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U.S. Wholesale
By Shuan Sim
Summer months have typically been slow for wholesalers and recent sales have either been on par with 2015 or slightly lower. The mixed results bring about mixed hopes for the coming months. “Business has been bad and I can’t really explain why,” said Arto Donikian, vice president of Doner Diamonds Inc., a wholesaler based in Los Angeles, California. Because of the uncertainty, Donikian feels that even as buyers start returning from their vacation, it would not necessarily mean rosy sales figures. Others hoped that their clients would be in a better buying mood, refreshed from their vacations. Diamantaires who were able to offer a vastly wide selection of goods fared better during this slow period. “Things have been great here as we were able to sell both high-end merchandise and lower-quality goods in the past two months,” said Rayaz Takat, CEO of Takat Gems USA Inc., a manufacturer and wholesaler based in New York City. He commented that demand for mid-quality and midsized goods — diamonds between 3 carats and 10 carats — has mostly dried up.
Most sellers highlighted that recent sales of commercial-quality diamonds in shapes that typically sold well, including rounds, ovals and cushions, had been unremarkable. While they have not experienced any inventory trouble, some sellers felt that oval supply has become tighter, though not enough to cause concern. Prices appeared to have softened, even as price resistance seemed to have eased off. Donikian commented that his selling prices had generally fallen and that his sales had been down approximately 10 percent to 15 percent year on year during recent months. Joel Szklarski, vice president of Kelsol Diamond Company, a wholesaler in New York City, wonders if the strong U.S. dollar has anything to do with the lackluster summer. “I don’t feel good about the economy. What with the elections on the horizon, there’s a lot of paranoia around,” said Szklarski. He could not say if that shaken confidence directly translated into the poor sales in recent months, but felt that the uncertainty does not help the industry. “It’s been tough the past ten years, and we see profitability slowly being squeezed out over the past 18 months, said Jonathan Siegel, principal at Jonathan’s Fine Jewelers, based in Houston, Texas. For states with significant oil economies, diamond sellers have reported fair business as oil prices recovered somewhat, climbing to above $50 a barrel in June, the highest price in over a year. “I can’t speak for the rest of the country but for us oil states, things have been better than 2015, but not on par with two years ago,” Siegel elaborated. He added that despite the lack of price resistance, finding the balance between making money and acceding to clients’ requests can be tricky. “We have been taking losses here and there, but this time round our inventory seems to be cleaner and we’re positioning ourselves to be more profitable,” Siegel pointed out.
Regardless of whether the coming months would be fair or grim, dealers stated that business would carry on. “Everyone’s coming back from vacation so we will need to be back into our selling mode,” Takat said. Siegel felt it would be an uphill task for many in the diamond industry. “If you’re not up to date with current forms of marketing, you’re in for a big world of hurt,” he expressed. Siegel added that the average diamantaire is certainly faced with a lot of challenges meeting those expectations. However, he remained optimistic that pulling through these challenging times is certainly doable and felt that the key is to leverage the knowledge that young people have. “I have a lot of young staff and their enthusiasm is incredible,” Siegel said. Other sellers shared that optimism, too — even if out of resignation. “I can tell you this much: I’m hoping it will get better — at least it can’t get any worse than what it is today,” Szklarski concluded.Article from the Rapaport Magazine - August 2016. To subscribe click here.
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