Dealers Approach Holidays Cautiously

RAPAPORT… Some diamond sellers in the United States complain that the holidays are moving later and later every year. The surge in orders for diamonds and diamond jewelry does not arrive as soon or as dramatically as these wholesalers would like. Many retailers, they say, buy in a conservative manner to minimize the risk of overstocking on products that may not be in demand when the holidays roll around. Other wholesalers make forecasts based on factors beyond changes in the retail scene and the erratic tendencies of customers, such as steep inflation and a dollar in steady decline compared to other currencies.

“The stores are not buying for themselves. In general, the American market is weak. The dollar weakens tremendously and gives an incentive for other countries to buy diamonds,” said Avi Simkhai, account executive at Kanton Diamonds in New York City. The failure of the holidays to generate a lot of orders, and the general dearth of activity, meant that Simkhai was doing less business than a few months before, though he did report some movement of larger-carat diamonds, namely the 80 pointers and the 21/2-carat-and-up stones.

“Our sales are just about the same. The numbers are flat compared to last year,” said Dror Yehuda, president of the Yehuda Diamond Company in New York City. “You always want to be up — and the rounds, princesses and big cushions are selling across the board, but the other shapes are dead,” said Yehuda, whose company sells primarily to independent jewelers rather than mass merchandisers.

Guarded Purchasing

“Things are scary,” agreed Raj Mehta, owner of Regal Jewels International, Inc., in Cincinnati. Mehta said that a considerable number of retailers are buying in a cautious and conservative fashion, and that he is sending out many of his larger stones on memo, which many diamond sellers would rather not do, even in cases where they’ve known the potential customer for years. But in this case, the caution is mutual; when selling merchandise to the independent jewelry stores, Mehta and his staff suffer from a nagging sense that “We don’t know who might go belly-up right after Christmas.” He hopes that some of the caution will soon evaporate and sales will pick up, but he is actively exploring the possibility of exporting diamonds to India, which has a large, expanding and, in Mehta’s view, consistently reliable market for both loose diamonds and diamond jewelry. That is one way around the uncertainty that he and his staff have come to associate with the U.S. holiday season.

Gearing Up

The level of uncertainty varies from one wholesaler to another – and from one customer base to another. In contrast to more pessimistic wholesalers, Alex Twersky, president of Finesse Diamonds in New York City, said, “We continue to serve our retail base. It’s been very consistent, and we haven’t noticed any sort of falloff. We’re pleased with the level of activity.” His company is enjoying strong sales of cushions starting at 11/4 carats, as well as 3-carat-plus emerald cuts. While he acknowledged that “there’s some truth” to the notion of the sliding holiday for certain wholesalers, Twersky maintained that the reality facing a wholesaler depends on “how you structure relationships with vendors.” His company makes use of price-point incentives, strategically timed throughout the year, and carefully develops relationships with key customers.

Josh Weinman, president of Taché Diamonds, speaking from the Long Island City office of the Antwerp-based company, noted that his company is extremely busy as the holidays approach. “It feels as if business is up from last year,” Weinman said, citing strong sales of rounds and princesses from 1 point to 3 carats, and from J colors and SI1 clarity up. His customers are not pinching pennies. “We sell a premium product, and these customers are willing to pay extra for a premium product,” he said.

Ads Paying Off

“We’re busier than six months ago. Many orders are coming for Christmas,” said Oded Weiss, sales executive at Universal Pacific Diamonds & Jewelry, a New York affiliate of the Antwerp-based Pluczenik Group. The company’s 1-carat stones in the I1 to VS1 range are selling, as are some 1/4-carat, 3/8-carat and 1/2-carat SI goods.

Ari Abaev, account executive at the ABA Diamond Corp. in New York, has developed a Victorian cut that he says blends in well with Asschers and cushions. He senses more activity in the market for this branded line than he did in August — a sign not only that holiday buying is underway, but also that people may be paying attention to the aggressive ads promoting the Victorian cut diamond in Harper’s Bazaar and other venues.

The Marketplace

• 1-carat VS rounds are selling strongly.
• Rounds, princesses, cushions and radiants are selling strongly.
• Ovals are starting to pick up.
• Triple EX stones are moving steadily, with more and more demand for finer makes.
• Cheaper goods, in the $800 to $1,500 per carat range, are selling well.