The optimism from June’s JCK show carried through into July, with a majority of wholesalers reporting strong and steady sales. “Our sales since the show have been 30 percent higher than in 2010,” remarked Isaac Blumenkrantz, vice president of
New York–based
A.S. Diamonds, adding that stones from .5 carat to 5 carats, and from 10 carats and over are selling well.
Likewise, Nilesh Sheth, president of Nice Diamonds in New York, noted that “sales have been strong, especially since the show.”
Yet, while most wholesalers experienced a profitable month, a minority was still stuck in the summer doldrums. “It’s a little bit slow, but nothing unusual,” said Hanna Shlomi, vice president of Benjamin & Co. in Los Angeles, adding that it is not uncommon for her sales to slump in a month when many of her customers are on vacation.
Bubbling Demand
Though wholesalers welcomed the robust demand, they are also worried about the market’s strain on their supplies. “Demand is bubbling up — we have a huge demand so we have to try and supply as many people as possible,” declared Blumenkrantz, adding that demand “is so fast paced we have to update our inventory every two weeks.”
Jay Gilbert, owner of the Los Angeles–based Coast Diamond, a manufacturer of engagement rings, echoed a similar sentiment. “We are just buying every day, trying to have enough goods,” he said, adding that an unyielding demand from Asia for smaller stones under 1.5 carats has left wholesalers scrambling for small items. “There is definitely a shortage of small goods, so for a while we could not buy anything — right after JCK, it all just dried up.”
Explaining the shortage, Maurice Efune, president of EfuneUSA in Dallas, Texas, remarked that “It’s basic supply and demand. India is taking up most of the production, so small stones are in short supply.” Blumenkrantz argued, however, that the demand does not stem from just India. “There is very strong demand in Asia, whether it is Hong Kong, Mainland China or India. And America just can’t keep pace.”
Prices Set In
After months of resistance, wholesalers were relieved to see many retailers and consumers finally catching on to the price increases. “The industry has come to terms with the new prices,” observed Sheth, adding “I think they have seen the price increases everywhere so almost everyone is on the same page now.”
Gilbert reasoned that the industry was slow to accept the new prices because companies had stocked up before the large increases. “Basically, we sort of figured out that they must have been buying a smaller amount of goods at past prices. But, by the time JCK hit, everybody knew what was going on.”
There are, however, still retailers out there who have not yet adjusted, which in turn is forcing wholesalers, like Gilbert’s Coast Diamond, to strain to meet certain price margins. “One of the things that is concerning some of our customers is that there are price points they want to hit, but it’s getting difficult to hit that sweet spot,” he said.
Despite ever higher and higher prices, demand has not wavered. “We are still selling items that have doubled in price,” observed Gilbert, adding “our best sellers are still selling, and if the design is nice and if the customers really love it — they’ll buy it.”
Future Markets
Though wholesalers are cautious about the future, they are still looking forward to the end-of-the-year sales. “I anticipate sales to continue to be strong, but I think there is some economic uncertainty that we have to look out for. But with the holiday season coming up, I think it will be good,” remarked Shlomi.
Most wholesalers also begrudgingly agree that prices will continue to rise in the coming months. “We would love prices to go down,” confessed Blumenkrantz, “but realistically, prices will probably go higher. The trend is still set on the higher side.”
Many were also unsure of how the Kimberley Process (KP) release of Marange diamonds from Zimbabwe into the supply chain would affect their businesses. So far, however, the issue has not seemed to change customer buying habits. “Maybe one in a hundred will ask me about Zimbabwe,” said Efune, adding that all of his material is from suppliers who claim to be conflict free so he has to trust his suppliers. “But there is basically no way to know for sure where diamonds are from,” he concluded.
The Marketplace
• Stones of up to 2 carats, and bridal stones of .50 carats to 1.50 carats, are selling well with American consumers.
• Price resistance to diamonds is leading some retailers to opt for less expensive, synthetic items.
• Round shape, F and G and loose diamonds are the most popular items with consumers.
• There is robust demand for custom jewelry and specialty items.
• Overseas buyers are interested in 3-carat to 5-carat stones.
Article from the Rapaport Magazine - August 2011. To subscribe click here.