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U.S. Wholesale
By Shuan Sim
Many wholesalers reported mediocre to middling sales as many of their clients are still on vacation, but some noted a worrying trend of quality goods being harder to replace. Sellers agreed that the industry is in a period of self-correction as sightholders have been refusing goods and production is ramping down worldwide.
“It’s not the lack of sales we have to worry about moving forward, but the lack of sourcing,” said Anish Desai, president of Star Gems Inc., a wholesaler based in Norcross, Georgia. Desai described business in the past few months as “good,” which he said was spurred by a growth in demand for custom-design jewelry. This type of jewelry requires specific diamonds and those requests have become harder to fulfill, unless the client is willing to pay a premium to purchase the stones. “You can get what you want if you pay the price for it,” said Greg Telonis, president of Mr. Baguette, a manufacturer of small loose diamonds, based in New York City. He added that sales have been mediocre for him lately. “I think many of my customers are not selling out of showcases,” Telonis said, adding that he has not been getting many calls from retailers and that consumer sentiment right now is conservative. However, he too noticed that custom-design jewelry demand remains strong and commented that firm prices with a lack of discounts has made it hard for him to fulfill certain requests. “On the retail side, they’re squeezing us too, making margins really hard for us,” Telonis added. Wholesalers noted that demand for diamonds for engagement rings and earrings has also been relatively strong in recent months, with ovals and cushions between 1 carat and 2 carats selling decently.
Well-made goods in high demand — particularly rounds and cushions in F through I color and VS to SI clarity — might face shortages if production remains lowered globally, said Jeff Fischer, president of Fischer Diamonds, Inc., a wholesaler and manufacturer in New York City. However, he does not think the scarcity is necessarily a bad thing, as it might be what the industry needs to bring supply, demand and prices back into balance. Fischer added that in the meantime, there is an oversupply of low-demand goods, such as diamonds with black inclusions, and that even though prices are low for those items, they are “just not going anywhere.” “I’m hoping rough prices will come down so that I can give a break to my customers,” said Puneet Lakhi, vice president of Vishinda, a wholesaler based in New York City. “If my customers can be more flexible with their specifications, maybe I can offer them better prices,” Lakhi said, adding that they were starting to see their business slowly stir as buyers return from vacations. “De Beers hasn’t lowered its rough prices, but at least it’s having smaller sights,” said Telonis, who is hoping for a pickup in consumer demand and polished prices. “Nobody wants to sell for a loss,” he added. “The market has been overinflated for the past two years or so,” said Desai, welcoming the adjustments in the market and hoping for the prices of rough to come down and prices of polished goods to go up. “The industry has to not produce more than it needs,” commented Fischer, explaining that the recent glut has been the result of a production dynamic geared toward the higher global demand of 2011 to 2012 rather than today’s numbers.
Meanwhile, the devalued currencies in China and Russia, lowered global demand and lack of consumer confidence have put a damper on the business outlook of diamantaires in the United States. “Everybody’s worried, everybody wants to survive,” said Shakeel Japanwala, manager of the certified diamond division at C.D. Diam in New York City. Japanwala said that if economic conditions and consumer confidence in India, China and Russia do not improve, he would not be surprised if people started to leave the diamond industry. “I don’t expect to see wonderful news in the upcoming months,” said Fischer, predicting a status quo. While steps have been taken for the industry to correct itself, wholesalers were of the opinion that they have to hunker down and endure this period of gloom. “The high U.S. dollar against China and India could be a problem, but the U.S. market remains stable,” said Lakhi. He predicted that high clarity, high color goods might be in extra supply in China and India as demand in those markets dwindles, but a healthy local demand should keep the supply of such goods trim. Brick-and-mortar jewelry stores, coupled with online marketing driving traffic to those stores, have been instrumental in keeping that demand up as customers are still clamoring for engagement jewelry and custom designs. “I’m noticing it’s a strong trend, it is keeping the U.S. market up,” concluded Desai. Article from the Rapaport Magazine - September 2015. To subscribe click here.
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