After talking with industry leaders and trade participants and visiting many impressive seminars organized at the JCK exhibition, I realized that the market is in a better condition than a year ago, despite the continuing challenges.
A week in Las Vegas, a visit to the JCK, exhibitions of luxury goods and fashion shows from haute couture have revealed the following fundamental factors that have an impact on the market:
1. Trade is stable, but there is no need to buy
The market is functioning, and there is some confidence in the demand from the United States. It is important that jewelers adapt to changes in consumer trends to a greater extent than a year ago.
Technically competent jewelers develop multi-channel capabilities through existing strategies related to social networks, and provide highly specialized, individualized services and products that will create their market position. Those who do not take such measures fail.
But the retail environment is still volatile and developing. Falling sales volumes of Signet Jewelers and Tiffany & Co. Has raised concerns about large companies, and the independent "family" segment continues to decline, increasing uncertainty.
"The market is fine, but it's not quite healthy," said Stanley Zale, vice president of diamonds and precious stones at Stuller, a large jewelry wholesaler and distributor. "The old business model is no longer working, as jewelers have shifted from large stocks to more efficient work."
Of course, they did not aspire to create stock at the exhibition. A number of diamantaires noted that buyers were looking for goods, but did not spend their entire budget. Customers were looking for narrower assortments of diamonds, demonstrating a good demand for diamonds of higher quality H-J color, SI purity, which were not always available.
Customers also switched to lower-priced products, to the detriment of size, the assortment of diamonds from H to J, and the purity of SI, which indicated a more limited consumer spending in the current economic environment in the United States, explained Charles Rosario, President of the New York-based company Lazare Kaplan, engaged in the supply of diamonds.
"Retailers are adjusting to middle-income consumers who remain resilient and will buy at lower prices," Rosario explained. "It's not about profit, it's about survival."
According to Edahn Golan, a researcher from the NDP Group, which conducts analytical analysis of data in the retail sector, in 2016 average retail prices for diamonds fell by 1%.
2. Vendors save inventory
Retailers are trying to protect their profit margins by transferring this decline in prices to wholesalers and diamantaires who are experiencing difficulties in creating cash flows. Golan added that wholesale prices fell by 2% last year.
Suppliers of diamonds are particularly pressured when working with large retailers, not wishing to adhere to their "dictatorial conditions", which faced one diamond manufacturer.
"The honor to sell the volume of stones to one guy is considered an easier thing, because you get stability," explained Rosario. "But they shake you out of everyone, so why sell if you can not make money?"
The profit margins of diamond manufacturers are declining as they are under pressure from retail buyers, and they are forced to pay for diamonds "which are slowly rising in price every month," the Israeli diamond manufacturer added.
In addition, since jewelry wholesalers and retailers are very legible, stone dealers and diamond manufacturers remain with large inventories in the industry. Another Israeli participant of the exhibition said that he built his business model around providing a large amount of stones to choose from, especially because retailers usually want to take the goods for consignment.
"For me, it's fine, because I do not need to worry about the liquidity of retailers, because they take the diamonds for consignment and pay when they sell," he said, wishing to remain anonymous.
But most small and medium-sized diamond companies can not afford to finance stones, although on a consignment basis, and diamantaires usually try to avoid holding too large stocks. At the exhibition, some discounts were given in an attempt to get rid of the surplus of old stocks, but American jewelers do not buy for future use, even at reduced prices, another supplier from New York said.
Many said that stock levels are currently in equilibrium, even assumed that there is a deficit of popular SI purity diamonds. But they are concerned that new deliveries of diamonds will hit the market, as production volumes have increased over the past few months, leading to an increase in sewage in the middle part of the diamond pipeline in a calm summer period.
3. Only change is permanent
Some diamond producers expect that the assortment of demand will expand by the end of the year, as jewelers began to think about Christmas. But they also note that June is too early for jewelers to make purchases for the festive season, as the market is changing at such a fast pace.
The changes were caused by the development of consumer habits of consumers by influencing how, what, why and where people make purchases, and what millenials - a generation of two thousandths - have a different attitude to diamonds than previous generations. This forces retailers to rethink the ways of interacting with their customers and forces marketers to look again for how they will tell the story of the diamond.
In combining the know-how of gabmiologists from the time of baby boomers with the technical knowledge of millenials, real opportunities lie.
Millenials can be different, but, like the "X" generation and baby boomers, they need to trust their jeweler. And much of this trust is demonstrated and deserved online through jewelers' websites and, probably, more importantly, due to their presence in social networks. Consumers increasingly "look at the windows" on the Internet before buying, and they are therefore more aware and armed in order to put pressure on the retailer to reduce prices.
Then it is the jewelers that show the added value that makes them stand out from the crowd to ensure sales.
http://www.diamonds.net/News/NewsItem.aspx?ArticleID=58997&ArticleTitle=5+Takeaways+from+Las+Vegas
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