The Las Vegas trade shows – JCK, Couture, Luxury, and AGTA – were active and positive this year, a clear departure from past annual June trade shows held in Las Vegas. The annual pilgrimage to the city was engulfed with a positive expectation by diamond traders, American retailers, and jewelry wholesalers. While not an exaggerated optimism, or ungrounded feeling that everything is going to be all right, it was an understanding that demand is there, prices are right, and people want as well as need to do business.
The bombshell that De Beers dropped on the eve of the show, namely the announcement that it will market to consumers low-cost fashion jewelry set with lab-grown diamonds sent shockwaves throughout the diamond and jewelry industry. The program, called Lightbox, surprised the industry. Some even felt deceived by the company that is still viewed as the custodian of the industry. As stated before, it can be argued that De Beers is bowing to public pressure. At the Las Vegas trade show two years ago, retailers expressed strong resistance to lab-grown. Last year the tune was different. The ‘no’ was replaced by a softer approach, and the common saying was that they (retailers) will go where consumers tell them to go. This year, the talk about lab-grown at the show was very different. De Beers’ acceptance of lab-grown, as perceived by the industry, gave it a certain stamp of approval.
That said, some felt that De Beers erred and by adding lab-grown to its offerings would destroy the natural diamond market. Others agreed with De Beers, saying that by lowering prices of lab-grown so much, it will succeed in creating a clear separation between lab-grown and natural, thus alleviating the threat of lab-grown replacing naturals. Everyone agreed that this is a major gamble that will take years to play out before we know which school of thought prevails. With De Beers or without it, lab-grown had a major presence at the JCK show, with its own section, the Lab-Grown Diamond Pavilion, dedicated to this product. Some 30 exhibitors took part in it.
While these 30 lab-grown exhibitors may have had a less-than-optimal show after De Beers basically called them very over-priced, most other companies had a very good show. Among diamond traders, a group that is not known to be shy about voicing its grievances, hardly any complaints were heard this year. Traders were busy, buyers were actively searching and buying goods, and prices were overall fairly stable. Friday, June 1, the first day of the JCK show, looked very promising from the morning hours. The traffic was busy and the vibe was very good among polished diamond traders, thanks to the large number of visitors and in terms of sales. It seems that buyers did not want to wait and see how the show develops, preferring to buy early and take advantage of the larger range of goods available from exhibitors.
After the strong sales activity on Friday, Saturday, Sunday, and Monday were much quieter at the show, with foot traffic far less than it was on Friday. In fact, during those days, traffic among diamond traders was far lesser than in past years. One possible explanation is that those that came to buy, mostly did so Friday. As always, exhibitors that came prepared, organizing their meetings in advance, did better than those that did not. In addition to those that came with the clear intention of selling, even setting sell quotas for themselves, other firms had different goals. Some were there mainly to meet clients and find new ones. A few companies were there to ensure a presence in the marketplace.
Another positive element of the show was a heavier presence than usual of buyers from the Far-East. This was somewhat of a surprise for many, especially in light of an upcoming trade show in Hong Kong, where traders focused on selling and buying for the local markets. Again, those that were better prepared had with them goods that are more fitting for the East Asian markets, on top of the so-called American goods needed for an American Trade show.
At the same time, there were a few negative elements to the show. First and foremost, the downsizing in traffic as well as exhibitors. It seems that interest in trade fairs is slowly decreasing. In the past I discussed this point, questioning the validity of running a business and attending many trade shows every year. In the past few years, trade shows are finding that many past exhibitors prefer staying in their offices over exhibiting. The reduction in the number of exhibitors was evident at Baselworld and understood to be happen at a few additional trade shows as well. One outcome of these reductions is an increase in charges show organizers are demanding from exhibitors to cover their relatively fixed costs. In turn, the rising costs lead more exhibitors to reconsider participation in these shows.
In the case of JCK, it seems that there were less exhibitors in the diamond pavilions, and traffic between the booths thinner. JCK intends to adjust to this change by changing venue. Starting in 2019, the show will return to its old home at the Sands, leaving behind the Mandalay Bay where it was held in recent years.
Another negative element of tradeshows is theft. JCK is usually immune of thefts, however this year, a 25.8-carat diamond valued at $580,000 was stolen from a booth in the Israeli pavilion. Two people walked into the booth, and while one distracted the staff, the other took the diamond out from the display case and walked away with it, according to a report in the Israeli press, based on surveillance camera footage.
Polished Diamond in Demand
A wide range of goods were in demand at the show, mainly typical American consumer-market goods, with some additional items as well. In terms of size, diamonds smaller than half a carat and up to 2-carats sold well. A clear demand for diamonds weighing 3 and 5-carats was evident as well, and a number of important stones weighing 10 to 40-carats took place during the show. In terms of qualities, VS-SI clarity goods were very popular, although traders reported a serious shortage of SI clarity diamonds in all sizes. This shortage is an ongoing issue. SI clarity diamonds are very popular in all the main consumer markets, especially in the US, but also in China where it is in growing demand.
Diamonds weighing 0.30-0.39-carats have been very popular in the US in the past year, and still are. However, an issue started brewing due to their popularity, which pushed up their prices in recent months. The market’s response to the escalating price, which was well reflected at the show, was a certain pullback on purchases, leading to a small cool-down in prices. Apparently this price reduction was not enough.
Speaking of polished diamond prices, prices of the most popular polished diamond items are relatively stable with a certain propensity to rise, since the start of the year. This is a positive market development and one that provided some relief for margin-squeezed diamond manufacturers. Many traders that wanted to make purchases at the show in addition to their selling activities found that many traders were exhibiting resistance to such sales, asking for relatively high prices. In a nutshell, these exhibitors wanted to do as much of their business with retailers, which would allow them some larger margins.
Beyond diamonds, a far larger activity at these shows are jewelry sales. Jewelry manufacturers, designers, and wholesalers continue to focus on smaller, very colorful items, with busier designs. This is a continuation of the trend that became apparent last year, and is only widening and deepening. One aspect of this trend is interest in color gems, somewhat at the expense of diamonds.
After years of slowing trade, declining prices and a shrinking number of players in the market, the diamond industry has woke up to find that its product can still be of interest to consumers. De Beers’ controversial move with lab-grown jewelry, a stabilizing and even strengthening polished diamond prices, and renewed demand from consumers have all converged at the Las Vegas shows this year. The result is a pick up in trade, shortages in desired goods, and stable to slightly rising polished diamond prices. Finally. Now we need to keep the path set by market forces. Go to trade shows only with a very good proposition, maintain current prices, and put out initiatives that shake up the market and spur growing consumer demand.
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.
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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.