|
|
U.S. Wholesale
By Ricci Dipshan
Fears of an industry slowdown vanished in April as the market quickly regained momentum it had lost in March. The unexpectedly strong sales environment was especially welcome given the cyclical market slowdown that typically occurs in early spring. “Sales have been surprisingly strong considering the fact that traditionally, at this time of year, sales are usually sluggish due to the Easter and Passover holidays and the April 15th tax deadline,” said Jay Moskovitz, vice president of loose diamond wholesaler Robert Moskovitz Co. in New York City. “We feel that consumer confidence is on the rise.” The favorable market conditions also extended to the bridal market. “We had an increase this quarter — our retailers have been selling our products well and need replacements,” observed Ian Levine, owner of Sylvie Bridal Collection, a division of Spectrum Diamonds in Plano, Texas. Some wholesalers, however, still believe that the market is not at its full potential due to the lukewarm national economic climate. “Sales are a reflection of the economy — stable, but not great. They will hopefully improve with an improving economy,” said Ami Koret, vice president of Davidoff Diamond Corp. in Houston, Texas.
While many are grateful for the positive sales environment, they are not sure how long it will last, given the current headwinds of rising prices. “Diamond prices are starting to inch up again, and I’m not sure how this will affect sales yet,” cautioned Koret. Many fear that high prices on rounds, as well as slowly increasing fancy prices, will slow the market’s momentum. “Round sales are relatively stagnant — the prices are too high,” added Koret. “Resistance to round prices is strong, as some consumers are switching to fancy shapes because of the difference in price. But prices on fancy shapes are now beginning to inch up too.” Specifically, observed Oren Sofer, a partner at New York City–based loose diamond and jewelry supplier Beny Sofer, “There have been increases in prices on loose round diamonds in sizes .50 carats and larger, and in SI quality and up. We are also paying approximately 2 percent more for the certified goods.”In the bridal market, these price dynamics are causing retailers to “hit certain price points either by asking for lower diamond quality or smaller centers,” said Levine.
Despite their high prices and stagnant sales, rounds remain the most popular diamond cut. “The highest demand for rounds is in VS to SI qualities and F and G colors,” noted Ed Eleasian, vice president of Elie International, a New York City manufacturer of colored gemstone and diamond jewelry. “These stones are most in demand in sizes from .50 carats to 2 carats.” Cushions, however, are holding a close second for most-sought-after cut. “The big story remains the strength of the cushion cuts. We are almost selling one cushion for every round and that is a big move for a fancy shape,” exclaimed Sofer, adding that “another standout over the past few months has been natural fancy yellow diamonds. They are definitely selling better than before.”
Inventory dynamics are slowly catching up with the market, as more popular goods become harder and harder to come by. ”Fancies have been difficult to find and replace in the VS and SI clarities,” noted Moskovitz. However, some older, ongoing inventory shortages still remain. “We do see continued shortages in SI princess cuts between .50 carats and 1 carat, but that has been going on for some time,” Moskovitz continued. “And, of course, the availability of some desirable sizes in rounds — stones between 1.50 carats and 2.50 carats — continues to be an issue.” Inventory shortages are also reflecting a market that is fueled primarily by high-end consumers looking for larger, higher-quality stones, and low-end consumers looking for cheaper goods. “Larger and bigger items or small and inexpensive ones are in demand. The middle-of-the-road goods are slow and hard to come by. This may be a reflection of a middle class that is disappearing,” cautioned Sofer.
Looking ahead, many wholesalers expect not only more price increases, but also a shift in their retailers’ selling strategies as the market adjusts to a new price reality. “I think we will see another round of price increases this summer and most independent retailers will push their clients toward special, made-to-order items, rather than ready-to-wear jewelry, because they can make extra margins and do not have to stock the items,” predicted Eleasian. Most wholesalers are optimistic that despite any price troubles, this year will be stronger than 2012. “Overall, I think most would agree we are moving in the right direction and, barring any significant political or economic event, 2013 will be better than 2012,” said Sofer.Article from the Rapaport Magazine - May 2013. To subscribe click here.
|
|
|
|