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U.S. Wholesale
By Brian Bossetta
If the pace of sales at the Hong Kong Jewellery & Gem Fair in September is any indication, then the rest of the year leading into the holidays might be a slow ride for U.S. wholesalers. That’s because Hong Kong, according to Douglas Blank, president of Joseph Blank Inc., a diamond wholesaler and manufacturer in New York City, is a pretty solid gauge as to the direction of the market — and, by most accounts, September’s show was subdued. “It seems more quiet now than this time last year,” Blank said of the general wholesale market. Some dealers were “pleasantly surprised” in Hong Kong, said Carl Edelstein, president of Edelstein Diamonds, a diamond wholesaler and manufacturer in New York City, but only because “expectations were so low.” David Wiener, president of Harry Kotlar & Company, a Los Angeles–based diamond wholesaler, described the buyers at his exhibit in Hong Kong as “cautious” and said they purchased only items they deemed to be of “great value.” Jai Bhansali, vice president of sales at Diagem, a loose diamond wholesaler in Chicago, also reported a lackluster Hong Kong show and said goods sold at higher discounts because of “known liquidity shortages in India.” However, wealthier customers at the show, Wiener noted, purchased his company’s proprietary handcrafted pieces. “For us, having special diamonds and precious gems not seen in the market gives us an upside for Christmas,” he said. One of those proprietary designs, the Kotlar Cushion — particularly in fancy yellow — remains one of the company’s top sellers, Wiener said, with “an unusual rise in sales in the past three months.” Colored diamonds — blacks, browns, blues, pinks and yellows — are in strong demand, Blank said, and other wholesalers agreed. “We are a fancy color house along with rose cuts and other unique diamonds,” said Harsheel Shah, vice president of sales and marketing at Prijems, a manufacturer of diamonds based in Los Angeles. “So for us, fancy is king.” Blues and pinks, Shah pointed out, have been especially strong “with mixed fancy color parcels doing very well in Hong Kong.”
For Blank, business has been erratic, a roller coaster ride of feast and famine. “One week you’re on life support, then the next week it’s a marathon,” he said, adding that has been the story for the past several months. “We had a good July, a terrible August, a good September and so far October has been mixed. I don’t know what’s happening.” Bhansali reported a similar ride: “September and August were good months, but October has definitely been slow, which lowered our projections.” Edelstein, who described business as a “little weaker” and sales “tougher to make” than a year ago, said what it boils down to is having the goods in stock that customers are looking for. VS and SI, because of rising demand — mainly in the Far East — are increasingly hard to stock, Edelstein said. “But if you have them, you will sell them.” Well-cut round and fancy shapes in 5-carat-plus, G and up, in SI have been hard to replace, Wiener said, adding, “Rough is very expensive in these goods.” He also noted a scarcity in stones 5 carats and up. “But we have them,” Wiener said, “and that’s helped fuel sales.” Supply, however, has not been an issue for Shah, although there’s a caveat. “Earlier in the year, merchandise was being replaced easily, albeit at a higher price,” he said. “Now, merchandise is again being replaced easily, but with upfront capital payments.”
The liquidity crisis in India has helped to soften prices, Shah said, and is causing “anxious” manufacturers to offer enormous discounts to raise capital, “but only to those who are purchasing with cash on the spot.” Bhansali said there’s been some price resistance, and that “Dealers are not keen on speculating on goods they may need for stock that are still firmly priced by a manufacturing vendor. They will only stock goods that are the most reasonably priced.” However, Bhansali doesn’t expect the stability in prices to remain for very long. “There are still goods in the market that need to be consumed to complete the market correction and put the loose goods market on track back to recovery.”
Global crises — Ebola, ISIS — and a sliding stock market are “certainly hurting business,” Blank said, adding that such factors directly relate to consumer confidence. “Recent economic data released by the U.S. government shows a slight downtick in consumer spending and manufacturing,” Shah said. “If this type of news continues, it could spook luxury spending.” He added, however, that consumers have become resilient and somewhat immune in the long run to such negative news. Still, with the holidays fast approaching, most wholesalers remained optimistic. “I always see the glass as half full,” Blank said. “But there’s no denying it’s tough out there right now.”Article from the Rapaport Magazine - November 2014. To subscribe click here.
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