In March, the wholesale market lost some of the momentum it
had gained since the beginning of the year, creating a slew of different
experiences for wholesale companies around the nation. Some wholesalers, for
example, saw their sales environment become more unpredictable. “Sales over the
past few weeks have been very sporadic,” noted Moshe Salem, president of the
Los Angeles–based M.S. Diamonds and Jewelry.
Other wholesalers fared better. “Sales have been typical for
this time of year,” reported Oren Sofer, a partner at New York City–based loose
diamond and jewelry supplier Beny Sofer. “But we have outpaced 2011 due to some
atypical larger diamond sales.” And then there were those who were able to
stave off a slowdown, but just enough to keep their businesses stable. “Sales
seem to be flat, but steady,” said David Wiener, president of Harry Kotlar, a
Los Angeles–based manufacturer of platinum and diamond jewelry.
Wiener, however, added he is confident that sales will pick
up in the coming months. “There seems to be, at least in recent weeks, an
increase in sales because people think the economy is getting better, so they
are spending more.”
STRONG POINTS
Though the market is not as robust as it was in early 2012,
it does have a few strong spots. “The bridal market, for example, is doing
particularly well,” noted Salem. Jay Gilbert, owner of the Los Angeles–based Coast
Diamond, a manufacturer of fashion and bridal jewelry, confirmed Salem’s observation.
“Bridal jewelry is totally driving our business. Our sales are ahead of the
past year and we had an excellent 2011.”
Certain diamond cuts are increasing in popularity. “Fancy
shapes are definitely selling well, especially ‘square-shaped fancies’ — princesses, cushions and radiants,”
declared Sofer. Still, cushions seem to be most in demand. “There is definitely
a big increase in requests for cushions,” observed Salem. “Overall, they are a
very strong seller.”
Wholesalers are also seeing a rising demand for colored
diamonds. “As far as fashion jewelry is concerned, we have seen a stronger
trend in fancy color and white diamonds — and it is much stronger than in
2011,” noted Ed Eleasian, vice president of Elie International, a New York City
manufacturer of colored gemstone and diamond jewelry.
PRICE MOVEMENT
Though industry prices have held steady over the past few
months, demand for certain cuts is finally causing some prices to fluctuate.
“Yes, the prices have changed,” said Salem. “We have certainly seen an increase
— we are seeing a huge increase in the square shapes, mainly cushion and
emerald cuts, though we are seeing less of an increase in round.”
Others noted that while general prices are rising, they are
also decreasing on a few items.
“Overall prices are up from 2011,” confirms Eleasian. “However, in
larger stones over 3 carats in VVS quality, we have seen a drop.”
While increasing prices are nothing new for the diamond
industry, many wholesalers still have to deal with retailers whose customers
are cautious with their spending. “I think that everything right now is really
based on how the economy is doing, and how much people feel they can spend,”
observed Wiener.
This dynamic is causing some headaches for wholesalers as
they strain to meet price points that are unattainable in the current market.
“People want specific price-point diamonds, people want a reasonable diamond
that will cost a reasonable price — but inventory like this no longer exists.
The fact is that prices have gone up,” explained Salem. “We are seeing a little
bit of a mismatch between expectations and reality, because consumers are still
coming up with prices from the past.”
Some also fear that if prices continue to rise at a fast
pace, they may undercut a burgeoning demand that is growing alongside the
economic recovery. “As the economy continues to recover, we are seeing a move
back into diamonds,” observed Sofer. “But there is a problem — a lot of
consumers are being unpleasantly surprised by the dramatic increase in the
price of diamonds.”
LOOKING AHEAD
While Sofer sees signs of sales picking up again, he is
still guarded in his prediction of how the wholesale market will fare over the
next few months. “I see business slowly improving, but for many jewelers, there
is still uncertainty in the market. Some retailers are still on hold,
selling what they have.”
Others are wary that the demand in the U.S. has hit its peak
and, while it may remain steady, will not be able to sustain the domestic
wholesale market like it once did. “I don’t see a strong consumer demand in the
U.S. anymore,” said Salem. “I see a steady bridal business and a steady
consumption on some level, but it’s sporadic and not strong enough — certainly
not strong enough to support the many outlets we have in this country.”
The Marketplace
- Stones ranging from 1.5 carats to 3 carats and fancy color
and white diamonds are in demand.
- Princess, cushion and radiant cuts are popular, especially
in G-H color and SI quality.
- Wholesalers are reporting a shortage in princess cuts
ranging from .5 carats to 2 carats.
- Prices on fancy shapes are rising faster than those on
rounds, while prices on VVS stones over 3 carats are dropping.
Article from the Rapaport Magazine - April 2012. To subscribe click here.