Already suffering from low margins, a lack of advertising, and competition from lab-grown diamonds, wholesalers have found they are not immune to coronavirus. Several that had planned to attend the now-postponed Hong Kong shows have indicated that they will skip the rescheduled events, in part because of the continuing health threat, but also because the timing is too close to JCK Las Vegas.
New York: Teamwork rules
“Retailers don’t want to own goods today,” said Yoni Nitzani, owner of Polo Gem Co. in New York. “But that’s okay. We are happy to provide goods on consignment, because ultimately the final sale is what matters.”
While it requires more capital, Nitzani keeps an extensive inventory of “all shapes and sizes” on hand to ensure he can fill orders. “At the end of the day, we want
our retailers to team up with us to move
our goods.”
Nitzani does not attend US trade shows, but he has attended Hong Kong for buying purposes rather than for scouting new customers. With the shows’ postponement, he has been contacted by “vendors around the world” trying to move their goods.
He prefers to meet potential customers face-to-face in their respective cities, which he also finds more cost-effective, given the expense involved in going to trade shows.
“We provide our clients a selection of stones to offer to their customers, which demonstrates that we have the knowledge and the ‘taste’ for the nicer and cleaner stones. They see that we don’t buy weak stones with low grading that are difficult to sell, and because of this, they come back to us for new orders,” he said.
His business is not a one-time transaction based on price only, he continued. “If you don’t understand that it’s a team [effort], you have no chance to make it in this industry,” Nitzani emphasized.
Chicago: All about price
In contrast, Dan Rahmanim in Chicago, Illinois, asserted that “the entire industry is price-driven” and that “even long-standing customers buy from whoever has the cheapest stone.”
Rahmanim — partner at wholesaler Rahmanim’s Imports, which sells stones weighing between 0.75 and 3 carats — contended that the lack of consistent grading also affected price. Overseas labs are more lenient than the US-based labs, he said. “Stones can have the same grade, but they’re not the same stone.”
He also felt that RapNet and other price sheets changed too frequently, without giving wholesalers the opportunity to absorb the new prices. Rahmanim would like to see prices follow the example of the Federal Reserve Board. “When the Fed changes interest rates, it announces that they’ll reevaluate after six months. That’s what we need,” he stated.
He attends JCK Las Vegas and several antique shows and has gone to the Hong Kong shows for 25 years. “We go to the shows to try to replace customers we have lost,” he explained.
That said, he was “not worried” about the Hong Kong fairs. “We’ve got a good batting average in business now. The shows are very expensive, and we’re seeing more sellers than buyers.”
Rahmanim also cited competition from the Luxury show, which generally begins two days prior to JCK. Many buyers have already spent their budgets before they get to his booth.
But prices remain top of mind. “I cannot unload my inventory by lowering the price by 5% — it doesn’t work like that. Every stone has a history, inclusions, character. Diamonds are not a commodity,” he stressed.
Los Angeles: ‘Sell the best’
“It’s a mixed mood right now,” said Jay Mehta, partner and director of operations at Varsha Diamonds, a manufacturer and wholesaler in Los Angeles, California. “A lot of the retailers should be cash rich after holiday sales, but they’re still being conservative in their spending because demand is on the softer side.”
Mehta, who specializes in 0.30- to 5-carat diamonds in rounds and fancies, attends industry shows with the intention of servicing old clients and building relationships with new ones, which he recognizes is a long-term process. Mehta attended Centurion in January, had planned to go to Hong Kong in March and intends to go to JCK.
In today’s market, he argued, retailers “must decide what they stand for. If you’re the cheapest, you’re a mass marketer like Walmart. If you have the biggest selection, you’re just doing high volume and it doesn’t matter what you sell. We’re in the luxury business — sell the best of the best.”
Mehta also advised retailers to “inform, educate and influence your customers that quality matters. That doesn’t mean to sell only colorless VS or better, but rather finely made, high-performing diamonds.”
Overall, he believes the industry needs to come together. Miners and sightholders should create a greater budget for marketing natural diamonds and fine jewelry, he asserted, because everyone would reap the benefits. “US retailers should not buy diamonds and jewelry from companies that supply e-tailers, who operate on thin margins compared to the industry average. Buying from companies that sell to both e-tailers and retailers increases competition for retailers, who will eventually lose this battle.”
Article from the Rapaport Magazine - March 2020. To subscribe click here.