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U.S. Wholesale
By Shuan Sim
As tax season approaches, sales have slown to a crawl for many, and wholesalers are rushing to shore up their revenue by selling more lower-priced goods. At the same time, online retailers present stiff competition by forcing brick-and-mortar jewelers to match prices, impacting diamantaires’ business. Wholesalers reported that clients are talking about more and more consumers coming into stores with stacks of research done on a specific diamond they want, including the price.
Aside from recent months being the time when most buyers begin to file taxes, many sellers felt that the presidential election spread a sentiment of buying conservatism. “People are watching the news and they’re distracted. They don’t know which way the elections will swing and how that will impact their business,” said Mark Oliva, president of Mavilo Wholesalers, a diamond and jewelry manufacturer in Tampa, Florida. Other macroeconomic factors slowing down the diamond business include depressed oil prices. “Big-stone sales are down, as well as big-ticket items,” noted Ami Koret, vice president at Davidoff Diamond Corp. in Houston, Texas. “For many of us around here, our business is heavily influenced by oil prices and oil companies. As long as oil prices remain down, things are going to be challenging.” Despite the stagnant mood, many diamantaires felt that their businesses have been acceptable as there has been a notable number of customers looking for good-quality stones. Consumers are still requesting triple EX-cut goods that are certified, sustaining demand for those items, according to Andrew Meyer, managing member of Continental Wholesale Diamonds in Tampa, Florida. “It used to be H, I and J colors that had the most demand, now we’re getting requests even for up to D color,” Koret added.
However, the real challenge for diamantaires remains online retailers like Blue Nile that can offer substantial discounts, affecting wholesalers’ clients. “I don’t know how jewelry stores are going to stay in business,” said Roderick Watterson, owner of Diamond Exchange Dallas in Dallas, Texas. “Customers have done a lot of research online but they don’t have all the information at their fingertips. They can ask for certain stones at certain prices, but they don’t understand why there are price differences for what appears to be the same stone,” Watterson continued, estimating this phenomenon to have really taken off in the past three years. “Consumers have access to many resources online. Blue Nile changes their prices quite frequently, and if the retailer does not anticipate that, they could be outsmarted by the consumer,” said Oliva. Koret explains that even with more information, consumers might not understand that things like cloudiness or fluorescence could be the reason why online prices could be lower and that these characteristics are not adequately reflected. While wholesalers do remain price competitive, they reaffirm their stance that their prices are value for the quality of the goods they’re selling. “Customers could be asking for discounts but I tell them that this is a good value price for the quality of goods you’re asking for, and that’s what they appreciate,” said Watterson, adding that the value of human interaction and service is irreplaceable.
Oliva feels that the industry is currently lacking strong jewelry trends that can really pull sales off. “We’re in a flat era of creativity,” he noted. “They’re buying essentials only and you can’t make good margins on bread-and-butter goods,” Oliva said. However, Oliva did notice an increase in demand for custom goods. “If you can facilitate those requests and have staff that can understand what the customers want, customers may be even more willing to pay more for the diamonds,” he continued. There has been an increase in trade-ins as many consumers want to upgrade their jewelry from what they already have. Likewise, Watterson acknowledged a similar increase in resale diamonds, as well as consignment jewelry. “There’s been a lot of buying of goods off the streets it seems,” Watterson pointed out. Looking forward, many wholesalers expect a continuation of the status quo — those who sold poorly expect the same slowness, and those who reported brisk sales expect the momentum to carry. “If the past two months were to be any indication for me, then I hope the next two months will look the same too,” replied Meyer.Article from the Rapaport Magazine - April 2016. To subscribe click here.
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