Rapaport Magazine

Lazy Days

US Wholesale Market Report

By Michael Washburn
RAPAPORT... Summer can be a slow time for many industries, but just how serious a slump was August for diamond sellers?

“Wholesalers, retailers, everybody’s complaining,” said Mike Rabbanian, owner of the International Diamond Club, Inc., in Los Angeles. He noted that his company was selling some 3-carat VS stones in the $6,000 to $8,000 range. But sales were much slower than six months ago, a problem Rabbanian attributed partly to a stagnant economy. The Federal Reserve’s decision to raise interest rates in the summer from a 40-year low left consumers with less discretionary income than before. In such a situation, luxury goods can be a lower priority for consumers than vacations.

“It’s very slow; nothing much is in demand,” agreed Shakeel Japanwala, sales executive for C.D. Diam, LLC, in New York. His company was selling a few 1-carat and 2-carat princess cuts, mostly D through G and VVS1 through SI2. Rounds were moving at a steadier clip than any other stones, but this did not change the overall sluggishness of a period when many retailers and customers were relaxing in the sun.

“I’m not getting a tremendous amount of calls, and the internet has slowed things down a bit for me,” remarked Renee Samuels, president of Renee Samuels, Inc., in Miami, Florida. Although her wholesale operation was enjoying fairly strong sales of princesses, cushions and radiants, the calls for larger stones were fewer than usual, and she didn’t expect things to start picking up until some time after the Jewish holidays in September.

Stopgap Measures

According to Raj Mehta, owner of Regal Jewels International, Inc., in Cincinnati, Ohio, “The summer is slow. Stores are not placing orders, and people are buying diamonds on the internet,” The slump has made it necessary to improvise. “In order for us to make the same volume or a larger volume of diamond sales than last year, we are approaching a much larger number of mom-and-pop stores,” Mehta continued. This spontaneous campaign involves marketing new lines of luxury items that Mehta’s company has developed, such as its J. Modo line, which will feature yellow-gold earrings with 2- to 3-carat colored diamonds. Hoping to stave off poor seasonal sales, Mehta’s sales team has scoured his region for potential customers, with mixed success – the line is “too modern” for some tastes, but is selling all right in Cincinnati and other cities. Mehta predicted that a general upswing was just around the corner.

Sober Optimism

Indeed, a number of vendors voiced sober hopefulness about the weeks to come. David Kirschenbaum, account executive at Martin Kirschenbaum, Inc., in New York, reported modest sales of fancy color diamonds of 3 carats and up, a trend he expected to continue. Jeff Conkey, president of Pittsburgh-based Don Conkey & Sons, Inc., said that his 1-carat princesses and cushions were moving, as were his 1.25-carat rounds. In the midst of a general slowness, Conkey sees hints that a significant fall season is on the way, something that many people in the industry had doubted only a few months ago. Orders from retail stores are starting to pick up, and Conkey expects this wave to rise more and more in coming weeks as retailers make calls in order to fill their shelves for the coming Christmas season.

Chetan Gandhi, account executive at Milistar NY Inc., said that retailers were “not at all in the mood yet” for high volumes of purchases, but he expected this to change in a few weeks. Gandhi predicted that Laxmi Diamond, the Mumbai-based manufacturer supplying Milistar’s U.S. sales, would soon begin heavy production of supplies for Christmas, and then, “We’ll see momentum in the market for rounds and princesses. It’ll be a late season opening, but I expect it to pick up.”

Modest Success

Moshe Klein, director of sales at the Julius Klein Group in New York, described a market where demand is running pretty high for larger stones and for some off sizes. “Fancy shapes are selling quite well, especially pears and heart shapes, which seem to be in the greatest demand, said Klein, adding that “1- to 2-carat stones are not selling as much, but the large continue to fly off the shelves.” In his analysis, demand for bigger diamonds is strong enough to outpace the supply available to some wholesalers.

The Marketplace

• Marquise cuts of 0.50 to 2.50 carats are selling decently.
• Cushions of all sizes are selling steadily, and radiants are beginning to pick up.
• Large stones, D-F, are selling well for some vendors, but not for all.
• Fancy shapes, especially pears and hearts, are selling modestly.
• Very large stones, 8 to 10 carats, D-F and H-J are top sellers.

Article from the Rapaport Magazine - September 2007. To subscribe click here.

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