For one, the housing market is taking a bigger chunk of people’s disposable income, he said. “If house prices move faster than wages, more and more people’s disposable income will not go toward jewellery. We’re seeing that first hand—average sales prices are going down.”
The other issue is what Mimar describes as hyper-transparency in the diamond industry, fuelled by online diamond retailers.
“Prices should not be this transparent,” he said. “We don’t know what a foot of lumber costs Home Depot to buy. But everybody knows how much a diamond costs and knows it quite easily, thanks to the Internet. Hyper-transparency is destroying the market’s profitability. And without profitability, you don’t have investment. This hyper-transparency is an overload of information.”
Jewellers are struggling to maintain margins at the retail level, said Alex Barcados, president of C.D. Barcados.
“The industry is shrinking,” he said. “There is a steady decline in independent retailers. ‘Business as usual’ is a struggle, although there are some jewellers who are excelling, whether it’s because of the product they sell or because they offer custom work. But sometimes it’s just based on the individuals operating the business. They have that community strength that plays well for an independent jeweller.”
Although retailers may be struggling in terms of moving diamond jewellery, gemstone pieces are one category that may offer jewellers better margins.
“There is no question colour is a harder sell because diamonds and bridal are the bulk of the industry,” he explained. “But for jewellers that recognize the margins in gemstone jewellery, colour is very appealing. There are not many places to get margin; you can get it in some brands, but that has inherent risks—the brand can open their own store or sell direct online.”
Todd Wasylyshyn, account manager in Western Canada for Customgold, said oil prices and the economy are top of mind among his clients. The $10,000-plus price point in the bridal category has “evaporated,” as he puts it.
“Men are buying the best engagement ring they can afford at the moment because they are unsure about job security,” he said. “It’s been a tight spring in the West for a lot of retailers—they resisted buying earlier in the year. As soon as a jeweller gets down to all the leftovers, they have to buy something because it’s not like they’re doing no business. Those who have been actively promoting, renovating their store, or getting into social media are actually doing just fine. The sky has not fallen in Alberta. It’s definitely taken a hit, but those retailers who are proactive are holding their own instead of disappearing off the map.”
