Rapaport Magazine

U.S. Wholesale

Holidays Break Slow Spell

By Ricci Dipshan
Going into the holiday season, wholesalers are taking solace in the fact that the longer-than-expected summer doldrums are finally over. “Sales have improved since the summer months. October and November were much stronger than what we encountered during the July to September period,” noted Andrew Rickard, vice president of operations at the Rochester, New York–based loose diamond and jewelry manufacturer RDI Diamonds.
   Likewise, Ann S. Arnold, chief executive officer (CEO) of bridal wholesaler Lieberfarb, a manufacturer and designer of bridal jewelry in Rahway, New Jersey, saw a recent uptick in momentum in the sales environment. “The market has finally picked up now after a very long and disappointing post-Vegas show period,” she said.
   While the summer season is traditionally slow for the industry, the
drop in sales in 2012 was more accentuated and prolonged because “stores were extremely cautious with their buying due to their concern over the election and how it would affect business,” explained Debbie Hakimian, vice president of marketing at fashion and bridal jewelry wholesaler
Dove’s Jewelry Designs in Great Neck, New York.

   Still, while sales are finally gaining momentum, they are still lagging behind where they were during the same period in 2011. “Right now,
there is lower demand for
sure, and I think retailers are just a little quiet,” observed Adam Mirzoeff, vice president of East Continental Gems, a
New York City–based supplier of diamonds and
precious stones.

Price Uncertainty
   The reason behind this slower sales environment, explained
Greg Telonis, president of Mr. Baguette, a manufacturer of small, loose diamonds and jewelry in New York City, has to do with perceived price dynamics. “With prices ‘supposedly’ dropping, people are uncertain what the real prices are,” he said, and where they will end up. When prices are unstable and fluctuating, consumers worry about paying more today for goods when the price could be lower later in the holiday season. “So what is happening,” said Telonis, “is you had a bit of a slowdown when people changed their outlook on buying and decided to hold off. If they couldn’t buy it cheap, they just passed on buying it at all.”

   The perception of falling prices, however, doesn’t explain the whole market performance, added Telonis. “In the areas where there is demand, with especially nice goods and nice stones, the prices are very stiff.
What people are seeing is lower demand, and therefore lower pricing, in less-expensive stock like melee in I1 qualities.”

   The bottom line is that overall prices have remained high, and wholesalers cannot afford to give in to their customers’ demands. “What I am seeing is a resistance to sell at lower prices,” said Mirzoeff.
   To keep ahead of demand for lower-ticket items, some retailers are buying mostly small, inexpensive goods. “Our sales have been stronger
in lower-price-point and smaller-size categories. We definitely feel that retailers are looking for more subtle items,” observed Hakimian.

Popular Items
   Despite the trend to small stones and smaller price tags, quality fancy stones are still popular. “In fancies of 3 carats and up, I’m seeing rising demand, especially in SI quality — this area is hot,” noted Rickard.
   Specifically, “there is demand for fancy shapes like cushion, radiant, princess and Asscher cuts,” observed Telonis. Due to their popularity and scarcity, however, replacing fancies is extremely difficult. “Fewer fancies are resulting in rising prices, and rounds in 1 carat and under are becoming more scarce and also rising in price,” added Rickard. Arnold said demand is strong in the bridal market for “rounds in engagement rings and anniversary bands in G and H colors and SI quality.”

Holiday Predictions
   This holiday season, the industry is looking at past years for clues on how to strengthen its standing with consumers and expand sales. One way to do that — which has become more and more important over the last decade — is through utilizing online resources.
   “I think this holiday, the industry is going to be very dependent on online sales, and if the season has remarkable online sales turnaround, I think it is going to be very good,” predicted Mirzoeff. “In-store retail shopping still has a place, but online requests and online research resulting in retail sales are definitely going to help move things forward.”
   Wholesalers are also holding out hope that a robust holiday season will offset the worse-than-expected summer sales totals. “Many retailers did not have a strong summer. Even in areas where their business revolves around summer sales, they are saying that business was terrible,” said Hakimian. “However, the good news is that travel and leisure spending is way up going into this Christmas, which should be a good indicator for the diamond and jewelry business as well. I’m keeping my fingers crossed.”

Article from the Rapaport Magazine - December 2012. To subscribe click here.

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