Wholesalers are hoping for business to pick up in the second half of the year. But given their experience at the JCK show in Las Vegas, many are concerned that price negotiation remains a non-starter.
New York: New equation
“No one was giving anything away at JCK,” observed Greg Telonis, president of New York diamond wholesaler Mr. Baguette, which specializes in side stones. And while there was a good amount of traffic, he admitted it was hard to determine whether the event had been a success for exhibitors.
Telonis — who described his first-half business as “decent,” if “a little down” compared with this time in 2018 — attended JCK with the intent of “buying loose goods, making new acquaintances and seeking out new manufacturers from either Israel or India.” He purchased small fancies, but rather than making any new contacts, he touched base with vendors with whom he had previously done business.
While he attended as a buyer, he was keenly aware of the wholesaler perspective. His overall impression was that the show was “mediocre” for diamonds; he failed to see “a lot of orders being written.” Similarly, he did not think people at the Asian pavilion (where he did make a small purchase), were happy with what they
were writing.
Price was a significant factor. “Rough is not cheaper. Manufacturing is down, so there is less product available,” Telonis explained. Describing the reaction to any attempt at negotiating, he declared that “if you offered 20% less — forget it.”
Telonis stayed clear of the lab-grown area. “I have no interest in it, and it’s not what my business is about,” he emphasized. Still, he recognizes that lab-grown has changed the market, especially when it comes to fashion jewelry.
The internet, too, has changed the business equation, but Telonis expects sales to continue at the same pace. The American economy is forging ahead, he said. “The future is hard to predict, but things shouldn’t change drastically.”
Miami: Adding value
“Larger stones — 2 carats and over — in ovals and rounds are moving well,” reported Max Quiñones, president of wholesaler DVG Diamonds in Miami, Florida. His business was “on pace with 2018,” he said, attributing that in part to the specialized services he provides for retail partners. “In addition to loose-diamond inventory, we have to be able to offer more in terms of special-order fabrications to our retail partners so
they can compete with the online companies that can’t provide those customized services.”
Quiñones assessed the general mood at JCK as “optimistic,” but voiced concern about the shortages of nice larger stones and the resulting higher prices. “Manufacturers were not in a negotiating mood,” he explained. “I had to pay stronger prices for certain stones that I know will sell and that I wanted to keep in inventory.”
His secondary purpose in attending the show was to observe firsthand the machines for chemical vapor deposition (CVD) detection. This was especially important to him because he has a wholesale office in downtown Miami, as well as a pawnshop, El Encanto Jewelry and Pawn. Yet the fact that CVDs are now part of the conversation has removed some fear from the marketplace, according to Quiñones. “Retailers are learning how to speak with customers and guide them to mined diamonds.”
Los Angeles: Shrinking margins
“The drop in retail sales has definitely affected our business,” explained Chetan Vakharia, president of wholesaler Simply Diamonds in Los Angeles, California. His company specializes in fancy shapes of 5 points to 0.50 carats in SI1 and better-quality VS. At the half-year point, he described the overall wholesale market as “quite slow.”
Vakharia approached JCK in a “just looking” mode, but did make some purchases. Price proved to be an obstacle. “I would have bought more,” he said, “but the goods didn’t fall into my price range.”
He echoed the sentiment that “vendors were pretty strong on prices” and that they wouldn’t accept the offers he’d made. “There was little opportunity for negotiation.”
Furthermore, while some like to attend industry shows to make new buying contacts, Vakharia felt most people were going to specific vendors with whom they had preestablished relationships.
The biggest difference he observed this year, he added, was the prominence of the CVD section.
Vakharia believes the second half of 2019 will follow the pattern of the first or “get a little better” after the summer as people start thinking about Christmas. While he doesn’t see signs of the economy slowing, he is concerned about the “tremendously shrinking profit margins” in the wholesale market. “We are facing competition from overseas vendors who are selling directly to our clients,” he commented. “Some are selling direct to the end user. The middleman is disappearing. I don’t see any relief. It’s twice the competition. We’re getting squeezed from both ends.”
Article from the Rapaport Magazine - July 2019. To subscribe click here.