Inflation is also expected to affect jewelry in the coming months
For the younger generation, inflation is a phenomenon that they have mostly learned about in history books. You have to be a certain age to remember a period of significant and sustained inflation, namely the 70s and early 80s. While there is always a debate between real inflation and official figures, for the past few months the rise in prices has been clearly visible even in official statistics. According to experts, this should soon affect the jewelry market, according to the New York Times .
Buy jewelry now so you don't pay more tomorrow
If you've got jewelry on your holiday gift list, " do your research and start early ," cautioned Stuart Robertson, vice president of Gemworld, a U.S. gemstone price guide.
Jewelers and jewelry experts around the world say inventory shortages and price increases are all but guaranteed this fall , thanks to the unexpected demand that surprised the industry last year. And the situation is further complicated by shipping delays and labor shortages. In short, jewelry is facing the same problems as companies like Starbucks and BMW.
- The most expensive rings in the world
It’s a far cry from the spring of 2020, when the pandemic brought the gemstone and jewelry supply chain to an unprecedented halt. Mines stopped extracting precious metals, governments stopped exporting, cutters were out of work, wholesalers stopped selling, workshops stopped manufacturing, and jewelers stopped ordering. Yet consumers never stopped buying.
Unexpected resilience
Strong demand for luxury jewelry has helped much of the sector recover quickly this year, even in April and May, when the Delta variant fueled a surge in Covid-19 in India, a major hub of the global diamond trade.
Now, with demand showing no signs of slowing down and supply concerns unlikely to ease, industry experts are advising shoppers to budget extra time and money for their luxury jewelry purchases , especially when it comes to diamond jewelry.
“ Everyone has been surprised by the demand for the most expensive, massive pieces, it’s mind-boggling, ” said Sam Sandberg, chief executive of A. Jaffe, a New York-based engagement ring maker. “ One carat is a thing of the past now, it starts at 2 carats. ”
In a video conference last month, De Beers CEO Stephen Lussier said that in 30 years he had “ never seen a quarter like the second quarter of 2021. ” His comment was based on a MasterCard spending report that showed, for example, that jewelry sales in May were up more than 200% year-on-year , driven in part by online jewelry sales.
“ Supply is tighter than usual. Demand, particularly in America, is extraordinary, ” Lussier said. “ There will be some pressure on prices, and in some categories, retailers will have a harder time finding the diamonds they are looking for. ”
Jewelry inflation: concerns about the supply of precious stones
Shruti Chhajer Ranka, the creative director of Shruti Sushma, a luxury jeweler based in Ahmedabad and Bangalore, India, is one of them. “ I’m working on a piece with one-carat oval diamonds of the same color and clarity, ” she wrote in an email last month. “ It took me 6 weeks to get half of what I need. Usually it doesn’t take more than 2 weeks. ”
Jewelry with colored stones can be even harder to find, and more expensive, as mines around the world have experienced production delays that are now impacting prices and supply. In March 2020, British mining company Gemfields suspended operations at its Kagem emerald mine in Zambia, known as the world’s largest emerald mine. The same went for its Montepuez ruby mine in Mozambique. Production didn’t restart until March 2021, a year later.
And while it upsets would-be buyers, the disruptions have had significant social consequences in the countries affected. Dealers based in trading hubs such as Voi in southern Kenya have suffered both from a lack of quality gemstones and from the disappearance of foreign buyers. “ I was in Voi three or four weeks ago, ” Kenyan gem cutter Marvin Wambua told a Gemworld webinar in early August. “ We had one buying session, it was mediocre because we saw almost nothing of interest. ”
The disruption has spread across the entire gemstone market
“ The mining centers are running at a standstill. The cutting centers have their own problems, they are not able to manufacture finished products. Many large manufacturers cannot fulfill orders, ” said John Ferry, founder and CEO of Prosperity Earth, a demantoid garnet mining company based in Madagascar.
At Akron, Ohio-based Signet Jewelers, executives decided to start holiday shopping early this year. The company is the largest jewelry company in the United States and one of the largest in Britain, with about 2,800 jewelry stores in both countries, primarily under the banners Kay Jewelers, Zales, Jared, H. Samuel, Ernest Jones, Peoples, Piercing Pagoda, Rocksbox and JamesAllen.com.
“ Some products that we would have historically offered a few weeks before Thanksgiving, we’re offering earlier, ” said Jamie Singleton, president of Kay, Zales and Peoples brands at Signet. What might seem like early sales is really just a precaution to avoid disappointing consumers.
“ This holiday season, I’m doing more investment pieces than less expensive jewelry because I appreciate the time my team puts into it, and I don’t know exactly what’s going to happen, ” says Andy Lifschutz, the designer behind Andy Lif Jewelry. “ We’re finishing up a pendant with a 25-carat flawless Madagascar aquamarine. In the past, I would have made 10 $1,500 link bracelets instead of one piece, but this year I’m focusing on one piece. ”
European logistics disrupt jewelry trade
It’s true that the jewelry industry’s tightly packed materials mean it hasn’t faced the same logistical challenges as other industries. But for many designers, shipping has been a daily challenge. “ The bottleneck is actually in Europe, ” designer Ananya Malhotra said in a video call from Chennai, India.
“ The parts are leaving India, but the flights are cancelled, so instead of going directly to London, they have to go through Germany, ” Ms Malhotra said. “ Or the flights from London have to go through this absurd stopover. We had to put someone on the ground just to manage the logistics. ”
Jewelry isn’t the only product facing blockages. “ Getting items like boxes, bags, or point-of-sale displays, which are delivered by sea to reduce our carbon footprint, is more difficult due to the significant reduction in shipping lines ,” Hélène Poulit-Duquesne, general manager of Parisian fine jewelry retailer Boucheron, wrote in an email.
- Used Fred women's watch
How can we sell what we don't have?
Finally, there are the labor shortages plaguing businesses around the world. “ Like everyone else, we’re struggling to find people, ” said Christopher Slowinski, founder and owner of Christopher Designs, a New York-based diamond engagement ring maker. “ I’m constantly posting job openings and getting no applications. ”
"Demand is good," Slowinski added. "But how can we sell what we don't have?"
Bulgari CEO Jean-Christophe Babin has had a similar productivity problem. At its manufacturing facilities in Valenza, Italy, government-mandated social distancing mandates have forced the company to stagger the work schedules of its artisan jewelers.
Bulgari could have sold much more jewelry in the first half of 2021, “ but production recovered more slowly than expected to return to 2019 levels, ” Mr. Babin said on a video call in early August.
“ I’m not just looking at the end of the year, but also looking ahead to 2022, ” he said. “ I believe the very strong demand we see for luxury watches and jewelry is not going to slow down. As in many post-traumatic times (wars, pandemics), people want to live life to the fullest, and that means treating themselves. ”
