At the start of the fourth quarter, wholesalers expressed optimism about sales for the remainder of 2018, even as some acknowledged the reality that holiday orders might only start coming in during the last two months of the year.
New York: American pride
“My customers are ordering — they want to be in stock for the holiday,” reported Reuven Kaufman, president of New York-based diamond manufacturer Reuven Kaufman Inc. “Retailers are predicting
a good season, so that is good news for
the industry.”
Kaufman, who is also president of New York’s Diamond Dealers Club (DDC), was buoyed by the results of the DDC-sponsored India Diamond Week — especially the psychological impact on wholesalers. “We sold a lot of goods, but more importantly, the event represented a burst of energy for the industry,” he said. “It proved that America still has the goods and New York is still a very vital market. Creating relationships with American wholesalers is so much easier than working with someone overseas.”
Bread-and-butter goods in rounds and ovals have been “selling over the top,” he went on. He described the rise in demand for 2 and 3 carats as “very encouraging — even up to 5 carats,” calling it “good for business, because we need more expensive stones to sell as well.”
Another trend from India Diamond Week that boded well for the industry was a move toward buying more inventory and relying less on memo. “If retailers are ready to stock items, we may become a regular wholesale industry again,” said Kaufman.
He cautioned, however, that wholesalers and retailers had to work together on adding value. “You have to be creative. Don’t despair, but make your story the most interesting, or you will be left at the bus stop.”
Chicago: Strength in memo
“Memo business is the key to the wholesale business,” asserted Ami Sarbagil of E.M Trading, a diamond manufacturer in Chicago, Illinois.
Until about two years ago, memo accounted for 75% of his business, and the other 25% was stock sales to his clients, which are primarily independent jewelers. However, he has seen the latter figure shrink “big time” to about 10%. Stones on memo have to be fine makes, he added, since there is competition from other wholesalers sending out diamonds on consignment.
Last-minute memo business will be a factor in determining how well wholesalers fare in the next three months. Sarbagil predicted an “absolutely good holiday season,” citing positive consumer confidence. “The stock market remains strong, and for most people, that is the gauge of how well the economy is doing.”
However, having the inventory to provide clients is a make-or-break issue for wholesalers, he cautioned. “The jeweler will call the second week of December and will want the stone right away. You have to be able to provide it.”
Overall inventory was stable, except for the inexpensive piqué goods in I1 to K1. “Whether we like it or not,” said Sarbagil, “prices are up.” He has seen strong demand for 0.50- to 2-carat stones, and said the US remained an “SI market,” with little demand for VS. And while noting that pear-shapes were “coming up,” he anticipated an “oval holiday season.”
California: Service is king
“The market for jewelry is good, but the wholesaler has to take a proactive approach with retail clients,” said Nader Malakan, president of manufacturer Malakan Diamond Company in Fresno, California. “The sale will go to the one who offers better service. Even if you have the best stones, if you don’t respond immediately, the client will find someone else to close the deal.”
Given the economic markers, Malakan expects a good holiday season. However, he pointed out, December has become anywhere from a “regular month to a good month” in terms of retail sales, and he prefers to focus on developing a year-round business with his clients.
Since he supplies jewelers nationwide, his business is subject to the vagaries of the local economy.
“From the corn belt to the oil-producing states, every part of the country has its own cycle,” he said.
“Rounds are always going to be 70% of the market,” Malakan added, but pointed to the popularity of ovals and cushions, with fancy stones showing strength. He predicted that jewelry sales would rise 3% to 4% at retail yearly, but acknowledged the competition from online sales and from diamond cutters in India selling directly to these e-tailers.
In that vein, he stressed the importance of keeping retailers in business to support the wholesale market. “Jewelry stores create that romance that sells not only bridal, but the tennis bracelets and earrings as well. [Retailers] can always sell that one diamond, but [they also] have to sell the other diamonds that we cut.”
Article from the Rapaport Magazine - October 2018. To subscribe click here.