The recently ended third quarter produced a sense of déjà vu, with a summer slowdown reminiscent of pre-pandemic days. Bridal remains the key driver of business even as economic concerns cloud the outlook for the fourth quarter.
New York: Summer months critical
Greg Telonis, president of New York wholesaler Mr. Baguette, describes business as “solid.” Despite a slight slowdown overall, he points to the “good flow of sales and the fact that people are paying their bills in a timely fashion.”
Prices are firm, he notes, adding that the industry needs to get used to continually rising prices. Citing some attitudes as short-sighted, he advocates a more realistic strategy: “If the marketplace moves, then you have to move with it.”
Telonis, who specializes in baguettes and fancy shapes, buys inventory aggressively throughout the year to be better positioned to make the sale. However, he acknowledges, some items are difficult to obtain. Tapered baguettes have become a huge issue, he says, because they are “not readily available or being cut.” Unlike straight baguettes, which are bought in multiples of 30 or 40, tapered baguettes sell in batches of two to four stones at a time. Triangles are in short supply for the same reason.
Telonis anticipates moderate fourth-quarter business, especially considering the inflation and declining stock market in the US, along with the slowing world economy and the war in Ukraine. Still, he advises, “don’t discount the third quarter.”
“The jewelry industry has not been a fourth-quarter business for several years,” says Telonis, explaining that it has become a year-round business driven by bridal and anniversary. “Except for the pandemic, Christmas sales have been disappointing. If we rely on the fourth quarter but experience a weak third quarter, the results will not bode well for the industry.”
Chicago: A call to Maintain prices
Eitan Borochov describes business as alternating between “normal and mixed.” He continues to sell, but not as often as he would like. As a result, the owner of Chicago-based wholesaler ABC Diamonds senses a slowdown in the market that could continue through the fourth quarter.
Borochov, who specializes in 0.50-carat goods and larger, has limited his buying activity, more because of price than availability. “There are plenty of diamonds in the market,” he explains, noting that ovals are “hot and very expensive” compared to other cuts.
He is concerned about the lack of stability in pricing, which makes it difficult to determine the direction of the market. “I think prices have moved up too much and too fast over the past year,” he says, noting that “as soon as prices move up, then sales slow down.” He recommends keeping prices stable for at least three months, which would allow time “just to let the industry settle.” Afterward, the price leaders could analyze the market and adjust as needed.
Consumers are also feeling the uncertainty. “People are more aware of high prices and inflation and may hold back for the holidays,” says Borochov, adding that the political divisions in the country also take a toll on consumer confidence. “Women are always going to get engaged, but buying diamond jewelry may slow. I’m hoping for the best, but not holding my breath.”
Miami: Eye on the economy
After a “more typical” summer, Máximo Quiñones thinks “the tightness in the availability of larger, finely made stones in the market has eased up, and we no longer have the shortages that we saw over the last two years.” The president of DVG Diamonds, a wholesaler based in Miami, Florida, points out that dealers are also getting back to their routines, which bodes well for securing large inventories going into the holidays.
While diamonds of very nice quality in VS2, SI1 and SI2 clarities still command higher prices, Quiñones says these stones are “moving very well downstream.”
DVG Diamonds specializes mostly in Gemological Institute of America (GIA)-certified, 1- to 10-carat stones and matched pairs of diamond studs. The supplier also offers special-order fabrication support to jewelers in the US and Latin American markets. To navigate higher prices and find good value, Quiñones goes beyond buying goods that are trending, like elongated cushions, and blends large purchases with staples such as round stones and matched pairs.
He cautions that the economy will have an impact on end-of-year sales. “The bridal sector will remain strong, as couples getting engaged are unfazed by talk of recession.” However, he thinks the economic news has rattled customers for fashion jewelry; sales of smaller tennis bracelets and straight-line necklaces have cooled off, he observes.
Quiñones predicts that 3-carat diamonds and up in the $40,000-plus range at retail will be “very strong” in the fourth quarter, while goods below 2 carats “always sell well.”
Article from the Rapaport Magazine - October 2022. To subscribe click here.