Rapaport Magazine

U.S. Wholesale

By Joyce Kauf
Confidence Continues to Climb

Conversations about the U.S. wholesale market are taking on a more optimistic tone. “It is going to be a strong September,” said Oren Sofer, a partner in Beny Sofer, Inc., a New York City–based supplier of diamonds and fine jewelry. “We are very positive,” agreed Virginie Ghighi, marketing director of A.S. Diamonds Inc, a New York City diamond wholesaler and manufacturer. Still, not everyone shares that sentiment. “Normally summer is not this slow,” noted David Wiener, vice president of Harry Kotlar & Company, a Los Angeles–based diamond wholesaler, voicing concern about both the U.S. and global economies.
   Wholesalers in general reported mixed results for the traditionally slower summer months. “Compared to 2012, sales are basically the same,” noted Raphael Maidi, president of Maidi Corp., a supplier of colored diamonds in New York City. “Sales have picked up lately, especially for high-end goods,” Ghighi commented. “As far as total numbers go, sales may even be a little higher,” said Jai Bhansali, vice president of sales at Diagem in Chicago, Illinois. “However, I don’t think we’re busier. The only reason for the increase in sales is that we are selling larger, higher-ticket items as opposed to the bread-and-butter goods that are used more regularly in the U.S. market,” he explained.

Top Sellers
   Rounds and cushions top the list of best sellers. “Round brilliant cuts in 3 carats and higher in D, E and F are very strong,” Ghighi pointed out. Wiener saw strong sales in 5 carats and up. Bhansali noted that 2.5 carats and larger in fine makes are moving “better than in previous years.” Larger colored diamonds are also selling well, especially yellows and pinks over 5 carats, according to Maidi.
   Sofer pointed to the increase in bluffy goods — uncertified stones that are clean to the eye — with .50 carats up to 2 carats in SI3 or I1 performing well. Wiener saw a “little more demand” for emerald cuts and ovals.
   “Overall, there is very little appetite for off-the-path stones,” noted Sofer. For him, the biggest surprise was the softening up of demand for larger princess cuts and smaller-sized Asschers.
   The halo’s continuing popularity in jewelry has led to new halo designs and new product categories. Wiener cited the strength of Kotlar’s new proprietary artisan halo in their Bloom collection. Hand-carved in platinum, it features a halo in melee pavé as part of the design. He noted that other companies have also done very well with their new halo designs. The market for halos has gone from being used in engagement rings to diamond studs and diamond pendants, Sofer explained.
   “Every manufacturer has more stones than needed, especially in 1, 1.25 and 1.50 carats. But certain goods are harder to replace, especially designer-made piqué goods, and larger fine makes in round and fancies are definitely tougher to find,” said Bhansali. While Wiener remarked that replacing inventory is not really a problem, he identified 2.5 carats to 2.99 carats in ovals and emerald cuts as “missing from the market.” Sofer, noting that everything is easy in the summer, predicted that replacing inventory “is going to get difficult again in September.”

Prices
   Maidi noted that prices have been going up since the beginning of 2013, but he has seen them stabilize over the past two months. “More than a change, prices have leveled off,” observed Bhansali. “Prices were declining because for the past few months there was only one market in play — the U.S.,” he pointed out. He sees prices now going up a little, which he takes as a hopeful sign.
   “Prices have gone up a bit because there is a shortage in better goods, such as VS-plus,” said Ghighi. Kotlar also saw “a little more price resistance” in VS, VVS goods. “Goods are available,” Maidi acknowledged. “If you need it, you can find it. You just have to pay the price.”
   Wholesalers are looking to the Hong Kong show as a barometer of the direction prices will take. “It will be a big teller for the rest of the year,” said Wiener, who is looking forward to seeing some positive signs reflective of a better economy.

Going Forward
   In talking with wholesalers, the word “confident” is now heard with greater frequency, especially as they look forward to the holiday season. Even retailers are a bit more confident, according to Maidi, “They are willing to stock more merchandise. It’s not normal yet, but more confidence leads to more activity,” he explained, adding that he expects it to take another year or two before retailers feel “completely confident.”
   “We think the 2013 holiday season will be a great one,” said Ghighi, who expects the market for VVS-plus goods to do very well over the next few months. Sofer is extremely bullish on the holiday season. Pointing to economic indicators such as higher housing prices, lower foreclosure rates and gains in the stock market, he predicted, “The holiday season might even be stronger than people think.”

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