The diamond industry’s intermediate channel is currently feeling a little moody. For the moment, American jewelry sales remain satisfactory. Many retailers enjoy comfortable sales. Last year, annual jewellery sales increased by about 4%. Both JCPenney and Macy’s reported good results for jewelry sales. The best independent jewelers seemed to do better than the big names.
Yet many traders and manufacturers in the supply chain continue to claim that they have little to be happy about.
Some are a little nervous about the economy in general and fear being impacted by the rapidly escalating customs dispute between the United States and China, which will impose 25% duties on a wide range of jewellery.
The trade war between the two countries affects economic opinions. People do not know how the situation will evolve overall.
Tariffs will not have much effect on polished diamonds because China does not export much jewellery to the United States. However, many U.S. retailers may be affected by the growing economic slowdown in Hong Kong and China.
The increase in jewellery sales itself has been a mixed benefit for manufacturers as most of these sales are on consignment. This increases pressure on intermediary actors who also face difficulties in obtaining financing from cautious banks.
Demand has become very limited and very specific in terms of what people are looking for.
To survive, people in the industry must do several things:
- Jewelers and dealers need to understand the big picture and how the industry fits into its macro-economic environment.
- The industry must be flexible and understand that tactics that have worked for generations are no longer necessarily effective today.
- The diamond industry has traditionally concluded its transactions with a handshake, but it must develop a more professional mindset. We must have financial statements, we must be transparent.
- Manufacturers must ensure that their supply chain is efficient. The big question is why the industry buys so much rough if there is such a stranglehold on the polished market.
- People who sell diamonds must guarantee their products and we need more verification of origin.
- The industry must tell a story and differentiate its product. Consumers want a seductive product and they want to interact with the company that provides it. There is no other product such as large natural diamonds, which meet all the criteria of beauty and value.
