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U.S. Wholesale
By Brian Bossetta
As the Christmas season wound to a close, U.S. wholesalers were less enthusiastic about the year-end totals than they had been just a few months earlier, when expectations were high. Back in October, Zion Maidi, owner of Daniella Design LLC, a diamond jewelry company in New York City, predicted the holiday season would be “great.” But, when interviewed in the final days of the 2013 shopping season, his view was that “Things are tough right now.” In Maidi’s opinion, the government shutdown in October contributed to the slowdown in holiday sales — which he described as excellent up to that point. And though the legislative standoff in Washington had ended, he believes a residual effect remained. Harsheel Shah, vice president of sales and marketing at Prijems, a manufacturer of diamonds based in Los Angeles, also said his industry forecast for the holidays had declined from what he was expecting as recently as this summer. “Back in June, I was expecting the holidays to be amazing,” he said. “Since August and September, things have changed. Perhaps people are just wary about the economy, jobs and the real estate market cooling.”
Shah also pointed to a decrease in Asian demand over the past few months, causing a slowdown in the industry worldwide, which, he suggested, could also be affecting the U.S. wholesale market. “I don’t know the real reason. Maybe it’s that we’ve had a couple of really good years and now it’s just time to slow down.” Debbie Hakimian, vice president of marketing at Doves Jewelry, a jewelry design company located in Great Neck, a suburb of New York City, said she also was sensing a plateau of activity heading into the holidays that continued through Christmas, with “a lot of stores even or down from 2012.” In the final days of the holiday shopping season, David Wiener, vice president of Harry Kotlar & Company, a Los Angeles–based wholesaler, said it was hard to predict how wholesalers would fare for the year. “The season is up and down,” he said. “It’s hard to get a good reading right now.”
Business “might pick up in February,” Maidi said, but leading up to the holiday, “it was tight.” Amish Mehta, president of Amipi Inc., a New York City–based wholesaler, pointed to an improved economy as the basis for his more optimistic outlook for 2014. “The economy’s better, there’s more job growth, more confidence and retailers have stocked up and have inventory to offer customers.” If final year-end sales totals come in lower than expected, Mehta said he would be surprised because to him, retail seemed “very busy” during the holidays. “Some retailers were too busy to return my calls.” If customers do resume buying in 2014, however, retailers might find themselves struggling to meet demand. Mehta said replacing his stock has been difficult. “Our team in India is down 60 percent in purchases from this time in 2012,” he said. “We have an office in India, we have the infrastructure in place and still we’re not able to replace our inventory.” Mehta blamed the drop in inventory to less production by manufacturers. “Reduced profitability has forced them to produce less.”
The brightest spot in holiday sales for the diamond industry appeared to be at the higher end. Hakimian, who deals in diamond fashion jewelry, said consumers seemed to have extra cash in their pockets and were willing to spend it on costlier gifts. Back in October, she noted a push toward white diamonds, and said that trend continued through the holiday period, with designs featuring all white diamonds more popular in 2013. In previous years, designs that mixed white with black or brown diamonds dominated. Hakimian said the increasing health of the stock market could be a factor in the increased sales of more expensive gifts because bull markets have more sway on high-end purchasing than on general retail spending. “But it’s very hard to gauge,” she said. Shah said some customers simply always have money to spend. “The big guys with lots of money are not affected by the day-to-day market,” he said, adding that he has adapted to the roller coaster of world economic and political upheavals and believes his customers have, too. “I feel consumers and everybody across the supply chain has become used to things happening,” Shah said. “So much has happened since 2008. There’s always something. There are always going to be downturns as well as upturns. I think people are getting somewhat immune.”Article from the Rapaport Magazine - January 2014. To subscribe click here.
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