Holiday sales may no longer be a fourth-quarter blockbuster, but all signs point to a good season — even as wholesalers recognize that business practices are changing.
New York: Data-driven decisions
“So far, so good,” reported Nick Jain, vice president of sales at New York-based manufacturer Paramount Gems. “Although orders have been coming in a little later than expected, everyone is getting ready — that’s number one.”
Jain described Paramount’s second-half business as in line with last year, which was positive, and he has seen “no strong suggestion of negativity” from retailers.
“The one good thing is that business has become a 12-month cycle, which allows you to plan your cash flow a bit better,” he noted. “It’s no longer a make-or-break fourth quarter.”
However, he acknowledged that manufacturers needed to take a more proactive, data-driven approach in partnering with retailers, especially in terms of inventory management.
“We are constantly looking at data to ensure that we’re creating bin stock to gear up for reorders and continual business,” he said. “Retailers are usually a lot more receptive about reorders when you can back it up with data.”
While not affected by the proposed tariffs on Chinese goods, Jain cautioned that “anyone with a major base of manufacturing in China would be foolhardy not to seek different options going forward…. I don’t think the consumer will be paying 21% duties; the products will be coming from elsewhere.”
The role of chemical vapor deposition (CVD) diamonds remains an industry uncertainty. “Anyone saying it is not going to be a category is fooling themselves, but I don’t think it is doomsday for natural diamonds, either. It is just figuring out which pocket is going to be the right market for you as a company,” said Jain.
Among macro issues, he noted that political actions were “always going to be unsettling.” But, he concluded, “you just have to roll with the punches.”
Philadelphia: Lots of activity
Business is “starting to pick up” for Larry Rosenberg, president of wholesaler Rosenberg Diamond Co. in Philadelphia, Pennsylvania. “I’m seeing a lot of activity in 1.50 carats and larger,” he said, predicting “a stronger season than last year.”
In the overall market, he has seen a divide in diamond preferences among different demographics. “People in their 50s are not looking for perfection. They want eye-clean and don’t pay that much attention to cut grade, color and clarity. K color can look white and sparkle too.”
In contrast, he went on, “everything has to be perfect” for those getting engaged for the first time — the 25- to 35-year-old group. “They want triple Ex, colorless, VS to SI1.”
Rosenberg believes retailers who own merchandise are reaping more benefits than those taking the stones on consignment. “You pay the price if you don’t have it in your inventory,” he said.
As for broader industry issues, he said the proposed tariffs would not affect him, and he dismissed lab-grown diamonds with the comment, “What do you think of getting engaged with a lie?”
Rosenberg is buoyed by the increased activity on both the buying and selling sides of the diamond market over the last six months. “The pundits are telling us we’re heading for a recession. But the economic indicators — unemployment, the stock market — are good,” he countered. “People have money to spend, and I think the holiday season is going to be very profitable.”
Fresno: Positive vibes
In California, Fresno-based manufacturer Malakan Diamond Company’s clients “are optimistic about the holiday season, and that’s really good for our business,” according to president Nader Malakan.
“The retailers are happy,” he elaborated, noting that he had written holiday orders as early as the Las Vegas jewelry shows.
But while the fourth quarter used to account for up to 50% of retailers’ yearly sales, said Malakan, that percentage has dropped, possibly as much as 20%, signifying a shift toward spreading business across the year. As a result, his company is striving to work with its clients on a long-term basis. Malakan cited stock balancing as key to ensuring a successful partnership with his clients, saying it was what “retailers need to stay in business.”
Given that he does not deal with China, the tariffs on Chinese goods will not affect Malakan’s business. He voiced greater concern over consumer confidence vis-à-vis the stock market, which has a more direct influence on overall sales. “When the market is down, even people with money don’t want to spend it,” he commented.
Still, he remains positive. “Our business has been strong throughout the year, and our customers are saying the same thing. All in all, it looks good for everyone.”
Article from the Rapaport Magazine - November 2019. To subscribe click here.