Later this week, the Hong Kong International Diamond, Gem and Pearl Show will open in Hong Kong, signaling the start of another year heavily populated by trade fairs. In a month, Baselworld will take place. In four weeks between the close of the show in Hong Kong and the opening of the show in Basel, no less than four important, yet more regional, trade fairs will take place.
Consider the following: diamond jewelry sales are not as good as they used to be. The decent margins wholesalers and retailers used to have on diamonds have shriveled. While luxury sales are growing, diamond jewelry sales are losing market share in the category. Consumers are losing interest in traditional diamond jewelry, opting instead for alternatives such as lab grown. Considering all this, my question to the industry is ‘what are we doing to turn this around?’
Prices of smaller goods, one carat and below, completed six months of price increases in January. Larger goods, however, which suffered from price declines late in 2018, continued to decline in January, according to the Mercury Diamond Global Tracker™ (MDGT™). The price changes were just shy of a single point for those that increased in price, while the declines were more dramatic.
The wholesale diamond market was slow in January. This is seasonal and somewhat expected, however in January retailers generally replenish their inventories and prepare for Valentine’s Day, and this happened only to a limited extent. The world’s largest jewelry retailers reported a decline in diamond jewelry sales in December, so the issue may be goods being off loaded back into the wholesale market.
The diamond industry has been suffering for a good number of years now, and we have discussed the declines, pains, and challenges many times in the past. In those articles, we looked deeply into the midstream of the diamond pipeline, specifically at diamond manufacturers and traders. Sadly, they are not acting in disconnect from others in the pipeline, and the pain of manufacturers is felt in other places as well.