RAPAPORT... Christmas gift-giving by young Japanese men is on the decline, according to Takenobu Ishikawa of Bambi Jewelry Co., Ltd., a jewelry manufacturer and wholesaler. He said he saw a recent survey that reported that 35 percent of men in their twenties give gifts to their girlfriends and/or significant others around Christmastime, compared to 65 percent of men in their thirties and forties who said they gave Christmas gifts when they were in their twenties. The numbers prove that “romantic gift-buying has declined to half of what it was decades ago,” said Ishikawa. It should be noted, however, that the vast majority of Japanese are not Christian and that Christmas gift-giving is considered “fashionable” among younger Japanese, rather than a reflection of Christian tradition.
Something NewBambi Jewelry is one of the pioneers in launching stainless steel jewelry into markets, which it began doing when precious metals prices started to rise. Because of the jewelry’s casual look, affordable cost and focused marketing, the products enjoyed considerable success among younger consumers. Yet, the company is finding this year’s Christmas one of its toughest.
Ishikawa said Bambi had been keeping 2008 projections generally in line with 2007 sales, but a couple percentage points behind. But, in the past couple of months, sales slowed substantially. “I heard manufacturers in Kofu are reporting 2008 sales less than half of last year’s, which were not spectacular to begin with,” he said.
In 2008, Bambi added another unisex casual line and is marketing the pieces to sell in pairs. “We learned that men find it awkward to walk into jewelry stores by themselves, even though they buy jewelry on the internet,” said Ishikawa. “So we coupled the pieces in the line in pairs. In this way, the men’s mental barrier is removed when they walk in with girlfriends and they each buy a piece of jewelry.” Items in the new line are priced between $50 and $100.
Hohoemi Brains Inc. is another innovative marketer.
Several years ago, the company discovered a formula that they claim enhances brilliance and scintillation in diamonds and they began marketing the diamonds as O.E., for “Over Excellent” Cut. The name is designed to reinforce the claim that the stones exhibit more brilliance than conventional 58-facet round brilliants that are graded “Excellent” by labs. But O.E. Cuts do not fall into conventional 4Cs criteria, so the company needed unconventional ways to market them.
One way that has proven successful was a cooperative venture with individual airlines to sell their customized jewelry lines in the sky. This Christmas season, in addition to the $500 jewelry items previously sold on flights, Hohoemi produced a more affordable $200 line to expand shoppers’ options.
In another product expansion, Hohoemi added $300 jewelry pieces to its regular O.E. line. Admitting that “the economy is hideous,” Nozomi Kawabuchi, managing director of the company, said that is not the only reason the company added a lower-priced line. The other reason is that Hohoemi’s factory recently developed the capability of producing small-size O.E. Cuts that can be priced lower.
“Christmas is not our holiday, but still, December sells twice as much compared to other months of the year,” said Kawabuchi. In Hohoemi’s case, 2008 sales are running 120 percent over 2007.
Down, Down, Down“The market is crushed. The prices of diamonds have plummeted across the board,” reported Masahiko Akaike of Orient 4Cs, a jewelry and stone wholesaler. Dealers are frantically cashing in before they deteriorate even further. Foreign buyers who provided some sales support are no longer seen in the market. “After the news of financial crises swept through the world, the yen got stronger, moving from approximately 115 yen to the dollar to 95 yen to the dollar. That makes exports from Japan costlier. Perhaps this is one of the reasons for the fall-off in sales, but probably, there are no buyers in the foreign markets either,” said Akaike.
In addition, credit lines are squeezed. Anyone who wants to get out of the market wants cash payments, pushing prices downward even farther, said Akaike. But for those who have money, this is an opportunity. Orient 4Cs is aggressively buying stones and precious metals, as Akaike sees the market near bottom, if not at bottom. He reasoned: “The Nikkei went down to the 6000s and bounced back to the 8000s. It never fell back down to the 6000 level again.
“The price of platinum has dropped to about $25 per gram,” continued Akaike. “Compared to the $75-per-gram price earlier in 2008, we can buy three times more at the current level. As a wholesaler, we need to trade every day, the day-to-day fluctuation is inevitable. But, if old inventories are replaced with new inventories, that will bring down our costs. If losses are incurred, we can use them as tax breaks, or carry them on the books for five years.”
Retailers in general are not so fortunate. Those who are stuck with high-cost inventories are trying to stock new items as late as possible, sometime after December 20.
The Marketplace• Prices are down across the board, from larger than 5-caraters to 4/4-grainers
and pointers.
• Fancy colors are very quiet, with few buyers and not much demand.
• Yellow fancy colors are very weak.
• Good pinks are off the market.
• Good melees and smalls are stable and there appear to be a limited number of suppliers. On the other hand, weak melees and weak smalls have dropped substantially in price.
Article from the Rapaport Magazine - December 2008. To subscribe click here.