Wholesalers bid adieu to 2020 with a sense of surprise that sales had beaten expectations. As a new year began, however, potential shortages tempered their optimism.
New York: Replacing inventory
“We went from the brink of a disastrous year to working overtime,” said Eric Mor, summing up 2020. The president of New York wholesaler Abe Mor Diamonds noted “very good demand” for 2- and 3-carat diamonds, which are “very hard to replace.”
The tightening of supply has resulted in lost sales. “There is no doubt about it; we sold out of a lot of items that we can’t replace,” Mor acknowledged. However, he expressed hope that the diamond producers would “not open the floodgates” in response to these shortages.
Calls are continuing to come in, he said. “Everyone wants nice SIs without black inclusions.” Triple Ex is “stronger than ever,” and J and K colors with Gemological Institute of America (GIA) certificates are doing well, he added.
Mor anticipates a repeat of post-9/11 2001 this year with a spurt of engagement ring buying. He believes the first quarter will still be “restrained,” given ongoing restrictions and/or quarantines in parts of the country, and expects Covid-19’s lingering impact to affect people at a personal level.
“We were completely in the dark; now we can at least see an end to the crisis,” he said. “But people are rethinking and reconsidering how they want to spend the rest of their lives. Covid-19 reminded us of what is important.”
Chicago: Focus on health
“Thankfully, we did better than anticipated, considering the circumstances,” said Jai Bhansali, vice president of sales at wholesaler Diagem in Chicago, Illinois. He attributed the sales to his having “enough inventory to satisfy the unexpected demand.”
“We gained market share because we had the stock, and [because] supply chains were sparse and access to goods was difficult,” he explained. He predicted that January and February would be a “little bit tight” in replacing “good, new and desirable” items.
Bhansali pointed to ongoing supply chain issues — though not the same ones as in early 2020, when supply was cut in response to Rapaport price adjustments that he said were “making the market,” rather than responsibly reacting to it. That move came as “a surprise to all of us.” Now, however, Covid-19 restrictions are the major deterrent to manufacturers’ recovery, according to Bhansali, who maintained that the economy and the pandemic were inextricably linked. “It will be a while before the vaccine takes effect. The challenge for 2021 is how to stay in business from a health perspective. It was a bonus if you made money in 2020, but the most important thing is remaining healthy. [For] a sole proprietor, keeping your staff healthy is an ongoing concern.”
In addition, he continued, “in 2020, we were able to reap the benefits of people having more discretionary income for jewelry. As people get back to their lives, they might spend a smaller percentage of their income on jewelry. But to sell engagement rings, people have to go out and meet.”
Houston: Reimagining business
Gaurav Khandelwal (aka “GK”) also felt the year’s sales had gone better than expected. The sales director of Union Gems in Houston, Texas — which specializes in fine-make diamonds — cited an increased desire to celebrate with jewelry, and a greater availability of discretionary funds.
While Khandelwal cautioned that his predictions were just “conjecture,” he was certain of the inventory challenges that “pervade the entire pipeline, from retailers to dealers to manufacturers,” and might lead to “significant polished price increases in 2021.”
The “economy is still basically Covid-19,” he said. The public health crisis has many unknowns, including how severe a post-holiday coronavirus surge might be. However, he added, the prospect of effective vaccines is a “light at the end of the tunnel.” In the meantime, “2020 gave us a chance to reevaluate and pursue smarter ways of doing business. Our retail and vendor partnerships are tighter, and we’ve added new products, including lab-grown, to expand the breadth of our services. Building off these new opportunities will definitely propel our growth in 2021.”
The trend of increasing e-commerce and remote communication will continue, he believes. This past year “proved the diamond dream still exists. But for 20 years, we’ve done a terrible job of selling it; we don’t advertise. In a year where travel and other options for discretionary purchases were not available, jewelry relived its past glory. What is the industry going to do to develop demand? That will be a priority over the next 10 years.”
Article from the Rapaport Magazine - January 2021. To subscribe click here.