Rapaport Magazine

U.S. Wholesale

By Ricci Dipshan
Prices on the Uptick

The spring wholesale market is usually marked by a slowdown in anticipation of the JCK Las Vegas show, and this spring was no exception. “Sales have been seasonally slow, which is typical just before the show, mainly because most of the customers wait to see new varieties at the show before placing large orders,” observed Nilesh Sheth, president of Nice Diamonds in New York City.
   This slowdown comes off the heels of a healthy start to 2013. “The first quarter of the year was strong as a lot of dealers replaced goods after the holiday season. Currently, the sales environment is just average — it is not the greatest we have had, but also not the worst,” said Sumeet Sethi, sales director at gemstone and diamond manufacturer Manak Jewels in San Francisco.
   The pre-Vegas stall was not the only factor impacting the market, however. Moshe Salem, president of Los Angeles–based M.S. Diamonds and Jewelry, for example, observed a spring sales environment that was more influenced by the nation’s financial and economic trends than the JCK Vegas show.
   “I saw different types of business over the past 12 weeks,” said Salem. “The first six-week period was fairly quiet for traditional reasons — a typical slowdown during tax season and the Jewish Passover holiday, which is when many companies took a few weeks’ vacation. I also would say that the slowdown had to do with the overall state of the economy, insecurity about the future of the business, concerns about the bad economies around the world and concerns in the U.S about sequestration and taxes.”
   “The second six weeks were much better,” added Salem. “We saw steadily increasing demand for goods. The driving factors were that the tax season ended, the wedding season was just around the corner and people realized that there is life after sequestration, so they went out and spent money again.”

Buying Trends
   Beginning in April and again in May, consumers heavily favored specialty made-to-order items, especially for holiday and bridal purchases. “We got a lot of special requests for expensive pieces for Mother’s Day, which is definitely very different from the past few years,” noted Debbie Hakimian, vice president of marketing at fashion and bridal jewelry wholesaler Dove’s Jewelry Designs in Great Neck, New York.
      “As far as jewelry sales, it seems that everything is special order,” agreed Greg Telonis, president of Mr. Baguette, a manufacturer of small, loose diamonds and jewelry in New York City. “It is either an engagement ring made for a specific center stone, often with side stones, or it is an anniversary band made for specific stones.”
There also has been a high demand for diamond jewelry as opposed to cheaper gold and silver jewelry, which is leading some wholesalers to be cautiously optimistic about the U.S. economic recovery.
   “What I have seen more than anything is a return to diamond jewelry, which was very stale for us throughout the recession. Now, strictly diamond pieces are back after several slow years when people weren’t looking for diamond fashion. I am hoping that is a positive sign for the recovery of the economy,” said Hakimian.
   In the current market, “rounds, princesses and cushions are the most popular cuts,” observed Sheth, adding that colored diamonds are also popular, especially “pink, yellow and black stones from 2 carats to 4 carats.”
   “White stones are in demand in F to J colors, VS2 to SI2 qualities, and sizes ranging from 1.50 carats to 3 carats,” added Salem.

High Prices Holding
   During May, prices on many items increased markedly. “Prices have gone up, mainly on rounds in SI to I1 qualities, and there is definitely some price resistance. It seems that the consumer expects more for his money — bigger stones and better qualities,” said Salem.
   This upward price movement, however, has been going on since the beginning of 2013. “There has been at least a 5 percent increase since the beginning of the year on most everything. I am getting a lot of price resistance during this slower period,” added Telonis.
   These high prices also are causing headaches for some wholesalers looking to replace stock. “Inventory is an issue for sure when prices are rising. There are shortages of several items on the market — replacing certain inventory is very difficult in fancy shapes and baguettes,” said Telonis.

Caution Despite Growth
   Despite some strong patches in an overall slow season and steady growth since the beginning of the year, many wholesalers are still worried that the market is inhibited by a less-than-spectacular economy, the recent diamond price increases and stunted consumer confidence.
   “It feels that there will continue to be a steady increase in demand and in business. However, I believe that it is going to be a very mild one. The market is still on the ‘relaxed side’ and not as active as we would like,” said Salem.

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

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