Diamond dealers expect a less sparkly festive season, but they aren’t too concerned.
Record sales have given way to cautious concern. The declining stock market and rising inflation are expected to dampen consumers’ holiday spirits. As orders come in later and later, “okay” sums up the predictions for the season.
New York: Uncertainty in the market
While demand for 2.50 and 3 carats remains strong, Eric Mor senses a general slowdown in traffic. It’s not an observable, “drastic” change, says the president of New York-based wholesaler Abe Mor Diamonds, but the phones are quieter compared with the nonstop ringing of a month ago. He attributes the slower pace in part to the economy; he sees a direct correlation between the “gyrations” in the stock market and the number of calls. But he also believes that the level of business over the last two years is not sustainable.
Since the pandemic, “budgets have increased tremendously — $40,000 or $50,000 is the new $25,000,” says Mor. He cites this as an example of “anchoring,” a term behavioral economists use to describe what customers believe something should cost. “Once people have these big inflationary numbers in their head, it’s hard to go back down.”
He expects last-minute sales for the holiday, since stores know they can source later, especially for ready-to-wear items like tennis bracelets. The exception is the “nice” GIA-certified stones used mostly for custom, which require more lead time. But he doesn’t anticipate late November to December requests for “twenty 1-carat, G, SI1 stones.”
Mor’s clients, independent retailers around the country, are “generally optimistic,” about holiday sales, he reports. However, even after “much stronger summer sales than usual,” he says there is “a lot of uncertainty in the market.” Wary of predictions, he ventures that “the holiday will be okay — but not as strong as 2021.”
Atlanta: Lab-grown popularity
“More and more people who were previously hesitant about lab-grown are now calling us for them,” says Ronit Franco-Pinsky, manager and designer at wholesaler Crown Diamond in Atlanta, Georgia.
“The trend toward lab-grown will be an important factor in driving holiday sales,” she predicts, citing the high cost of natural diamonds. “Lab-grown offers more value for money in bridal and fashion.” She expects lab-grown in 2 carats and above to be a popular bridal purchase for the holidays.
Steady demand for bridal will continue through the season, she forecasts. In both natural and lab-grown, rounds are the top sellers, with ovals “right below.” She has seen a “little bit of a comeback” for emerald cuts.
While she estimates that lab-grown accounts for between 30% and 40% of her overall business, her engagement rings incorporate both these and natural stones. She’s seen a trend toward three-stone rings with a larger lab-grown center — 2 carats, for example — and two smaller natural side stones that might total 0.50 to 0.85 carats. She also designs rings with a hidden halo under the crown, providing “shine and reflection” without overwhelming the center stone.
In addition to a slowing economy, Franco-Pinsky is concerned about the number of calls from dealers who want to sell to her. “Dealers calling other dealers relentlessly indicates slow business,” she points out, adding that “the season gets later and later. Stores are much more conservative; they’re ordering one stone at a time because they know the inventory is there.”
But preferring to be an optimist, she expects sales to “pick up a lot this month and in December.”
Los Angeles: Opting for smaller
“Unlike the past two years, consumers may opt for less expensive gifts this holiday,” says Kalpesh Jhaveri, CEO of Los Angeles-based wholesaler K.R. Gems and Diamonds International. He cites the impact of lower-value portfolios on consumer psyches and spending power. “There is a pervasive feeling of concern that is directly related to the drop in the stock market.”
He believes “demand will be there, but people will be buying a notch smaller.” However, other market factors may create a shortage of the very sizes shoppers want.
“We did not anticipate the RapNet price drop in October,” explains Jhaveri, who is also vice president of the Diamond Club West Coast (DCWC). Given the lower prices, factories reopening after Diwali may not resume production of smaller stones right away, resulting in limited supply “at the heart of the season.”
The holiday orders Jhaveri has already received come with a caveat: “Don’t ship immediately.” Retailers are taking a “wait-and-see attitude” until further in the season.
Fancy shapes are “holding their own,” he says. While he’s seen a “resurgence” in marquises, cushions have “really slowed down.” Consumers are “gravitating toward one-of-a-kind, special designs,” says Jhaveri, whose company offers the patented 81-facet Eighternity cut.
He, too, believes the holidays will be “okay” — “not good or great,” he says, “but we won’t have to worry.”