Rapaport Magazine

U.S. Wholesale

By Ricci Dipshan
Competitive Pricing Drives Sales

Competitive Pricing Drives Sales The holiday shopping season has further propelled the market out of its summer and fall slump and given wholesalers something to finally be happy about. “There definitely is a feeling that we ‘turned a corner’ because holiday sales are an improvement over 2011,” said Oren Sofer, a partner at New York City–based loose diamond and jewelry supplier Beny Sofer. “Stores are busy — overall, the reports of traffic in stores are up.”
   The surge in sales is most noticeable in the bridal market, though many jewelry stores focusing on bridal still have to be proactive to benefit from the momentum. “Sales have been steady and we have seen a positive increase over the past eight weeks. Our marketing efforts, product mix and the steadily growing bridal business are all factors that have contributed to our positive sales,” noted Ian Levine, owner of Sylvie The Bridal Collection, a division of Spectrum Diamonds in Plano, Texas.
   Despite the current encouraging sales environment, some wholesalers
still lament the many setbacks the market suffered this past year. For
them, the market is not at its full potential this December. “The first half
of the year was fairly strong — there was a lot of talk about the U.S. coming out of a recession, diamond prices were on the rise and the mood was very positive,” said Moshe Salem, president at the Los Angeles–based M.S. Diamonds and Jewelry.

   “But then came the news from Europe — prices started to decline, demand worldwide became much softer and the U.S. got very involved with the election and its potential consequences. Now with the talks about the ‘fiscal cliff’ and the overall uncertainty affecting the market, I would say that the diamond market is still relatively weak.”

   Hot items this holiday season included “VS to SI grades in colors
from D through J in all shapes and sizes,” observed Morris Szklarski, owner of Kelsol Diamonds in New York City. “Furthermore, fancy shapes, especially cushions and princesses, have been greatly sought after —
more so than in previous years.”

   “Emeralds in 3-carat sizes and larger are also in high demand this season,” added Shakeel Japanwala, manager of the certified diamond division of New York City’s C.D. Diam.
   While consumers are spending more this holiday season, they are
also more price-conscious than in previous years. “Everything is
selling with a low price. If you have good prices, you are really busy,” explained Japanwala.

   This trend is especially prevalent in the bridal market. “We are
definitely seeing our retailers requesting lower-quality stones and
lower-priced goods. Specifically, it seems that the lower-carat fashion jewelry items have been moving well as retailers look to hit the
$1,500 to $2,500 retail price points,” said Levine.

   While having in-demand goods is pivotal this holiday season, they can
be difficult to find and replace in the current market. “There are still real shortages with respect to SI princess cuts and that has definitely reduced our sales,” observed Sofer, adding that “White diamonds have also firmed up in price and are harder to find.”

   Due to the fast pace of the market, many wholesalers are burning
through their inventory and betting that a strong showing this December will leave them understocked as they ring in the New Year. “Our inventory is lower than usual as we have had good sell-through and have not made
an effort to replace these goods until we see how the holiday season finishes,” said Levine.

   While many wholesalers predict that there will be stronger sales in
2013, they also fear that these sales will be more aggressively fought over than ever before. “With every passing year, I feel that we are in more and more of a hypercompetitive market, and two main factors are fueling this — the internet and wholesalers all doing too much of the same thing,” explained Sofer.

   “The internet is a real problem for retail stores. I do believe that both
can exist but brick-and-mortar retailers must do a better job in educating consumers to understand value,” explained Sofer. “The expertise of a jewelry professional guiding you through your purchase has value. That needs to be amplified or the retailers will continue to hemorrhage sales to the internet.”

   Sellers also are encouraged to distinguish themselves from their competitors by offering something unique and creative, either in services
or products. Sofer is concerned about “the repetition we see. In our business, there are still too many people doing the same things and that
will always create a buyers’ market where the seller has little leverage. In order to be relevant to your customers, you must innovate, bring new and fresh products to them and give them products that sell better and faster than the ones in the showcases of your competitors down the street.”

Article from the Rapaport Magazine - January 2013. To subscribe click here.

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