The U.S economic recovery regained momentum in early 2012 as
the unemployment rate in January dropped to 8.3 percent — the lowest it has
been in the past three years. Although a strong economic gauge, lower
unemployment was but one of several economic indicators that appear to be
impacting the market positively and improving business for a host of
wholesalers around the country.
Among those benefitting from the economic uptick is Andrew
Rickard, vice president of operations at loose diamond and jewelry manufacturer
RDI Diamonds in Rochester, New York. “We are having really good sales coming
off a very strong fourth quarter and a record year. The reason behind these
good sales is that the overall economy is improving, and people have more
confidence.”
Debbie Hakimian, vice president of marketing at fashion and
bridal jewelry wholesaler Dove’s Jewelry Designs in Great Neck, New York,
shared Rickard’s experience. “Sales have been terrific — I have only seen
improvement. The Christmas season was really good, the fourth quarter of 2011
was fantastic and currently, things are really improving.”
NOT ALL ROSY
This combination of strong sales and enthusiasm over the
economy, however, is a world away from the experience of other wholesalers who
have not gotten any boost from the recovery’s tailwinds. “Sales have been
sluggish and I find consumer confidence is still nowhere near the levels it was
prior to the recession,” noted Jay Moskovitz, vice president of loose diamond
wholesaler Robert Moskovitz Co. Avi Simkhai, director of Kanton Diamonds in New
York City, also has not seen any signs of economic momentum. “I find the
economy to be slow, and I think the markets in the Far East are quiet, and
markets all over the world are not stable.”
In explaining the starkly divergent experiences among
individual wholesalers, Rickard noted that, while getting better, the economy
is not yet strong enough to have a pervasive effect on the entire wholesale
market. “There are still some pockets of the market and of the country that are
definitely tough. And then there are those for whom lightning strikes just
everywhere.”
PRICE PRESSURES
A growing trend in the current wholesale market is the
scarcity of princess cut diamonds.
“Consumer demand has been fairly consistent, but supplies have dwindled
on princesses, so their prices have risen,” said Rickard. “Since princesses are
hard to come by, cushion and radiant cuts are doing well” and taking up the slack.
Ann Arnold, chief executive officer (CEO) at bridal jewelry
manufacturer Lieberfarb, Inc. in Orange, New Jersey, also noticed a shortage of
princesses in the market. “I haven’t had too many problems with restocking
other cuts but, with the princesses, I am definitely having some
problems.”
For the time being, wholesalers are saying that prices are
not coming down from their high points but, thankfully, are not rising either.
“For the most part, overall prices have been pretty stable,” observed Hakimian.
Many wholesalers also report that even when it is relatively
easy to find the items they are seeking, high market prices are making it
harder for them to replace goods and stay within desired price points. “Prices
are still generally high — if you want it, you have to pay more for it,”
declared Rickard.
These price pressures have forced some wholesalers to shrink
their inventory. “Inventory does go down because it’s hard for me to replace
goods,” said Simkhai. “Prices have not declined as much as I think they
should.”
THE RIGHT PRICE
Though retailers have adjusted to the prevailing prices,
they are still searching for the lowest prices they can find. “I feel like
everyone is very well aware of what’s going on in the diamond industry, and
retailers are not giving me much resistance to price. But then again — have I
had retailers complain and say ‘you have to do better’? Of course! They know
prices are high and they just don’t want to pay them,” acknowledged Arnold.
Chasing after sales in the current environment is a game of
figuring out what price you have to offer retailers to close the deal. “If you
offer the right product at the right price, it is golden. If you have a
good-looking product and are offering it at a fair price point, you are going
to do well,” advised Hakimian.
UNCERTAIN FUTURE
With some wholesalers expounding the virtues of the economic
recovery and others questioning when it will ever kick in, there are divergent
views on how the wholesale market will fare in the coming months. Almost all
wholesalers, however, express a level of cautiousness and a “wait-and-see”
sentiment when looking to the future. “The only trend that I see is continued
uncertainty as to where the market is going to go and what is happening —
everything has become a guessing game,” said Simkhai.
THE MARKETPLACE
- Princess cut diamonds have increased in price due to a
shortage in the market.
- The most popular fancy shapes are princess, radiant and
cushion, while the most popular colors are G, H and I and the most popular
qualities are SI and SI2.
- Prices are stable, but overall remain relatively high,
making it harder for wholesalers to replace goods.
- Stones ranging from .50 carats to .75 carats are in
demand, while larger stones ranging from 3 carats to 5 carats also are selling
well.
Article from the Rapaport Magazine - March 2012. To subscribe click here.