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U.S. Wholesale
By Shuan Sim
The streak of poor sales continues in the months following the December 2016 holiday season and wholesalers are getting hit hard. Furthermore, tax season may spell more trouble for the midstream as buyers tighten their purse strings. Wholesalers also felt that the lack of any strong jewelry trends or styles means there were not any definitive trends in sales for the midstream. “Business was on a downward trend since the holidays,” said Koby Stalowsky, owner of Excellent Diamonds & Jewelry, a diamond dealer in Los Angeles, California. He added that sales had been average and were about on par with this time last year. Many other diamantaires reported either similar sales levels year on year, or lower sales.
“Price is an issue with everything these days,” noted Greg Telonis, president of Mr. Baguette, dealer of fancies in New York City. “Retailers aren’t doing very well and they don’t have much budget,” Telonis said. Buyers had been making specific calls based on whatever orders come in for them but few retailers are holding on to or building up inventory. “People are dropping down in sizes and clarity for price reasons. Their budget was not what it was back in 2015 and previously,” Telonis noted. Stalowsky was of the opinion that many wholesalers were fighting for the same business. “I’m seeing a lot of price resistance and a lot of competition from other sellers,” he said. Requests for steep discounts have become the norm in recent months. “People are calling in asking for discounts. It’s hard to make a profit,” said Bhavesh Patel, owner of Diamond Nilprakash Inc., a wholesaler in New York City. Sellers who fulfill a niche or are well established fare better. “Things had been slow but it looks like it’s slowly picking up,” said Rahul Parikh, president of K.R. Gems & Diamonds International, wholesaler in Los Angeles, California. “It’s harder to keep the same margins. We’re in the position where we’re making the sales but not making the profits.”
The recent shift for lower-clarity goods has led to tightness in restocking those goods, especially in the SI range, and even for some I1 or I2 diamonds. “I think it’s because people are not cutting as many of those goods because they didn’t sell as quickly,” speculated Telonis. “When things tighten up, smart manufacturers stay in areas where they’ve had success. If the goods are not profitable or not going to turn, they’re not going to make them,” he added. “It’s difficult to get ideal cuts,” said Yariv Janfanza, CEO of Diamonds for Life, a wholesaler in Los Angeles, California. He felt that prices of those goods seem to have risen as well, though he could not say for sure why.
While sales had been disappointing, the lack of the spikes of highs and lows seen in late 2015 to early 2016 was reassuring for some diamantaires. “I’d much rather see a moderate flow of sales,” said Telonis. He explained that while his company enjoyed the spikes back then, they were followed by extended periods where sales all but dried up. “It was hard to pay the bills and many in the industry were struggling,” Telonis noted. “I hope things will just stay on a moderate pace for 2017,” he added. Many wholesalers could not express optimism for the industry as the economy gave no clear signs that customers will buy more diamond jewelry. “There’s a lot of uncertainty hanging in the air, especially in our industry,” Parikh pointed out. Some were of the opinion that the new Trump administration could bring about changes to tax policy that could benefit the diamond and luxury industries, but diamantaires were not going to hold their breath waiting for that to happen. For others, at least there are no imminent signs that the economy would worsen, either. “I hope things will improve. I’m not sure what the future will be like; it’s so hard to tell these days,” Patel said. In such situations where there is no clear sense of where things are headed, some dealers opted for optimism over despair. “Things will definitely get better,” Janfanza concluded.Article from the Rapaport Magazine - April 2017. To subscribe click here.
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