As a new decade begins, suppliers are dealing with a diamond market that’s competing with other luxury goods for a slice of the pie. After an inconsistent holiday season, they are looking to ensure steady, year-round business.
New York: All about restocking
“Instead of having pickups, we’re having hiccups,” said Ronnie Vanderlinden, president of New York diamond manufacturer Diamex, describing the state of the market. “We had some wonderful sales at Christmas, and not just on memo. But what we’re really looking for is a steady stream of business.”
Vanderlinden, who also serves as president of the Diamond Manufacturers & Importers Association of America (DMIA), asserted the need to “be in front of the customers.” He was “thrilled” with Signet’s holiday campaign for Kay Jewelers, Zales and Jared, which he said produced a trickle-down effect. “At least someone was helping us,” he remarked, pointing as well to the ads from the Diamond Producers Association (DPA).
Vanderlinden’s view of 2020 is predicated on jewelers’ January inventory levels and whether they will “need to restock at more than just the bare minimum.”
People may be reserved in their spending, he acknowledged, because the word out of Washington is that a recession is looming. “That gives me a pit in the stomach; it’s not great for business,” he said. “It’s not an easy time.”
Still, he expressed optimism, citing changes in the industry that would be good for everyone. These included the revised system of warranties from the World Diamond Council (WDC) — a set of guidelines to help the diamond sector regulate itself and thereby strengthen consumer confidence.
Chicago: Creating partnerships
“I’m really comfortable with making sure we have consistent stock available for our clients throughout the year rather than just preparing for a burst of activity during the holiday season,” commented Jai Bhansali, vice president of sales for wholesaler Diagem in Chicago, Illinois.
He plans to keep to this strategy in 2020, noting that it is also effective for clients in allocating their dollars.
Bhansali doesn’t mind sending items on memo. “It’s the nature of the business,” he said. “Jewelers are squeezed. They have to spend a lot on marketing and staffing. If they can’t stock everything, we’re happy to be the person who helps out.”
Next year can go “one of two ways,” Bhansali said. Citing the continued consolidation in the industry, he predicted that people who had “the right inventory and focus on their market are going to be successful.”
However, he cautioned, “if people want to speculate on items in the hope that they’ll hit a home run on goods that are not that easy to sell, i.e., items that are cloudy, I think they are going to sit on them, which will eat up a lot of their capital.”
But market trends will impact everyone in the industry, he said. “Diamonds don’t test as strong as they used to, and people prefer spending money on experiences or Apple watches. Those peripheral items are taking discretionary spending, and that will always be a factor.”
Los Angeles: Carving a niche
“We can’t continue working the old way; there’s not much hope for people who won’t change,” said Kalpesh Jhaveri, president of K.R. Gems and Diamonds, a wholesaler in Los Angeles, California.
Jhaveri, who is also vice president of the Diamond Club West Coast (DCWC), has adopted a strategy of providing value-added services to his clients. He urges other wholesalers to “carve out a niche for themselves.”
However, he does not advocate specializing in one specific product. Rather, he suggests offering enhanced services and being the “eyes and ears” of the retailer.
“The changes we’ve made are coming to fruition,” he said. “We’re partnering with our clients in merchandise assortment, delivery, stock-level analysis and, of course, checking and rechecking for [lab-grown diamonds].”
Jhaveri stressed that retailers were competing not only against online sales, but also against artificial intelligence (AI). “A lot of retailers are trying to fight dollar-to-dollar. They’re not going to succeed that way. The more we give our clients, the more they will need us.”
Barring an economic depression, a natural catastrophe or a war that will make people seek diamonds as a portable source of income, Jhaveri believes diamond sales will continue as they are now — not going up or down.
“We’re competing against other luxury goods, and not too much is going to be added to our plate,” he said.
Article from the Rapaport Magazine - January 2020. To subscribe click here.