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U.S. Wholesale
By Shuan Sim
Wholesalers selling smaller sizes enjoyed brisk sales in January, but those selling bread-and-butter diamonds around 1 carat experienced a rough patch. “Business has been quiet and a bit worse than 2016,” explained Elisheva Raviv, office manager of Abe Abrahamoff Diamond Importer Inc., a wholesaler in Los Angeles, California. She pointed out that many sellers in Los Angeles shared similar sentiments of grim conditions for the industry. “Many are struggling just to keep business going.” Reuven Kaufman, president of the Diamond Dealers Club (DDC) in New York, said that his programs selling .15 carats to 1 carat did well in December 2016, and he saw buyers replenish stocks in January. However, he agreed that times have been challenging for diamantaires recently and profit margins have been squeezed for most dealers lately. Sellers who had a good run in January reported some difficulty in restocking diamonds in .10 carat, .25 carat and .30 carat sizes. Supplies of larger stones around 2 carats have also become tighter.
“It’s become a bit of a price-point business lately,” Kaufman noted. “Everywhere buyers go, sellers are offering discounts to attract sales.” He was of the opinion that discounts have been given too readily to clinch the sale and sellers’ lack of bargaining power has pinched margins for many. “The market has become softer because of a lack of confidence,” said Shakeel Japanwala, manager of the certified diamond division at C.D. Diam, a wholesaler in New York City. He felt that while people are indeed buying, they’re mostly buying as needed and not buying to have inventory sit around. “Any diamond has to be on sale to even move,” he commented. Those specializing in fine-quality diamonds seemed to be less affected by the price wars. “December had been a good month for me and it seems business was fine in January, said Vinay Gupta, owner of B G International Gems Inc, a wholesaler specializing in VVS to FL diamonds in Los Angeles, adding that price resistance is uncommon for him and that restocking had been relatively easy.
Many diamantaires relished the stability of recent months, even if sales hovered at less-than-stellar levels. “Everyone’s doing at least some business right now. It’s not exactly a situation where people go into the office and have nothing to do but read newspapers,” said Japanwala. However, he added that the industry was probably at its lowest limit of profitability needed to break even. “If sales get any lower than this, we’re probably going to be in a lot of trouble,” he noted. To break through the quandary, Kaufman felt that either a drastic event like a supply shortage is needed to improve the midstream position, or that sellers have to agree to sell at full markup prices. “Quietly, everyone’s making a sale, but they’re not selling at full markup,” he said. Some dealers added that major companies are able to offer diamonds at bigger discounts and that edges smaller players out of the game.
Some wholesalers hoped that upcoming months would be good as Valentine’s Day approaches and buyers return from their winter vacations. “Everyone should be back by then and ready to buy,” said Jigar Zaveri, manager at Diamantra Inc., a wholesaler in Chicago, Illinois. “Sales might not be better than the previous year but should at least be around the same level,” he speculated. Puneet Lakhi, vice president of Vishinda, a wholesaler in New York City, felt rallied by his retailers and designers doing well. “Many said that they don’t know if it’s directly related to the election or not but people suddenly woke up after the election. Many were very busy with last-minute orders coming in before Christmas.” Others take a less rosy outlook on coming months. Raviv is worried about the overall future of the industry as more jewelry and diamond businesses shutter. “Hopefully it won’t be worse than 2016,” she concluded.Article from the Rapaport Magazine - February 2017. To subscribe click here.
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