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U.S. Wholesale
By Brian Bossetta
As might be expected during the peak of summer, diamond dealers returning from vacation in late June and early July reported sales in the U.S. wholesale market “seasonally soft.” Anticipating the summer lull, Douglas Blank, president of Joseph Blank Inc., a diamond wholesaler and manufacturer in New York City, said his company amped up marketing to compensate for the slowdown, which is why, he said, his sales were “better than this time last year.” The longevity of the company — a third-generation, family-run operation for 95 years — was the thrust of those increased marketing efforts. “It’s a more challenging market now,” Blank said. “It’s tougher to get people to buy.” Although he said he hasn’t noticed much growth in the industry in general, he has, however, noticed a better mood overall among consumers, which he believes is due to an improving economy. “People are better off,” he said. “There are more jobs now than there were a year ago.”
Business has been down for Ron Maor, president of Activ-Gem Inc., a diamond dealer based in Houston, Texas. “Maybe it’s just the summer or people away on vacation,” Maor said. “But we’re down a little bit from last year.” But the slower pace of summer and the Fourth of July holiday did not hurt sales for Carl Edelstein, president of Edelstein Diamonds, a diamond wholesaler and manufacturer in New York City, who said the first couple of weeks of July were surprisingly strong. “Traditionally, the industry closes down toward the end of June and the first two weeks of July,” Edelstein said, adding that the first two weeks of July, for him, were robust. “Perhaps it’s because others were away on vacation and we weren’t, but we had a lot of requests. I am very impressed with our July sales.” And though Edelstein said, “SI remains popular,” he has seen “an increasing demand” for VVS and even flawless, G-plus in 2 carats to 5 carats. “Things were lagging a couple of months ago,” he said. “But people have been jumping at these finer goods because the price is right.”
Over the past several months, many in the diamond trade have noted the rise in the price of rough — three price increases so far in 2014. It is a scenario that, as Blank pointed out, makes selling goods more difficult because buyers are more resistant if the price is higher than they expected — or higher than they paid for similar goods the week or month before. “Rough goes up, then polished goes up,” Blank said. “You’ve got to make adjustments.” And while Maor said he’s heard grumblings about the rough price increases, he described overall prices as “holding steady.” Blank remains positive and sees the silver lining on the spike in rough. “I’m okay with diamond prices holding firm or going up,” he said. “I’d rather them be firm or up than soft or down. That means there’s demand out there.” And that demand has been primarily round melees — Blank’s niche — in 15-pointers up to 50-pointers. In the midst of price fluctuations, shortages exist in some categories. Rounds in 30-pointers to 40-pointers have been the most difficult category for Blank to replace. For Nick Jain, vice president of sales at Paramount Gems in New York City, the shortages are in ovals in most sizes. A combination of more demand, less manufacturing and the ongoing backlog in certification at Gemological Institute of America (GIA) are the reasons, Jain said, for the shortages of certain goods. Edelstein said he has had the most difficulty replacing the increasingly popular finer VVS goods.
While most in the industry see the overall economy improving, Debbie Hakimian, vice president of marketing at Doves Jewelry, a jewelry design company located in Great Neck, Long Island, a suburb of New York City, is not as convinced. “Consumers listen to the news,” she said, “and a lot of what they hear on the news about the economy isn’t so positive.” Jain, however, described the current economy as “the new normal” and said he believes consumers are no longer that affected by changes in economic conditions. “People are either going to buy, or they’re not,” he said. “It’s just a way of life now.” Though most in the jewelry industry acknowledge that jewelry is a luxury of life, not a necessity, Jain believes that in a sense — particularly in the bridal sector — that’s not necessarily true. “No one in America is getting engaged without a ring,” Jain said. “Maybe those who would have bought a larger stone are buying a smaller, less expensive stone. But they are still buying jewelry. That’s somewhat recession proof.” That reality — especially with an economy still in recovery — has increased the bridal sector’s importance because it often compensates for other jewelry categories that are still struggling. “Everyone is moving toward the bridal sector,” Jain said, “because that’s where the demand is.”Article from the Rapaport Magazine - August 2014. To subscribe click here.
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