The Las Vegas jewelry show season injected some confidence back into the diamond trade, despite a drop in attendance. Beyond the trading prospects for buyers and suppliers, last week’s shows provided a snapshot of the diamond and jewelry market.
As I spoke with industry leaders and members of the trade, and attended the many impressive seminars on offer at the JCK show, I found the market in a better position than it was a year ago – despite its lingering challenges.
After a week in Las Vegas attending the JCK, Luxury and Couture shows, here are the underlying factors currently influencing the market:
1. Trading stable but no Urgency to buy
The market is functioning, and there is some confidence in US demand. Significantly, jewelers are adapting to shifts in consumer trends more than they were a year ago.
Savvy jewelers are developing omni-channel capabilities with social-media strategies in place, and are providing bespoke, customized services and products, which will carve their position in the market. Those that aren’t taking these steps are falling by the wayside.
However, the retail environment is still volatile and evolving. A drop in sales at Signet Jewelers and Tiffany & Co. has raised concerns about the majors, while the “mom-and-pop” independent segment continues to shrink, adding to the uncertainty.
“The market is OK, but it’s not totally robust,” said Stanley Zale, vice president of diamonds and gemstones at Stuller, a large jewelry wholesaler and distributor. “The old business model doesn’t work anymore, as jewelers have shifted from being inventory-heavy to operating more efficiently.”
They certainly weren’t looking to build up inventory at the show. A number of diamantaires noted that buyers were looking for goods but weren’t spending their full budgets. Buyers were looking for a narrower range of diamonds, demonstrating good demand for better-quality H- to J-color, SI-clarity diamonds – which weren’t always readily available.
Buyers were also shifting to lower price points, willing to compromise on size within that H to J, SI category range, which reflected consumers’ tighter spending in the current US economic environment, explained Charles Rosario, vice president at New York-based supplier Lazare Kaplan.
“Retailers are adjusting to middle-income consumers who are still finding their footing and will buy at lower price points,” Rosario explained. “It’s not about margin, it’s about survival.”
Edahn Golan, a researcher at NDP Group, which provides data analytics about the retail sector, estimated that average retail prices for diamonds softened by 1% in 2016.