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Despite the tough business environment, diamond wholesalers who spoke with RDR in April were mainly positive in their long-term outlook. Most stressed that while business is slow, it has not stopped completely, and many noted the opportunities available to savvy players.
Cash Equals Discounts“I’m sure you’ve heard cash is king. If you have money, you can buy stones at big discounts,” reported Jay Moskovitz, vice president of Robert Moskovitz Co. in New York. He believes his firm’s strong balance sheet is due to a swift and pragmatic response to lower market prices for diamonds. When prices decreased, his company moved to sell its older goods at reduced prices, then used the cash influx to negotiate deals on new goods.
Mike Rabbanian, president of International Diamond Club in Los Angeles, California, expressed a similar viewpoint. “You have to be creative. We are offering new pricing. We are not doing worse than 2008. When the prices went down, I accepted the reality.”
Andrew Rickard, vice president of operations for RDI Diamonds in Rochester, New York, observed, “You’re able to put diamonds in the hands of your jewelers for a very competitive price. Goods are prevalent and you can buy very well. I think it is a good time for someone who is strong to be in the market. It’s a good time to be aggressive.
“Suddenly in February, we saw a lot more conversions — retailers converting memo transactions into sales. I’m certainly very enthusiastic, given what we’ve seen, that it will continue. I doubled my sales force in the past month.”
Shakeel Japanwala, manager of the certified diamond division of New York’s C.D. Diam, concurred that there is some movement in the market, calling bridal diamonds “a necessity for the middle class.”
Nabbing JCK BoothsWith the JCK Las Vegas Show on the horizon, some moved to take advantage of the reduced number of exhibitors. Rabbanian said his company had “expanded to two booths and we are trying to get four. We only think positive. Serious, stronger people are going to do better than before. We had so much competition in the past, but now they are not around anymore. Things are settling to the correct quotient.”
Nick Jain, vice president of sales at Paramount Gems in New York, seemed to agree. “I think the expectations are definitely lower, but if you just get in the cycle of not being creative, it becomes a downward spiral. We have four booths and I just signed up for Luxury. We expanded in anticipation of gaining market share for the long term.”
Japanwala noticed that hotel prices in the Las Vegas area have gone down. “I think there will be fewer exhibitors this year. I wanted another booth and I was able to get it. I have been wait-listed for ten years.”
Moskovitz’s firm, however, doesn’t attend trade shows. “I can’t believe people are actually going to shows. I can’t see them being a success these days,” he reasoned.
Hanging in ThereIn general, wholesalers continued to concentrate on survival. Japanwala clarified, “We are trying to do as many sales and as much customer service as we can. We are trying not to lose any of the customers we have and to give them more service.”
“It can’t stay like this forever,” stressed Moskovitz. “We’re trying to hang in there until it’s over.”
Rabbanian noted that “We communicated with our customers in a newsletter to tell them to have faith in their business. My advice is to stick with what you know. The business is not on cruise control anymore. You have to take the driver’s seat. Clients are not really investing in the hope of future sales. But if they don’t have diamonds and jewelry, what are they going to sell? They are not lawyers or doctors or singers — they are jewelers.”
Optimism Japanwala noted that the marketplace is in flux. “There are a lot of strange things happening. With the changing market, smaller businesses are disappearing and big companies are fighting bankruptcy. Luckily, we are not too big and not too small.” He went on to predict that business will improve this summer. “Between Mother’s Day and Las Vegas, things will start happening.”
Rabbanian remains positive. “For sure, prices are not going higher. Things will adjust themselves to a more normal market than before. People who were speculating will not be around and it will hopefully be a healthier market.” He forecasted three to four more months of the current conditions, followed by improvement.
“As players get weeded out,” Jain recognized, “it gives a company like us a better grip of the overall market.” Rickard also sees sales on the horizon. “I do think we’re going to see that market continue to come back. I think people get sick of feeling bad.”
The Marketplace• ½- to 1½-carat diamonds are seeing some movement.
• 2-carat-and-larger diamonds are no longer at a complete standstill.
• Most buyers are looking for G, H and I colors and SI quality goods.
• Lower-end certified diamonds can be sold if offered at a generous discount.
• After rounds, the most popular shapes are cushions and princesses.
• Demand for melee is soft.
Article from the Rapaport Magazine - May 2009. To subscribe click here.