Looking at other industries, there appears to be various ways to address the challenges of excess fragmentation in parts of the diamond sector as highlighted previously.
The diamond market predicament, which began late last year and developed into a full-blown crisis in the past few months, is continuing to evolve in a somewhat predictable way. There are positive aspects to this, such as we saw in the De Beers Sight last week. The diamond miner has reduced production and prices in response to the drop in demand. Sightholders have also decreased their requests for goods. Will this rational behavior prevail?
We are less than five months into the year, and 2015 already appears to be a year of fighting for survival and capital preservation. In the past, the trade always looked forward to the next trade fair or holiday for the next big push in sales. Now, just a month before the important JCK Las Vegas trade fair – the largest diamond and jewelry exhibition in the world, taking place in the most important market, and it seems that the industry is only looking forward to 2016.
The excess fragmentation we are facing in parts of the diamond sector must be addressed to allow the diamond industry as a whole to operate more effectively and to provide the new generations of professionals with more sustainable opportunities to flourish in our sector. We can draw lessons from more consolidated industries.
Dark Clouds Overhead
All large sales periods – the November-December holiday season, Valentine’s Day, Chinese New Year, Hong Kong and Basel trade shows – were disappointing to diamond traders. Worse, looking forward, sales projections by chain stores in the US, Hong Kong and China are poor. Most are reluctant to replenish their inventories and are adopting a “playing it as it goes” policy.