One month, the phone rings off the hook; the next month, dead silence. Overall, 2019 has been a year of unmet expectations. As a new year approaches, some are voicing slight optimism, but all agree a major advertising effort is necessary.
New York: Cyclical business
This year hasn’t been easy to categorize, according to Saul Goldberg, CEO of William Goldberg, a high-end diamond-jewelry company in New York. While he cited recent strong demand for important pieces and said jewelry was selling, he didn’t think business had “turned the corner” for the year.
“We have a lot of nice inventory, know how to place it and try to find pockets of business, including an international client base,” he reported. The company’s proprietary 62-facet Ashoka diamond continues to gain in popularity. But “overall, things are quieter,” he said.
Goldberg anticipates that 2020 might bring a shortage of “certain nice products,” which would result in higher prices. But for him, next year still holds too many unknowns.
One thing of which he is certain is that the industry needs more advertising. “Everyone would like a return of ‘A Diamond Is Forever’ — it’s one of the greatest phrases ever,” he said. He suggested emulating Bulgari, Chopard and Cartier. “They are showing glamour. We need red-carpet looks and spectacular diamonds. It will benefit everyone.”
From the vantage point of experience, Goldberg urged optimism. “Maybe this cycle feels a little longer and more painful, but we have to remember there will always be a market for diamonds.”
Chicago: Hard to predict
Business this year “was touch and go” for Eitan Borochov, owner of wholesaler ABC Diamonds in Chicago, Illinois. “It was so inconsistent; every week was different,” he said. “I don’t expect a banner year, but I’m hoping Christmas turns out well.”
Borochov, who specializes in 0.50-carat diamonds and up, noted that this downward trend had gone on for at least five years — despite the strength of the stock market, which has spurred some people to upgrade their stones.
Millennials’ reluctance to buy diamonds is contributing to the drop in sales, he believes. “They are concerned about diamonds’ environmental footprint, but natural diamonds are more eco-friendly. The tremendous heat used to create lab-grown releases harmful gases into the environment.” Furthermore, he argued, most are produced in China and India, countries not known for their environmental safeguards.
The industry must be proactive in supporting mined diamonds, according to Borochov. Although he acknowledged the “craze” over an emerald-shaped diamond Jennifer Lopez sported recently, he said it was not enough to count on celebrities to drive diamond sales. And the independent retailers can’t afford advertising. Borochov called for a high-level, broad-based industry campaign emphasizing the rarity of natural diamonds, especially with mines going out of production. Like his colleagues, he expressed willingness to help fund sustained advertising.
While he offered few predictions for 2020, he would like to see a trend return: the start of a new decade spiking an upturn in business.
Houston: High prices, low profit
“It is a precarious market,” commented Gaurav Khandelwal, sales director for Union Gems, a fine-make diamond specialist in Houston, Texas. “Generally, you see one of two sides of the spectrum. Sales are great and inventory is difficult to get, or conversely, it’s easy to procure the goods but hard to sell. This is a totally different market, because it has been both hard to procure and to sell.”
Khandelwal (who goes by “GK”) was “cautiously optimistic” about holiday sales, which would represent a “marked increase” from the “lethargic” first half.
He foresees more upheaval in 2020 due to the presidential election. In Houston, divisive ads already flood the airwaves. The conversation will be all about politics, he said, anticipating a “rough” third quarter next year with “below-normal” business.
Still, Khandelwal believes steps can be taken to bolster sales. As with other sellers, generic diamond advertising tops his wish list. “Brands such as Tiffany & Co. invest in advertising, but the independent jewelers are too fragmented to amass a budget to conduct any meaningful campaign.”
Current initiatives, such as those by Forevermark, don’t resonate with the consumer and are not lifting the industry, he contended. “If the miners collectively put a premium back on the boxes [as De Beers once did], it could be effectively used to support the industry, without giving anyone an unfair advantage. Or a trade group could collect money to finance advertising for the entire industry.” And that, he asserted, “would be tremendous.”
Article from the Rapaport Magazine - December 2019. To subscribe click here.