US wholesale

US wholesalers were happy to turn the calendar to a new year. Most agreed that 2017 had been challenging, but continued to voice optimism that business would improve in 2018, encouraged by proposed legislation.
   “Instead of having pickups, we had hiccups with spikes and lulls in 2017,” said Ronnie VanderLinden, president of New York-based diamond manufacturer Diamex, as well as of the Diamond Manufacturers & Importers Association of America (DMIA).
   Echoing that sentiment was Raphael Maidi, president of Maidi Corp — a New York wholesaler specializing in colored diamonds. “The year started okay, the middle was rough, and then activity improved in the last six to eight weeks,” he said.
   “Demand was there, but the stores are so wary of being over-inventoried that orders were coming in later — on a regular basis, and not just for the holidays,” added Reuven Kaufman, president of both New York-based manufacturer Reuven Kaufman Inc. and the Diamond Dealers Club (DDC) of New York.

Global market pressures
“The whole world seems to be vying for the same rough, the same colors, the same clarities,” said Kaufman, noting that previously, VV2, high-color stones were popular with Asians, while stones that “faced nicely” dominated the American market. “Now G to J and SI to I1 has now become the most popular stone.”
   While Kaufman believes this trend will be beneficial to the industry in general, there may be shortages with everyone looking for the same goods. He plans to expand inter-bourse trading through the DDC to drive additional business.
   As for prices, Maidi predicted they would “stay stable unless there is a big demand.” VanderLinden, too, viewed prices as stable for the “immediate moment,” though he emphasized that they were subject to supply and demand, and that end-of-year sales might be a factor. Kaufman, meanwhile, hopes lower prices will drive sales of the colorless, clean goods that have been dormant for so long.

Getting proactive
Wholesalers accept the realities of the current marketplace: continuing retail consolidations, slowing mall traffic, brick-and-mortar businesses vying with internet sales, and synthetics making inroads. But it means they need to take a proactive approach.
   “The key to any manufacturer today is value-added, which takes on more significance now,” said Kaufman, though he explained this did not mean cheaper. “You need to create a niche, tell a story and give people a reason to buy from you, whether it is an incentive program or selling the stone mounted as a piece of jewelry so the retailer can make a profit.”
   VanderLinden was less concerned about the buying medium than about consumer education. “I don’t have a problem with online sales,” he said. “But I do have a problem with the consumer not understanding the differences within grade categories that affect the price. It is incumbent upon the industry to explain why merchandise is priced a certain way.”

It’s all political
As for the future, VanderLinden said, “my crystal ball is a little slow warming up, but it all really, really has to do with the political climate. If people are comfortable with the stock market and spending instead of saving, we could have a very promising outlook.”
   Maidi, however, questioned whether people would use their money to buy jewelry. He also cautioned that there might be a correction coming to the skyrocketing stock market. And while most wholesalers agreed that the recently passed tax bill would benefit the industry, VanderLinden called it “a catch-22,” noting that people who stopped getting deductions under the new law might have less to spend on luxury goods.
   “Whenever there is political uncertainty, people get a little nervous,” said Kaufman.
   Still, Maidi felt that “2017 ended up better than it started. And next year is going to start well, and it might continue to the second quarter. We’ll see what happens.”

Article from the Rapaport Magazine - January 2018. To subscribe click here.