Rapaport Magazine – Wholesale in the USA: Diamonds turn out to be bright spots
The bride remains a likely driver of holiday earnings amid growing recession fears.
Elongated fancies are always in style, but round ones are in a class of their own when it comes to the best-selling bridal cut. While sales may not match 2021, the couples are still getting engaged — a fact that tempers worries about the economy.
New York: Stable and seller
“It’s about having the right inventory,” says Abe Fastag, vice president of New York-based wholesaler Ideal Brilliant Co. “The percentage of sales when a serious call comes in is higher than it has never been because the goods are scarce – and that also applies to the bride.
He discovered that “rounds are always in demand. Fantasies are doing quite well because they give customers a way to create a more unique look. While ovals are selling well, he sees strong interest in pretty marquises, followed to a lesser extent by pears.
Based on its sales, the average center stone is typically 1.25 to 1.75 carats, with prices typically ranging from $5,000 to $15,000. Most diamonds are of VS and SI clarity. It only sells colors D to J.
Additionally, while diamond prices have risen, the increases don’t compare to increases of more than 30% for other luxury goods like handbags and shoes.
From this perspective, Fastag believes the diamond industry is more stable. “If diamond prices had gone that high, I would say we were in trouble,” he says. He takes the positive view that the bride will remain strong.
“We get a sense of what’s happening in the retail market very quickly,” he adds. “We are all interconnected now.”
Chicago: push towards pear shapes
“Ovals are so hot; they have been a huge trend for nearly four years. We call them the new princess cut,” says Aaron Goynshor, marketing director at wholesaler United Gem Ltd. in Chicago. “We are seeing strong demand for elongated radiants, as well as a small push towards pear-shaped diamonds.”
Goynshor also cites yellow gold as a “big trend,” especially for finished wedding rings. In wholesale dollars, the average ring is between $5,000 and $15,000 for a 1-2 carat center stone. It reports good demand for 0.80 and 0.90 carats, as well as larger stones in the 2.50 to 3 carat range. Popular colors include G, H, and “sometimes I”. Clarity rarely falls below SI2, he says; 80% of diamonds requested are usually between this and SI1.
Still, Goynshor worries about a “perfect storm” of rising diamond prices, limited ability to source everyday consumer goods and the threat of recession that is “in the bottom of the everyone’s mind.” He predicts that sales of vacation units will remain the same as in 2021, but the average price per unit could drop. He also believes traditional retailers will play a bigger role in driving sales because of the value-added services they provide.
He dismisses “dark and catastrophic” predictions that the retail store is dead and all sales are moving online. “Many local jewelry stores are doing better than ever. Diamonds are one of the few commodities that have not become ‘Amazonified’ and totally relegated to the virtual world.
Los Angeles: request for the GIA
“Emerald cuts and ovals are the most active,” says Raffi Donikian, owner of wholesaler LA Diamond Supply in Los Angeles. The Radiants round out the trio of best sellers, he adds, and the Towers – despite their historic status as a perennial favorite – have been “underperforming”.
The average center stone sale he sees is 1.50 carats, with the wholesale price ranging from $5,000 to $15,000. Most consumers seeking Gemological Institute of America (GIA) grading “lean towards H-plus” in terms of color. The G, SI1 stones represent the “pleasant, intermediate, GIA-rated category,” he says, though he also receives calls for the lower colors J through K.
He encounters supply problems; specific premium sizes of 1.30, 1.70 and 2.50 carats are “very rare”, he reports.
The current high cost of crude is “not completely outrageous,” he says, “but rather keeping pace with inflation, or maybe a little bit above it.” He sees it as “something we all have to get used to”.
The engagement market is expected to continue its strong trend, Donikian predicts, although he anticipates holiday sales will be “not as good as last year.” He is worried about a possible recession in the fall which worries consumers.
When it comes to supply shortages, however, he opts for ethics over ease of doing business. “I know that many dealers are complaining about the shortage of rough from Russia, but it is well justified. I agree with that even if it affects our wallets, because it pales in comparison to what people are going through in Ukraine.
Article from Rapaport Magazine – September 2022. To subscribe click here.