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U.S. Wholesale
By Shuan Sim
Wholesalers are finally feeling the turnaround after the slow season that lasted until April and report that business is increasing, even if sales have been slightly weaker year on year or about the same. “Business has picked up considerably in April and May and things have been stable finally,” said Elliot Auslander, president of Ronelli Corp., a wholesaler in Los Angeles, California. Impressions about price competition have become mixed in recent months, with some sellers complaining about price wars and others not feeling the pinch that much. “Prices have been stable for me,” commented Auslander, adding that he has been able to work with the prices he has. Others lament that depressed polished prices have been the trend in the industry for years now. “There’s always strong price resistance for me,” said Rich La Motte, owner of RTL Fine Jewelry & Wholesale Diamonds in San Francisco, California. He commented that business had been good for him in May and that he has learned to expect the discounts asked of him and how to make the sale work in his favor.
La Motte feels that consumers have tightened their wallets and that effect has rippled up the supply chain, affecting the midmarket in particular. “There’s still a lot of uncertainty going around and discretionary spending is at a low level,” he notes. Shakeel Japanwala, manager of the certified division at C.D. Diam, wholesaler and manufacturer in New York City, hoped that the rallying stock market could help turn consumer reluctance around. “The stock market has been growing and hopefully this could lead to people thinking that they do have more money, and in turn become more willing to spend,” he said. Roderick Watterson, owner of Diamond Exchange Dallas in Texas, felt that growing local economies could boost consumer spending. “There seem to be more people and more companies moving into Dallas,” he noted, citing that Toyota has moved its corporate offices and Amazon has set up fulfillment centers in various cities in Texas. “This would probably help the local market by just having more customers in the area,” Watterson said.
For dealers in high-end and large diamonds, their uptick in sales was a good sign that the affluent have loosened their purse strings. “I’m certainly optimistic about the future. In my line, when I see big stones move — and we’re talking about diamonds that cost in excess of six figures — it’s a sign that big money is active,” said Andrew Rickard, vice president of operations of RDI Diamonds, a wholesaler in Rochester, New York. “I’m hearing good things from my retailers these days,” he added. Meanwhile, the bread-and-butter market of diamonds around 1 carat remains squeezed for sales and profits. “Many goods are selling only because of their prices,” noted Japanwala. “It’s totally a buyers’ market right now. All the power is with them and sellers have to price accordingly to attract their business.” He described how dealers essentially have to offer discounts that keep their goods at the top of the sellers list to attract sales as buyers readily take their business to the cheapest diamantaire. “Don’t even think about profit margins,” Japanwala adds. While most goods were available, obtaining them at good prices remains challenging. For manufacturers who do custom orders, even though they are seeing a rise in these orders, they note customers have become more savvy about prices, given all the ease of comparing prices on the internet. “They’re always coming in and comparing with prices that they get online,” said Watterson.
Sellers are looking toward the bridal season in the summer, though some dealers remain cautious. Japanwala was concerned that the rise in demand for lab-grown diamonds might dilute the demand for natural diamonds. “We need a strong marketing effort from the big guys, like the Diamond Producers Association (DPA), to help keep the demand for natural diamonds,” he said, adding that if nothing is done, lab-grown diamond demand might grow even further. However, for most diamantaires, things can only go upward. “The upcoming months should be good. It’s getting to be bridal season, after all, and there doesn’t seem to be any signs that it will not be a good season,” concluded Auslander.Article from the Rapaport Magazine - June 2017. To subscribe click here.
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