The warm season has begun with a slowdown in demand, but continuing price hikes dominate concerns about the state of the industry. Anxiety over the economy and inflation still outweigh issues of Russian-origin diamonds on the market.
New York: All about retail
Ketan Mehta anticipates that sales this summer will be a notch down, but closer to what was considered a “normal season” before Covid-19. However, given the “fantastic sales of the past two years, psychologically business may seem even slower,” said the president of New York manufacturer Divina Creations.
Inflation, the decline of the stock market, and the desire to resume travel have driven a liquidity crisis that’s been lessening the “appetite of US consumers for luxury goods,” said Mehta. He predicted that dealer-to-dealer business would weaken as a result.
Still, even as demand slows, prices are “holding steady at high levels,” unlike in a traditional summer, where prices might drop by 5% to 10%, he continued. If the prices of natural diamonds don’t soften, he warned, people with lower budgets may opt more frequently for lab-grown.
While the sanctions on Russian goods have not impacted his inventory, Mehta has been adamant about ensuring that clients know his company is an ethical supplier. His memos and invoices all state that his goods are not of Russian origin.
Mehta offered an “educated guess” that sales would be slower than usual for the remainder of the year. But he was also relying on his experience. “Our business beats to the pulse of retail. The 1% don’t count, because they will always buy. We depend on the spending power of the average person. My gut tells me that retailers will not be making the same sales as they did over the last two years.”
Pittsburgh: Managing inventory
Given the price jumps across the board in the first quarter, Girish Jain admitted to being concerned about the industry’s ability to sustain such increases. Coupled with stock-market and inflation worries, this has made for a general market sentiment of “holding up a bit,” said the owner of wholesaler Universal Diamonds in Pittsburgh, Pennsylvania.
“Our bridal business has stayed steady,” added Jain, though he noted “fewer calls and sales” for larger items such as studs with a total weight of 3-plus carats, and tennis bracelets totaling 8 to 10 carats or more. These were consistently strong sellers in the last 18 months, he said, but “we’re no longer the beneficiary of those dollars that people are now putting into travel.”
Being unable to source stock “at a price” has been a significant problem, he continued. “We haven’t been able to replace stock that is now 20% or even 30% higher than a few months ago. But we’re service-based, and we do all we can to make it work for our clients.”
While he said awareness of the Russian sanctions had not yet trickled down to the end consumer, he felt that viral media coverage could “flip a switch” and make origin comparable to sustainability as a key criterion. One of his goals is to create a program that attests to stones’ origins, but tracking melee is more complicated than single diamonds. He also wants to focus on strengthening his business’s inventory-management system based on the lessons of the past two years. “Companies that effectively manage their stock are poised to do well in the long run, especially when we return to a more normal time,” he stated.
Dallas: Bridal strong
As summer began, Gadi Spiro saw the market moving at a more tranquil pace compared to the “crazy busy” activity of earlier this year.
“After Covid-19, we anticipated that sales might slow, but we didn’t expect that everything — food, housing, gas — would become so expensive. Our industry is the first to get hit,” said the president of wholesaler SJ Diamonds in Dallas, Texas.
Bridal is still driving his business in both volume and price point. Elongated shapes, along with the always-popular rounds, have been his best sellers. “But I have never experienced the high prices — often full list — that these stones command.”
As a result, Spiro has changed his buying strategy to purchasing only stones he knows he can sell. The shortage of goods “at a price” is occurring worldwide.
He has been approached via RapNet by potential clients in Europe and Asia, which he views with some alarm. “People who used to be overwhelmed by the amount of goods in the market are seeking out smaller wholesalers like myself because I have a stone they want.”
Spiro has encountered few questions about whether his stones are of Russian origin, and even those have been more general rather than need-to-know. But the question that most frequently comes up among his colleagues is about the state of the industry. “The market seems to be upside down; we’re at a standstill. I’m hoping for the best, but it’s too difficult to make any predictions. I’m locking my crystal ball away.”
Article from the Rapaport Magazine - July 2022. To subscribe click here.