Though the holiday season is over, jewelers are continuing to ride its wave of steady sales and prices into the new year. Explaining the industry dynamics going into 2012, Rick Shatz, president of New York City–based antique diamond wholesaler Rick Shatz Inc., said: “Sales were weak at the end of the summer and into the fall of 2011, but then got stronger throughout the holiday season. Overall, they have remained consistent for the past two months.”
Sumeet Sethi, sales director at gemstone and diamond manufacturer Manak Jewels in San Francisco, confirmed Shatz’s observation: “Sales have been improving — they started slow in November, but since then have picked up well.”
Wholesalers trace the beginning of their solid sales to the onset of the holiday season, which, although not much better than 2010’s start, provided them with a much-needed boost. “We had an increase of 10 percent to 12 percent in our November and December sales,” observed Greg Telonis, president of Mr. Baguette, a manufacturer of small loose diamonds and jewelry in New York City.
How long wholesalers can ride the momentum coming off the year-end sales beyond January remains to be seen, but many express confidence that steady sales will characterize the entire year. “We are pretty much positive 2012 will be good, because we had a good Christmas, so we expect the sales to follow,” said Sethi.
Prices Plateau
Prices have plateaued over the past few months, giving wholesalers reason to believe that, unlike 2011, this year will not be rocked by extreme price volatility. “Whatever was happening with prices, it has already happened. The prices today are pretty constant,” explained Sethi, adding that this price stability may have helped holiday sales for many companies because consumers were reassured by the stable prices. “Maybe the reason people started shopping again was because prices were more consistent than at other times during 2011.”
While it is true that prices are more stable, the fact is that they also are stabilized at higher levels compared to industry prices before the turbulent increases in 2011. “There is no doubt that prices are still comparatively a little high overall,” observed Telonis, adding “prices that were in place at the beginning of 2011 seem to have stuck at the end of the year and into the new year.”
Some believe that although prices remain steady, it is a relative steadiness and they will continue to trend upward in the future. “Diamonds will get more expensive in the long run but there will be slight fluctuations along the way,” predicted Amish Mehta, president of New York City–based loose diamond and jewelry manufacturer Amipi Inc.
For now, however, stable prices mean that retailers and customers are much more in tune with the high-price reality. “There is not much of a price resistance because most of our customers are well aware of current market conditions. For those who are not in daily contact with the market, a little explanation and price education are generally sufficient,” noted Nilesh Sheth, president of Nice Diamonds in New York City.
Expensive Inventories
Wholesalers with cash stand the best chance of getting the inventory they want — not only because of the high costs of replacing goods, but also because of tightening credit and cautious suppliers. “It seems that I can get most everything I need. If I look hard enough, I can find it. If you pay your bills, you can get your supply. Credit has tightened a bit, so people want to sell to good companies — basically, if you don’t pay your bills, people don’t want to sell to you,” said Telonis.
Though high prices are still a concern when replacing inventory, for those wholesalers gearing up for the upcoming shows in Tucson, Hong Kong and Basel, the focus is to get what stock they can and put their best foot forward. “We are just getting ready for the shows to come, so manufacturing is in full swing. There is some difficulty getting nicer goods, and the prices are still not easy, but whatever we have to do, we have to get ready before the shows start,” said Sethi.
Unforeseen Worries
A caveat to many wholesalers’ positive expectations for 2012 is the experience of 2011, when unforeseen events threw the industry into erratic and dramatic turns. “The world is going through so much that no one knows what is going to happen six months from now,” said Telonis. “Everyone got scared when the diamond market dropped in August 2011 because of the euro crisis, and if it happens again this year, people are going to get scared again. It really depends on what the news is before we can say how our industry will react — goods aren’t going to sell if people are worried.”
The Marketplace
- Color diamonds of SI1 to I3 clarity, especially natural fancy yellows, are selling well.
- Rounds are the most popular shape, but there is also a strong demand for cushions and princesses.
- The most popular size in both solitaire
earrings and engagement rings is 1.5 carats to 2 carats, while demand is strong for 2 carats and above in rounds.
- Prices have remained steady, though they still remain relatively high, making it harder for wholesalers to replenish inventory.
Article from the Rapaport Magazine - February 2012. To subscribe click here.