The nonstop pace of business showed no signs of slowing ahead of the holidays as wholesalers and manufacturers posted record sales. Inventory shortages and high prices didn’t dampen the spirit, and the celebration looked set to continue into 2022.
New York: Informed inventory
“Everyone is gearing up for the holiday in a bigger way than they did in previous years,” said Nick Jain, vice president of sales at New York-based manufacturer Paramount Gems. “Retailers are also taking a closer look at the data to determine what sold in the last nine months to make sure they have the items they need.”
Jain, who sells to independents, said such businesses tended to be more “reactionary” than the majors. Still, they understand supply chain constraints, especially in light of declining inventories, he remarked. “Given the level of sales on the retail front, they are definitely stepping up to replace inventory in a much more meaningful manner than I’ve ever seen.”
His sales were strong across the board. “The independents have figured out their own niche,” Jain explained. “Some do well with I1 materials, and others are selling bigger and better stones.”
He predicted a robust holiday season that would continue through the first and second quarters of 2022. “There won’t be any substantial change — barring a catastrophe.”
After having experienced such a “traumatic time,” he said, the industry has adapted and is better equipped to deal with “something unseen.” Technology is just one aspect; the way people work and travel for business has changed as well. “Companies have become leaner than in the past — and we’re the better for it.”
Indeed, he said, “business has been at an all-time high. Even if there is a downturn in the market, we’ve made a couple of bucks, and we apply cost averaging and move on. That’s the mentality now. We’re riding the wave, and it seems to be a pretty big one.”
Chicago: Competing for goods
“If there is anything we’ve learned from the last 18 months, it’s to expect the unexpected,” declared Ami Sarbagil of manufacturer E.M Trading in Chicago, Illinois.
At the start of the pandemic, no one could have anticipated the “crazy good” business and “big-time demand” of today, he elaborated. That said, demand for the same “narrow alley of goods” is driving prices “super high” for the holiday season. “Everyone is competing for the same items — rounds between 1.25 and 3 carats, E to K in color, and VS2 to SI2 in clarity.”
He noted a decreased interest in diamonds under 1 carat for the holidays, attributing the trend to competition from synthetic stones. “We see this especially in small earrings, a category that has been taken over by lab-grown.”
Sarbagil forecast that the holiday season would be strong, but took a broader view when looking at 2022. Inflation is very real for the consumer, and government stimulus payments have ended, he said — two factors that may influence the overall economy, and in turn, the diamond market.
Nonetheless, while Covid-19 won’t disappear, the fact that Americans have “learned to live with it” will mitigate its effects, Sarbagil maintained.
“It has been a great year for everyone,” he said, adding that his retail clients shared this sentiment. While prices may level off next year, the market is still positioned to do well, if at a slower pace. “It’s like a car that is speeding at 80 miles per hour and then slows down to 60 miles per hour. And that’s okay.”
Los Angeles: Classics prevail
Like Jain and Sarbagil, Danny Moradzadeh expects “a very strong holiday season,” though he noted that demand was higher than supply.
“Retailers are very positive about the holiday,” stated the owner of Unique Diamond International, a wholesale operation in Los Angeles. “They keep buying, and the orders are flowing.”
His top sellers, in both loose diamonds and jewelry, are primarily VS2 to SI1 goods, as well as I1, I2 and I3 items. Studs, tennis bracelets and tennis necklaces are among the classics that have been popular for the holidays.
The end-customer has money to spend, he explained, and retailers are going after those dollars by buying for stock as well. Furthermore, given the shortages in the market, they recognize that if they wait, the goods they want may no longer be available.
Previously, Moradzadeh had felt the market was “undervalued” in terms of price, but “it has come to the point now where it is what it should be.”
He believes business will continue to thrive until at least the second quarter of 2022. “If increased production leads to greater supply, business will suffer,” he cautioned. “But eventually the market will adjust, and next year may be back to normal.”
Article from the Rapaport Magazine - November 2021. To subscribe click here.