The fourth quarter began on a positive note as the increased pace of business allayed some concerns about the impact of Covid-19. But now the focus has shifted to whether inventory availability will meet demand.
New York: High-end going strong
“There was a doomsday scenario hanging over us. Fortunately, it didn’t happen, so in that context, business has been okay,” said Ketan Mehta, president of New York-based manufacturer Divina Creations. However, he voiced concern that it was the various government stimulus packages that were driving business, and that once those funds ran out, buying might slow down.
Compared to before the pandemic, Mehta has observed that jewelers have “a very clear understanding of exactly what their customer wants and are able to communicate it more effectively to us. The calls are very specific, and generally the rate of return is minimal.”
High-end — his specialty — is selling well, he said. “We have sold more 3- to 5- to 6- to 8-caraters in the last four months than in January to February. Given that people are not eating out or going on vacation, they’re trading up from a $10,000 stone to a $15,000 diamond or $30,000 to $40,000.”
However, the “head-scratching” question for Mehta has been whether to replace that $200,000 stone because of turnover concerns. Inventory is a “little bit of a problem” in certain segments, but he believes it’s more artificial than real, because “goods are there if you’re willing to pay the price.”
“Everything is a new lesson; there is no historical data on which to base decisions now,” said Mehta, who is generally an optimist. Still, he admitted, “once the honeymoon phase of money has dried up, and with the elections done and over with, it will be interesting to see what happens during the Christmas season.”
Chicago: proactive approach
Keith Zimmerman in Chicago, Illinois, has been seeing “excellent activity,” with sales from over the summer continuing into September. While the president of wholesaler National Diamond acknowledged that he hadn’t recouped the business he’d lost during the eight-week shutdown — “that’s gone” — he said volume for July and August this year matched that of the pre-coronavirus summer of 2019.
Zimmerman attributed the strong figures to the fact that he supplies stones for engagement rings, which are still in demand during Covid-19. However, he also noted that his clients were primarily in towns that had less economic disruption than major cities.
He did not discount the possibility of another shutdown, given the still-high infection rates in Illinois and even higher rates in other Midwestern states as of press time. Worried about potential flare-ups, he has been proactive in preparing the workplace. Approximately 40% of his employees work from home, and he has implemented social distancing measures in the office. He has two teams that don’t come into contact with each other, enabling the company to remain open if someone becomes ill.
Zimmerman is optimistic about the rest of the year, assuming he’s able to replace the items he needs. “Supply is a big concern right now, which could change the course of the business. It’ll be a decent year if we get the goods — better than 2008.”
Los Angeles: Social media buzz
With the proverbial “knock on wood,” Shannon Eichner reported a “pretty good summer” following his company’s reopening on June 1. A partner at wholesaler Aronow & Ross, Inc., in Los Angeles, California, Eichner attributed the strong sales to continuing demand for its commercially viable matched pairs and diamond studs in quarter- to 2-carat rounds.
Jewelry sales have also benefited from people being unable to travel and go on vacations, he believes. “Taking kids to Disney World is expensive. Some people are stepping up and buying pieces that they can pass down to a child.”
However, he stressed that procuring the right merchandise in a timely manner was a critical part of the equation. “Shipments have resumed, but we spend a lot of time contacting our suppliers with very specific requests to ensure that we get the goods we need.”
Adapting to the new situation is important as well. “Everyone wants normalcy back. But we’re going full steam ahead, recognizing that changes have to be made, and there are opportunities in that. The phone doesn’t ring, and we can’t pound the pavement going from store to store, but social media has opened up new avenues of business for us.”
Depending on the economy and what happens in November, Eichner expects a good Christmas season — but “only if we can get our hands on the right merchandise. That’s what it boils down to.”
Article from the Rapaport Magazine - October 2020. To subscribe click here.