RAPAPORT... U.S. wholesalers say that select retailers are beginning to buy diamonds with cash to avoid further price increases down the road, which the entire industry is anticipating. “Everyone needs goods right now — from retailers to wholesaler dealers to jewelry manufacturers,” said Atit Mehta, vice president of Atit Diamond Corporation in New York City, noting that rough shortages are making it “hard to get big quantities of items quickly. Retailers are planning purchases ahead of time.”
Amish Mehta, president of Amipi Inc. in New York City, agreed. “Prices are going north and they are going north fast,” he said, adding that those retailers who are still relying on memo and waiting to replenish stock are in for a rude awakening when prices do rise. “Retailers have showcases that are light from a good Christmas. Those who think prices are going to zoom up are buying.”
There is also a benefit to buying goods up front, because prices are lower, explained Andrew Rickard, vice president of operations at RDI Diamonds in Rochester, New York. “Educated and savvy jewelers are buying with cash right now. Our better retailers are aggressive with their stocking. It’s not a good time to sit back and utilize memo — now is a good time to buy.”
But Jai Bhansali of Diagem in Chicago, Illinois, said that the concept of memo is not yet obsolete and only jewelers with deep pockets are filling shelves with cash goods. “Only wholesalers are stocking heavily right now. Retailers are calling in individual stones, mostly because they still have overhead and salaries to pay.” Atit Mehta expressed concern for mom-and-pop jewelry stores. “Smaller stores are buying just what they need for the week and aren’t stocking for more than a month ahead,” he said, adding that he is seeing price resistance only from these smaller retailers. “Those who bought in January are not able to digest the 15 percent to 20 percent increases that have occurred since then.”
Demand Across the Board
“Right now, my demand is for everything across the board — anywhere from SI goods all the way down to I2, from melees all the way up to 2 carats,” Atit Mehta said, adding, “There is also a lot of strength in 3-grainers, 70-pointers and 1-caraters.”
Amish Mehta said that commercial studs and anything Gemological Institute of America (GIA)-certified are moving well. Rickard added that “4-grainer rounds and 1-caraters to 2.5-caraters are hot. Rounds, princesses, cushions and radiants are strong sellers. The most-in-demand colors are F to I in VS to SI.” Bhansali simply said, “Everything is sellable now if it’s made well, especially rounds and Triple EX.”
Bridal Moving
Wholesalers say that retailers are stocking up on bridal goods and that sizes for carat stones are starting to edge up again. “We keep getting more and more calls in for engagement rings, but center stones are staying between 1 carat and 1.5 carats,” Rickard said. Atit Mehta said that although he does not make jewelry himself, he is “seeing a big movement in larger stones that will get used for bridal.” He added that the most popular size for a center stone is .70 carats to 2.90 carats.
Bhansali said that since the beginning of the year, bridal sales have gotten slower — but the stones are getting larger — at least those being sold to wholesalers. “There’s a lot of market speculation regarding prices and I would much rather be selling directly to jewelers instead of other wholesalers. But there is definitely an uptick — the average- size stone is from 1 carat up to 5 carats.”
Good Start to 2011
The better-than-expected holiday sales have continued into the first months of 2011. “I haven’t heard anything about a downtrodden economy — all that talk has stopped,” observed Bhansali. “But we are happy — our sales have been going strong since the year began. I think the trouble is replacing goods, not selling them.”
Atit Mehta agreed. “Surprisingly, we had a good first two months of the year and we had help because these rising prices also boosted sales.” But he said he is cautious about the future. “Going forward, we have to see how sales do with these new price hikes.” Rickard was the most optimistic. “Business has increased hand over fist since the holiday season. Sales have been up 30 percent month over month since Christmas and we see no signs of it stopping,” he concluded.
The Marketplace
• Round is the most popular shape, followed by princesses, cushions and radiants.
• SI-VVS and up are moving well.
• Demand is strong for F-G colors.
• Anything from .99 carats to 5 carats and above are moving well.
• Movement is slow for I2, I3 and K-L colors.
Article from the Rapaport Magazine - April 2011. To subscribe click here.