December may be holiday time, but for wholesalers, the entire year felt like Christmas. Retail consumers, still flush with money, have been spending more for larger and better stones, driving optimism for a positive start to the new year.
New York: Higher dollar deals
“It’s almost a record year; sales of larger and better-quality diamonds have been driving the business,” said Eric Mor, president of wholesaler Abe Mor Diamonds in New York. “Our clients, mostly small independent stores, are requesting more VS and VVS than in years past.” He noted that he sold “nicer” Gemological Institute of America (GIA) goods.
He has seen a lot more sales than usual in the $20,000-plus range. Higher prices have not been a deterrent. “Consumers are primed for higher prices because of supply-chain issues around the world — for everything, not just diamonds.”
Observing that “there is still a lot of steam for spending in the market,” Mor predicted “more of the same” for the first quarter of 2022. However, he admitted to being concerned that the industry might be in for a “hard landing,” even if not in the immediate future.
“The business is cyclical, and we always forget about the difficult times when we’re at the top.” As travel restrictions ease, he said, it’s a “pretty safe bet” that consumers will turn that pent-up demand into dollars for vacations and going out.
However, Mor saw opportunities as well. He applauded the “better-late-than-never” De Beers push for sustainability, which he believed would resonate with the younger demographic.
The pandemic led people to appreciate personal relationships, which bodes well for the industry, added Mor. “We should continue representing diamonds as a milestone event. That’s what is important in our lives now.”
Pittsburgh: Extensive inventory
“We never could have expected demand to stay so strong throughout the year,” said Girish Jain, owner of wholesaler Universal Diamonds in Pittsburgh, Pennsylvania. “We’ve sold a lot more tennis bracelets and larger earrings than in a normal year.”
His company has “seen a higher success rate, along with a quicker decision time from our clients,” he continued. Previously, a call for an item was followed by back-and-forth conversations. However, that attitude has shifted to a “buy now” mentality. “Retailers realize they may not be able to replace the item at the same price and in the critical time frame.”
Jain’s practice of always buying when there is a good deal has proved especially advantageous in this market. Having an extensive inventory allows him to fulfill orders at a better price. It has also spurred more calls from dealers. While traditionally, his business was heavily weighted toward small, independent retailers over dealer-to-dealer transactions, he has observed a shift toward the latter, who in turn have become distributors for his company.
The challenge of not being able to travel to clients as he did pre-Covid-19 has directed Jain’s focus to improving the company’s digital assets. This includes high-quality imagery and 360-degree renderings of products, as well as new inventory-management systems and an enhanced website. “We haven’t had the time before, but we want to be at the forefront of technology that will help our clients,” he said.
Jain forecast that the market would stay “pretty strong” through the first quarter given consumers’ formidable spending power. Although he anticipated a “correction” in the future, he preferred to call it “getting back to a normal world.”
Houston: Sticker shock
“Everything is selling,” declared Gaurav Khandelwal (GK), sales director of Union Gems in Houston, Texas, which specializes in fine-make diamonds. “The aggregate sentiment in the industry is optimistic. People are excited because we haven’t seen such strong demand in so long.” He envisioned this being “the way the jewelry industry was in the ’80s and ’90s.”
Khandelwal cited the high-end earring market as an example of robust demand. “Historically, triple-Ex, finer-make GIA rounds were used for engagement rings or a select few earrings, but we’ve sold many, many fine matched pairs throughout the year.”
But strong demand and limited supply have created challenges. “We’re confronted with sticker shock,” he explained; it’s difficult having to buy “what is available, when it’s available, and then paying a higher price.”
Like Mor and Jain, he predicted that the first quarter of 2022 would be a continuation of 2021 with “solid demand,” as retailers would need to replenish inventory. Furthermore, he said, the trade is in a “relatively healthy financial position” and well-capitalized. He believes there will be a “recalibration” from the demand and supply perspective. “We’ll get some clarity with the alleviation of supply-chain issues and the stabilization of Covid-19.”
Article from the Rapaport Magazine - December 2021. To subscribe click here.