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U.S. Wholesale
By Brian Bossetta
After a slow summer and subdued fall, diamond dealers heading into the holiday season could use a little wind at their backs, and perhaps November’s Israel Diamond Week at the Diamond Dealers Club (DDC) provided that much-needed boost. The DDC cited the event as “a great success” and estimated 700 dealers had participated in trading on the club’s floor. Still, Sol Rybak of Premier Gem Corporation, a wholesale diamond dealer in New York City, said it was hard to gauge what effect, if any, trading at the New York bourse had on overall sales. “There’s no way to know,” Rybak said. However, he did say that the opportunity to engage in person and establish new contacts was certainly healthy for the industry. From his take on sales heading toward the end of the year and Christmas season, the U.S. wholesale market could use all the help it can get. “Business has not picked up since 2013,” Rybak said, citing high prices on rough goods as the heaviest drag on business. “It’s hard to make a profit.” Steve Eisen, secretary for Nat Eisen & Sons, Inc., a diamond wholesaler in New York City, shared Rybak’s view on prices and profit margins and said dealers have to sell goods at lower prices. “You just have to go with the flow and deal with weaker prices,” Eisen said, adding that he had just completed marking down his entire inventory. “The velocity of the money flow seems to be bypassing 47th Street on its way to Wall Street.” But what Rybak and Eisen describe as holiday headwinds, Kalpesh Jhaveri, chief executive officer (CEO) of K.R. Gems & Diamonds International, a diamond wholesaler in Los Angeles, sees as the cyclical nature of the diamond business. “Every year after the Las Vegas show, the market quiets down and restarts in early September,” Jhaveri said. “This is not a slowdown in the industry, but more of a seasonal phenomenon.” Though business is starting to pick up again for Jhaveri after “several weeks of minimal activity,” he said the overall mood has been somber due to price fluctuations and a rather lackluster market.
The overall trend of lower prices has been positive for Joshua Niamehr, co-founder and CEO of EnchantedDiamonds.com, an online diamond retailer in New York City. As prices fall, volumes rise, Niamehr explained, so while individual goods sell for less, more goods sell, especially as consumers see diamonds as more affordable, which is good for the entire industry. For Eisen, however, mid-autumn sales have been “mediocre” and even a “bit slower” than they were in late October and November 2013 — a time period, he noted, that “wasn’t all that great.” Along with shrinking profit margins due to the price of rough, the “mood of the country,” in Eisen’s view, is also holding back sales. “It’s weird,” he said. “We’re told the employment rate is getting better and the economy is improving, but it seems that the public is not confident.”
Improving economic indicators, particularly better job numbers and declining gas prices as well as an ease to Ebola fears in the U.S., have accelerated business, according to Marvin Finker, owner of Trillion Diamond Company, a New York City wholesaler specializing in fancy shapes. “When people feel better, they are more apt to spend,” said Finker, who estimated his sales heading into the holidays as 30 percent better than in 2013, with about a 3 percent increase in profits. However, Finker added a caveat: “That’s comparing business to 2013, which wasn’t a very good year.” Attracting repeat customers and “just working harder” are the factors he credits for his company’s pickup in profits. An increase in computer-assisted designs, Finker added, has also helped generate sales. “I work with a lot of artists who do their own carvings and create their own individual designs,” he said. “Their pieces are generally one of a kind.”
Niamehr sees lower-quality colors gaining strength, but said it’s lower colors farther down the spectrum — M, N, O and P — that are catching on with customers who want beautiful jewelry at exceptional values. Though not usually associated with quality, these lower-market colors — “with reddish and orange tinges” — provide a “major opportunity” for dealers, Niamehr said, to offer added value to their customers. “I can create a beautiful 1-carat diamond piece of jewelry in one of these colors for less than $1,800,” he said. “These colors are often looked down upon and all the information online suggests to stay away from them, but they are quite beautiful, almost tropical.” Perhaps Niamehr’s strategy of selling online and focusing on goods on the “less sought after” end of the spectrum is the wave of the future. Jhaveri seems to suggest that is the case. “Those who adapt to the changing trends as well as keep up with the advances in technology will continue to thrive,” he said, “while companies working traditionally will see a slowdown overall.”Article from the Rapaport Magazine - December 2014. To subscribe click here.
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