December sales were off to a late start at press time, with some wholesale diamantaires hoping for a rush of last-minute consumer shopping. “That possibility is there and we are waiting for that moment,” said Sam Nazarian, owner of A&M Diamond and Jewelry in Los Angeles, California.
Nick Jain, vice president of sales at Paramount Gems in New York City, added, “Every year, it seems to be getting later and later. But the calls are coming. Things are heading in the right direction.” He added that negative financial news may now be having less of an effect on consumer behavior. “I think people are so used to hearing bad news that it doesn’t have quite the same impact that it had a year ago.”
A Late HolidayJoe Evich, senior vice president of GN Diamond in Philadelphia, Pennsylvania, saw his sales beginning to turn around. “It was later than we wanted for stock. Normally, we have everybody bought up by October. I think people are realizing you can’t just buy gold and sell Pandora. Bridal is the deal. I guess they have come to their senses a little bit.”
Morris Szklarski, principal of Kelsol Diamond Co. in New York City, conceded that holiday sales were happening, “but not enough.” Indicating that high-priced goods were not moving, he explained, “The retailers are telling me that their $10,000 customers are becoming $3,500 customers. Generally, the goods are more bluffy than they used to be.” Jain concurred, “It is true that the type of goods are a lot more promotional than a year ago.”
With credit and supplies tight, sellers worked to get the right goods to qualified buyers. Nazarian stressed, “Today we have to be more cautious,” and noted that he now provides memo for no longer than a week to ten days.
Incentives for CashTo attract cash buyers, Kelsol Diamond Co. offers discounts on cash sales. Regarding memo requests, Szklarski recognized, “If we have the slightest doubt, we ask for cash memo,” referring to an agreement in which clients pay up front, but have the option of returning goods within a set period of time.
Similarly, Evich admitted to allowing memo arrangements for specific calls, but his company also takes 2 percent off the bill when clients pay within ten days from the date merchandise is shipped. “We’re realists here,” he attested. “I’m very stringent with credit. The main thing is dealing with creditworthy people who want to grow.”
Princesses ScarceThe manufacturing lull brought on by the global recession is still affecting supplies of fancy shapes, particularly princess cuts, according to wholesalers who spoke with RDR. Regarding fancy shapes, Jain pointed out, “Prices have been going up and there is some resistance. There is definitely a squeeze on both sides in terms of margin.” He has also seen a lack of lower-quality diamonds.
Szklarski conceded, “There is a shortage of certain items. Whatever is in abundance doesn’t seem to move very well. When you get calls, there is almost shock if they find what they want.” To compound the problem, Elizabeth Ellner, sales manager at Cardan Diamonds in New York City, finds she is often responding to specific requests, with “no flexibility at all” from her clients.
In general, Ellner has seen memo practices continue in the face of sinking prices. “People are dumping, so why should anyone buy for a normal price? People are buying so cheap it doesn’t matter what the terms are.”
On the contrary, Evich declared 2009 to be “a record year for new accounts” at GN Diamond. He stressed that his company has utilized email, kept up with advertising and joined buying groups to help maintain profits. “I feel like we’re back in the jewelry business again. It’s a world of difference from 2008. It’s so much better being on the offense than on the defense,” Evich reported. Nazarian also mentioned the importance of marketing, reasoning, “If you don’t do it, you fall behind.”
At press time, Ellner was not holding out hope for last minute holiday sales for her firm. “We knew it would be this way,” she contends. Her New Year’s resolution? “Try to cut our expenses and stay hopeful.”
Nazarian doesn’t expect big changes in the new year. “I believe 2010 is going to be the same as 2009. I don’t think it will get better fast.” Jain’s outlook is similar. “Everyone is still going to be cautious. It will be interesting to see what happens at the January shows,” he noted. Szklarski stayed upbeat, stating, “I think those of us who survived this long see it getting better.”
The Marketplace
- The typical engagement diamond is ¾ to 1 carat.
- Demand is moderate for diamond solitaire earrings in 1¼ to 1½ carats total weight.
- Color is ranging from H to I and better.
- Clarity is ranging from SI2 to VS2.
- Princess is the most popular fancy shape, but availability is limited. Cushions can often make an acceptable replacement, so they are in demand as well.
Article from the Rapaport Magazine - January 2010. To subscribe click here.