As temperatures in August climb, demand seems to be cooling. Wholesalers are preparing for the holiday season, but most agree it’s too early to gauge holiday sentiment.
New York: Mixed bag
“Some days, the phone is ringing off the hook, and some days, we find we’re doing a lot more service and less wholesale,” said Caroline Wilkinson, sales manager at New York-based wholesaler Star Rays N.Y. “Customers are only buying what they need and not keeping items in stock.”
Regarding whether lab-grown diamonds will impact the market, Wilkinson’s answer is “yes and no.” She believes both the public and the industry are still learning about them. Still, lab-grown has forced her business to take additional, time-consuming steps. “We have to scan everything in our chemical vapor deposition (CVD)-checking machine to make sure our customers know we’re not selling lab-grown. It gives our customers — and us — peace of mind.”
Wilkinson believes synthetics have their place. “We can all coexist in the market if we keep CVD and natural very separate. There is a middle category that lab-grown can fill — fast fashion, for example — but it’s about educating and being open about it. I think we can live and work side-by-side if everyone is honest.”
Dallas: Dose of reality
“Retailers are asking me why business is so weak. But I have no answers,” said Sol Ben-Aharon, president of wholesaler Sol-Ben Co. in Dallas, Texas, which specializes in 0.75- to 6-carat, SI- to VS-clarity, nice-make goods.
The answer may have more to do with market and economic realities. Micah Ben-Aharon, the company’s vice president, pointed out that “life is expensive. And millennials are different shoppers. They’re not really interested in diamonds; they prefer an iPhone or iWatch.”
Furthermore, he continued, “it’s very hard for small, well-respected wholesalers throughout the US to supply local and regional clients with hand-selected stones when we’re competing with portals that only add a small percentage.”
From his vantage point, it was too early to predict whether sales would pick up for the holidays. He expressed concern about overall consumer sentiment at a time when people were constantly being bombarded with negative news. And while the company has clients across the country, retailers in Texas are subject to the vagaries of the oil and gas industry, which affects “everything and everyone down the line,” he said.
While Micah said Sol-Ben had received calls asking if it carried lab-grown stones, he emphasized that the company would
not supply them. “There is no reason for
us to, because the price will only come down. We have the certainty that we stand behind mined stones because of their rarity and value.”
Los Angeles: Lull in demand
For Joseph Ladd, “the first half of the year was steady, although a bit slower, with strong demand for well-made fancies.”
But that changed. “Sentiment became negative after JCK and the Hong Kong show,” reported the owner and president of Ladd Diamonds, a wholesaler and manufacturer in Los Angeles, California.
“I don’t feel that the dealers are hungry for goods.”
He attributed the slow business to existing high inventory levels among dealers, as well as their high prices. Ladd has found there is little room for price negotiation — a trend he also experienced at JCK.
It is too early to predict the holiday season, according to Ladd, though he expects to get a better sense of that market toward the end of this month and in early September. He also pointed to the potential of the “wealth effect” in the September-to-December buying season. “In my experience, it’s how the consumer feels. If the stock market pulls back, it might not influence their pocketbook as much as their confidence, which would make them less inclined to buy.”
Lab-grown is also a key factor. “Obviously the biggest impact in the market for natural diamonds, other than availability of goods and pricing, is the dealers’ concern [over] synthetics. Those holding large inventories are worried about how these synthetics would affect the value of their inventory in the long run,” said Ladd. He admitted that “for sure there is a market for synthetics,” noting that they offered a higher margin than natural diamonds and therefore had appeal for struggling jewelers. “But the person who is buying a synthetic and plans to upgrade later should know they’ll get
bupkis [nothing] for that diamond.”
Article from the Rapaport Magazine - August 2019. To subscribe click here.