By accepting you will be accessing a service provided by a third-party external to https://www.ehudlaniado.com/home/
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.
After the somewhat disappointing sales results of the holiday season, US retailers concluded 2018 with a marginal rise in sales, and many with an overall decline in diamond jewelry sales. It is no surprise, therefore, that the number of specialty jewelry retailers declined yet again in 2018, dropping below 20,000.
Signet Group same-store sales in the holiday season were down 1.3% year-over-year. The worst performing brands were the groups’ regional labels, which saw same-store sales drop 14.6%. Signet’s online operation, James Allen, the big hope for improving results, reported flat sales, while Signet’s low-end operation Piercing Pagoda posted a 16.9% rise in same-store sales.
Alongside Signet, many independents are looking to reinvent themselves in the hope of finding a way to survive in the challenging market. This is clearly needed. Fine and diamond jewelry is not very popular among several key consumer segments that don’t understand why they should spend their money on something pricy that they can’t change, replace, or update like their mobile phones. Therefore, many retailers are trying to lure clients into the stores with new marketing campaigns, but the sense is that they are somehow missing the mark. In the case of jewelry companies, the impression is that many campaigns are unfocused.
On the bright side, there is some hope in the air as Valentine’s Day approaches. Jewelry retailers intend to show a wide selection of stud earrings in the hopes that they will start 2019 on a positive note.
Following a weak holiday season in the consumer markets, Indian traders are fighting hard to generate cash flow. The bigger and more sophisticated firms are doing alright, however most of the rest are struggling.
Demand for the smallest goods, weighing less than 0.15 carats, has dropped sharply, heavily affected by the rising popularity of lab-grown goods, according to Indian traders. As for prices, the attempt to hold them firm has started to crumble. Prices of more and more items are being reduced.
Coupled with the much stricter stand of the banks on supplying financing, the Indian diamond center started the New Year with many worries.
Despite all the gloom, traders are reporting a rise in demand for round, 1-carat, white VS-SI goods, possibly ahead of Valentine’s Day.
After a good December, the Hong Kong diamond market slowed down in January, a seasonal trend. Also typical of the time of year, tourist traffic declined, which has its own negative impact on luxury retail activity.
Yet the Chinese consumer market, which fuels much of the diamond trading activity in Hong Kong, is weakening, as the results of the large jewelry retailers can testify. Chow Tai Fook recently reported that during the fourth quarter, that sales of gem-set jewelry declined 5% in Mainland China, and by 8% in Hong Kong and Macau.
Luk Fook reported very similar results for gem-set jewelry. The retailer blamed the poor results on market sentiment, adversely impacted by the US-China trade war, the depreciation of the Chinese currency against the dollar, and the downward pressure in the stock and property markets. All those issues remain today, indicating that at least for the current quarter consumer demand will remain depressed, and consumers will shift down when they do make a purchase.
An example of this is seen with market demand moving to GHIK color in VS goods. This results in good demand for 0.30-0.70-carat rounds in GHI colors.
Traders noted some demand for 2-5-ct GHI/VS-SI rounds and for pear shapes weighing 2-3-carats in GHI/VS.
There is a buildup in Star/Melee inventories, leading to a price decline of about 3% among wholesalers in the Hong Kong diamond market.
The Israeli diamond market had a slow return to business after a very slow December. Traders say that commercial goods are in short supply as the larger manufacturers reduced manufacturing in recent months. The lack of fresh goods is impacting the Israeli market.
Prices are ruled by inventories, and less by demand. Prices of items in great abundance are being slowly reduced. On the other hand, items in short supply are priced high. As a result, purchases for stocks are somewhat limited. Most of the shortages are in “American” goods – GHI colors, SI-I clarities.
According to traders, sales by Israeli traders to the US retail market are very limited and specific, underlying the cautious approach US retailers are taking. It seems that most demand from Israeli traders coming in from the US are for engagement rings, where profitability is limited due to stiff competition.
White rounds weighing 1 carat or more in SI2-I1 clarities are in good demand, as are goods with slight color. When the amount of color in the goods rises to cape, demand drops to near nothing.
There is very good demand for ovals in good makes, and some demand for pear shapes, also in good makes.
The views expressed here are solely those of the author in his private capacity. No one should act upon any opinion or information in this website without consulting a Professional qualified adviser.
Diamond industrialist Ehud Arye Laniado is a man passionate about diamonds. From his early 20s in Africa and later in Belgium honing his expertise in forecasting the value of polished diamonds by examining rough diamonds by hand, till today four decades later, as chairman of his international diamond businesses spanning mining, exploration, rough and polished diamond valuation, trading, manufacturing, retail and consultancy services, Laniado has mastered both the miniscule details of evaluating and pricing individual rough diamonds and the entire structure of the diamond industry. Today, his global operations are at the forefront of the industry, recognised in diamond capitals from Mumbai to Tel Aviv and Hong Kong to New York.