Even as jewelry shoppers returned to stores, wholesalers remained concerned about supply issues, credit, and a possible economic slowdown that could only bring more uncertainty.
New York: Survival mode
Greg Telonis admitted it was too early to determine the new normal. But Telonis, president of New York-based wholesaler Mr. Baguette, knew those elements that always drove sales would still be critical: strong industry relationships and his company’s recognized specialty in small fancies under 0.75 carats.
“Even during the pandemic, our extensive inventory allowed us to convert specific requests into sales, including from new clients whose sources couldn’t provide the fancy shapes they needed,” he explained. He plans to maintain a strong inventory to ensure he’s “not missing out on any sales.”
Telonis envisions a “rocky road” ahead, with credit becoming a “major issue.”
“I will be taking fewer chances in extending credit and will expect a more timely payment, or it will affect my decisions about future orders for the negligent payers,” he said.
Overall, he believes “the industry will survive.” He pointed to post-9/11 sales that were spurred on by the “realization of what is important to us in our lives.”
Although “there will be some casualties,” he predicted, “others will prosper in their place. It’s all about adaptability and how you position yourself in the industry.”
Chicago: Slow but steady
“Covid-19 had a dramatic impact on business,” commented Ami Sarbagil of E.M Trading, a diamond manufacturer in Chicago, Illinois. “[But] the riots caused more harm because they actually damaged the stores themselves.”
Sarbagil described a “crisis-to-crisis” scenario, further exacerbated by the significant across-the-board price decline reported by Rapaport — which he maintained did not accurately reflect the market at that time.
“The reality is that there is no manufacturing; Surat is shut down. When there is no trade, prices aren’t going to decline, nor can you predict the price,” Sarbagil asserted. He forecast that goods might not start flowing again until the Diwali festival in November.
He also said shorter memos would be part of the new normal.
“There is so much uncertainty regarding cash flow. You have to pick and choose your clients very carefully,” he cautioned. “You don’t know if small businesses will be able to pay.”
Retailers may use the funds from the sale of the stone to cover their overhead, leaving manufacturers waiting for their money, he added.
Furthermore, he believes a lot of middlemen will go out of business. “The dealer who gives my stone to the store won’t be relevant anymore,” he argued.
Meanwhile, pawn shops — which have been designated essential businesses — are having banner sales with people buying, not selling, according to Sarbagil. But he predicted an “unfortunately high unemployment rate that will affect everyone — not only jewelry.”
Los Angeles: Changing practices
Arch Kitsinian, president of S.A. Kitsinian and Vanna K in Lake Balboa, California, has a broad perspective on the industry post-coronavirus: He’s a manufacturer who also owns a retail store. “These are very hard times for everyone: manufacturers, wholesalers and retailers,” he noted.
Procedures are changing, from credit practices to additional health precautions for shoppers. For his part, Kitsinian tries to allay health concerns with the logo-branded hand sanitizer he gives to customers.
“You’re going to see credit shrink. Before the pandemic, 30- to 60-day terms would have been business as usual. Now, we’re working on payment plans to assist our retail partners,” said Kitsinian, who does not sell on memo, but does give clients the option of returning the goods in 10 days.
Covid-19 will hasten the end of the trade shows, including JCK, according to Kitsinian. The fairs have already become too costly and fail to generate significant sales, he contended. While he expressed regret that he could not attend the shows in Italy, he said Zoom had “worked extremely well” so far.
“The future is a mystery, but we can’t live in the past,” he declared. He foresees an almost 20% “flush” of the industry. “Some of that will be driven by retirement, but those companies that don’t embrace technology won’t be able to compete.”
Article from the Rapaport Magazine - July 2020. To subscribe click here.