to get the publicity for their business."

Previously: New rival for Tiffany: Costco (Includes a photo gallery.)  Top of page

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