Dive and bounce: the Golan diamond market report Q4 2020

Edahn Golan

The saying is what goes up, must come down. However, in the diamond jewelry industry, the opposite is equally true: what goes down, must come up. A dive and a bounce back. So while 2020 was a challenging year, it recovered quickly, and all came together in the fourth quarter.

Retail dive and bounce

Total US jewelry sales soared to $13.23 billion in December, bringing total 2020 retail sales to $62.68 billion, according to the latest government data.

This annual figure is impressive considering that US retailers lost $4.76 billion in business between March and May. Jewelry consumer demand fully made up for that loss in the second half of the year.

Year over year, jewelry sales were flat, down 0.3% – an impressive result by all accounts.

At specialty jewelry retailers, the situation was challenging throughout the year. The dive was deep, and some did not recover. However, collectively, retailers did recover, and a splendid recovery it was.

For the collective of independents and chains small and large to do well required hard work. They had great client outreach and improved it further. They were online, available, flexible, focused, and smart about the situation. They remembered every fall is followed by a rise and prepared for it.

Their dive and bounce led to an incredible December. Usually, specialty jewelers’ December sales average 122% higher than in November. This year, they knocked that up to more than 160%.

Based on the sales of hundreds of specialty jewelers, December sales were up a robust 4% year over year – despite the pandemic. For the quarter, sales increased 3%.

Amazingly, the average cost and price of sold units rose 10% in December to $596.25 and $1,110.66, respectively. This proves that retailers, almost no matter what, will always protect their margins.

This leads us to an interesting finding. Based on our research, as the holiday season developed, retailers reduced prices and pressured wholesalers to do the same. Retailers were so successful at reducing costs that they successfully improved their gross margins.

Sales peaked on Christmas Eve

Analyzing sales in December by day reveals that sales rose every day of the week, with Saturdays being the best sales day in December. Sundays were the slowest.

Another finding is that each week was busier than the previous one, until Christmas Eve. Sales peaked the day before, on December 23rd. While there was barely any business on Christmas Day, sales resumed at a decent volume on the following days.

Wholesalers’ deep dive and bounce

The sector that typically suffers the most is the midstream. Manufacturers and wholesalers were forced to practically close shop for a period during 2020. However, following the bounce in retail sales in June, wholesale activity resumed as well.

This was a godsend for manufacturers. Balancing their inventory is always tricky. With no polishing activity and without a supply of rough diamonds, wholesalers just sold their polished diamonds.

The resumption of retail sales, first in China and then in the US, provided them with an opportunity to dry out their stock of goods. And they took advantage of the opportunity.

It should be stated that no part of the diamond pipeline came to a complete and absolute standstill. While some closed shop and others halted activities for a bit, most continued to work at a much reduced level. Manufacturers, for example, bought rough and polished it. Considering the circumstances, they purchased nothing but very specific items that fit their needs.

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Source Edahngoaln.com

Photos © DR, Edahn Golan.