RAPAPORT... Israeli diamantaires reported a slow start to the Christmas shopping season, but are hoping that this year will prove stronger than 2006 as they increasingly rely on the last-minute holiday rush. Although Thanksgiving still green-lights the traditional holiday shopping season, all agree that the busiest period is getting later each year.
“The Christmas rush used to start at the beginning of November, then after Thanksgiving,” said Moty Goren, a manager at Gal Diamonds. “Last year, it only picked up about two weeks after Thanksgiving, and this year we expect it to really start moving around two weeks before Christmas.”
Nevertheless, Goren, whose company deals mainly in 20- to 70-pointer clean goods and relies on the U.S. as its main market, noted that in this year’s seasonal run-up, the market has been slow with an “atmosphere not as good as last year.”
The Internet Influence
Rafi Yerushalmi, a manager at Dalumi Group, expects the season to perform along the same lines as last year and agrees there will be more last-minute purchases than in prior years. Recognizing the “dramatic” rise in online shopping recently, Yerushalmi reasons that the internet has played a major role in changing consumer trends.
“People have greater access to information and are more easily able to see what’s out there, so they don’t feel a need to go out shopping till the last minute,” he explained.
To take advantage of this trend, Dalumi — which traditionally sells to jewelers — is planning to start offering its stones for direct purchase on its website from the first quarter of 2008.
Looking EastAmnon Barak, president of Briza Color Diamonds, believes that the later Christmas rush is unique to the U.S. market and that the same does not hold true for Europe and the Far East, which have already demonstrated strong trends in October and November.
Israel’s reach to markets outside the U.S. is evident from data provided by the country’s Ministry of Industry, Trade and Labor. While polished exports to the U.S., including returns, dropped 6 percent between January and October, exports to Belgium, Switzerland, the United Kingdom, Hong Kong and India have all increased.
Still, Barak feels that 2007 has been a stronger year than 2006, and is confident that a potential U.S. recession will not have an effect on his business, which deals mainly in color-enhanced diamonds, whose colors are produced with an electronic beam and high temperatures, in smaller goods of 10 pointers and less.
“The downturn in the U.S. economy won’t have an effect on our business because we see that the trend for cheaper jewelry has become stronger, and colors give jewelers a chance to do more with this category of jewelry,” he said.
That is not to say, however, that the market for larger goods isn’t hot right now. According to Nir Goldman, U.S. sales manager for Avlas Diamonds, the market for larger goods is strong at the moment and least vulnerable to a slow Christmas. Contrary to other items, Christmas sales on these goods are made a bit earlier in the year, he said.
“We concentrate on higher-end goods, so we don’t feel Christmas so much because we work with companies that make planned purchases throughout the year,” Goldman said. “And we feel that on the bigger stones the market is burning at the moment. Prices are going up every day because of high demand and a shortage of supply on nicer goods.”
Ilana Bernat, marketing manager at Avnit Diamonds, which deals in smaller goods and fancies, agrees and notes that the higher-quality goods, of D to F color, are generally not affected by the season.
Tough ConditionsBernat maintains, however, that the U.S. economy is still highly vulnerable which, coupled with tough market conditions, is having an effect on business. “Our expenses keep going up, payment is much tougher, and we lost value over the past few months because of the weaker dollar,” she said.
Avnit is selling more in the Far East and Europe, which remain strong, but Bernat stresses that expanding into these markets is being done independent of the weaker U.S. economy and is something “you have to do.”
Despite Israel’s expansion into other markets, the U.S. remains its core diamond export destination and the real question for many diamantaires is not what will happen during Christmas, but what will happen after.
As Bernat noted with caution, “I think we will see the real effects of a recession in 2008, so we are more concerned about January and February [than Christmas].”
The Marketplace
• Orders are slowly picking up for the U.S. Christmas sales season. Hong Kong sales continue to improve, while supplies from India are slow because of the Diwali holidays.
• Demand has increased for clean goods in 90 points to 1.5 carats.
• 3 carats and larger are hot and scarce, commanding 10 to 30 percent over list.
• 10-carat+ items are netting 50 percent over Rap.
• Hearts and marquise cuts are very popular and look to stay that way during the Christmas buying season.
• Fancy colors are trading well, but light fancies are not as strong.
Article from the Rapaport Magazine - December 2007. To subscribe click here.