Dropping diamond prices and end-of-the-year sales gave the
wholesale diamond market momentum as it moved into 2012. “I would say that, on
average, sales are definitely stronger and have been during the past three
months,” noted Raphael Maidi, president of New York City–based diamond and gem
manufacturer Maidi & Co.
Seeking to build on that momentum, many companies are
pursuing aggressive marketing and sales strategies to attract and retain new
clients. “Sales were better in December because we launched a very aggressive
consumer marketing campaign and introduced a number of new ring designs, some
of which won design awards,” said Khajag Hovsepian, president of Danhov Inc., a
bridal and gemstone jewelry wholesaler in Los Angeles.
The highly competitive market is squeezing smaller companies
less able to compete with more established ones. “Big companies are getting
much bigger, and bigger stores are getting much bigger, while small wholesalers
are not growing at all,” explained Ed Eleasian, vice president of Elie
International in New York City.
“I think there
is more demand going to the high end,” added Maidi, “and the supply lines are
getting a little bit tighter — they are being concentrated in the hands of
fewer people.”
Dropping Prices
After months of high diamond prices in 2011, overall prices
were much lower as the industry moved into a new year, even though the
decreases have been uneven. “The price of everything has decreased; some more,
some less,” observed Moises Mareyna Rosenberg, president of M&M Diamond
Imports in Houston, Texas. “Melees, for example, have dropped about 30 percent.
And three months ago, a 4.50-carat D color diamond was above the list price,
but now it is about 15 percent below list price.”
Wholesalers are also noticing that while rounds remain more
expensive than fancies, their prices have dropped at a faster pace, mainly due
to their greater supply in the market. “This is because the price disparity
between rounds and fancies is leading manufacturers to produce more round
goods,” Jai Bhansali, vice president of sales at Diagem, a jewelry wholesaler
in Chicago explained. “In many cases, for example, you can get two fancy shapes
for the same price as one round. That’s why manufacturers are coming out with
rounds, instead of nicely made shapes of anything.”
Inventory Relief
Though prices are changing, they are not changing as fast or
as erratically as they were for most of 2011 — providing a welcome relief for
many wholesalers stocking up on inventory. “In 2011, there was a lot of
uncertainty with pricing and we didn’t know what it was going to cost to
replace anything,” said Eleasian. “The good thing about now, though, is that
prices are more stabilized. When we are replacing items, we are able to replace
them at a reasonable cost — the same huge price volatility that we experienced
in 2011 is no longer there.”
Finding goods, however, is becoming more of a challenge as
demand in Asian markets steadily grows. “Supply is getting a little tighter,
because the goods are mainly going to the Far East,” explained Maidi. “We used
to be the biggest market, but today, there are many more markets opening up in
the developing countries, especially China and India.”
Buying Trends
All the price fluctuations in the market have made many
customers overly cautious in their spending and opting for cheaper material,
like silver, to go along with their diamond jewelry. “In terms of jewelry, I
think silver and diamonds have a foothold everywhere now,” said Eleasian. “What
we are seeing now is that even larger independent retailers are asking for that
type of product.”
Another buying trend in the market, added Eleasian, is the
pullback from most fancy color diamonds. “We are seeing that demand for colored
diamonds has slowed significantly compared to 2011, although whites have
remained steady and strong.”
Looking forward to 2012, many wholesalers express guarded
optimism. “I think we will see steady growth in 2012,” predicted Eleasian, “but
I still believe a lot of the stores are going to be conservative because of the
effect the economy has had over the past two years.” Many are also hoping the
good start to the new year will follow through to the end. “I think it should
end up okay, but we are very optimistic,” said Maidi. “Indeed, we are much
busier now, so that is a good sign.”
The Marketplace
- Stones ranging from 1 carat to 3 carats are in
demand.
- Prices have dropped, with prices of rounds falling faster
than fancies and prices of melee down by around 30 percent.
- Emerald cuts are popular in sizes above 3 carats.
Article from the Rapaport Magazine - January 2012. To subscribe click here.