JEWELLERY EDITORIAL

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2014/10/29

The US cruise industry generates over $30 billion a year in revenue. Each ship visit can add around

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million to the local economy. There are close to 200 cruiseships that bring over 14 million passengers to a handful of small island nations in the Caribbean Basin and The Bahamas. Some of the islands are quite small. The island of St Martin is 87 square kilometres and divided between two countries; France and the Kingdom of the Netherlands. For many of the islands In the Caribbean, cruise tourism is the only source of income.

 

All of the shipboard marketing. including the port talks. are owned and run by independent contractors who hire and train the shopping experts and port lecturers. They also provide training to cruise directors and other crew members who work directly with passengers. They collect the commissions and fees, splitting the profits with the cruise line.

 

Not all stores participate in cruise promotions but the ones that do will see more traffic and more sales but at a much higher cost. Other stores believe their own marketing and reputation will draw customers and don’t feel the need to partner with the promoters. Still others are quite happy with the overflow from everyone else’s marketing efforts.

 

The Caribbean jewellery industry is a confusing and misunderstood market. The Caribbean has been associated with gold, gems and jewellery since the days of the pirates. Eventually the pirates became legitimate merchants and shippers, creating Duty-Free ports to encourage trading.

 

 

Many US jewellers tend to dismiss the Caribbean jewellers as nothing more than latter day pirates. While there are some stores that may have less than ideal ethics and business practices, the majority of the stores are sincere, honest, family run businesses. Some of the larger chains are very well run and professional.

 

This is not a small market of tourist trinkets. There are some serious sales being made. A small family run store will need to have over

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million in sales to survive. Annual revenues in the $5-10 million range are typical. Six-figure days can happen at any time. For the more exclusive stores, seven figure single items will sell more often than you might think.

 

These floating jewellery selling machines have been operating for several decades, perfecting their systems and driving jewellery sales. It worked beautifully and built a massive retail jewellery industry. But the market is changing and neither the promoters nor retailers have caught on. There is an understandable reluctance to change something that has worked for generations. The machine will still keep churning out the shoppers; it’s up to the stores to figure out how to continue catching them.

 

Cruising is becoming popular in Asia but the emphasis is still more on touring rather than jewellery consumption. I am sure they have strong local product promotions appropriate to each country but the intense promotion of jewellery that we see in the Caribbean has not hit the Asian ports. yet. But it will.

 

 


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2014/10/29

I’ve been a bit obsessed with attendance at the 2014 September Hong Kong Jewellery & Gem Fair. Wars in the Middle East, sluggish European economies, uncertain economic aspects in the US, the slowing of growth in China, and even local politics, which now has an international stage, all led to unexpected outcomes for this year’s show.

 

Even UBM officials hedged their outlook in attendance, anticipating very modest growth for a trade fair that seems to have had no limit to its potential.

 

Then came a category 8 typhoon.

 

Despite all of this, the 32nd edition of the fair concluded with a “remarkable” (the show’s words and mine) 12 percent growth in attendance, with 59,116 buyers from 157 countries who were there to see the products and services of 3,695 exhibitors from 49 countries and regions.

 

Registration area in the Hong Kong Convention & Exhibition Centre (HKCEC)

 

The September Fair occupied 135,000 square metres of exhibition space in two venues - the AsiaWorld-Expo (AWE) and the Hong Kong Convention & Exhibition Centre (HKCEC). The AWE housed exhibitors of raw materials including diamonds, loose gemstones, pearls and equipment and packaging, while the HKCEC housed exhibits of finished fine jewellery.

 

It has earned its place as the world’s largest B2B fine jewellery trade fair. At this point as it defies global realities it is threatening to become its own economic engine.

 

No one is more surprised by these figures as I am. I attended the second day of the AWE portion of the fair and was shocked by the crowds who came even though the typhoon caused the free shuttle surface from downtown to be canceled for a half-day. The first two days of the AWE portion of the show, as I reported previously, had 11.2 percent growth in attendance. People I spoke with who attended the AWE portion of the fair said crowds remained strong throughout.

 

Hall 1 Entrance in Asia-WorldExpo (AWE)

 

Meanwhile, I thought the first two days of the HKCEC portion of the fair was slower compared to prior years. While still brisk, the overflow of crowds didn’t seem to be there on opening day and the second day seemed even slower. By the third day, my final day at the show, buyers returned with a vengeance. Apparently this continued during the final two days of the event as well.

 

UBM Asia reported 17-percent growth in visitor numbers from Asia compared to last year. Participation from the Middle East increased by about 25 percent. Wolfram Diener, senior VP of UBM Asia Ltd., told me that he expected fewer buyers from the Middle East because of the various conflicts, so this is very surprising.

 

Meanwhile, participation from India increased by about 24 percent and mainland China was up by about 23 percent. In other markets participation increased: Africa by 19 percent, North America about 12 percent and Europe about 6 percent, according to the data.  

 

The 59, 116 visitor figure refers to unique visitors recorded over the seven-day period of the event, Total visits were more than 131,700 between the two venues. About 30 percent (17,079) of the crowd was Hong Kong based visitors while 42,037 visitors came from the overseas. The top ten visiting countries and regions were Mainland China (18,310), Hong Kong (17,079), India (3,867), the United States (2,211), Taiwan Region (1,776), Thailand (1,768), Japan (1,466), the Philippines (1,093), Korea (1,075) and Indonesia (920).

 

Through good times and bad this continues to be quite a show.

 

 


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2014/10/28

Happy days are here again for India’s jewellery manufacturers and retailers as the yellow metal regained its lost shine with the expected growth in sales during festive season of Diwali.

 

As Mr. Vipin Mehta, Director (Jewellery) of the World Gold Council (WGC) while analyzing the trends had rightly said recently,

“In spite of several ups and downs in demand in recent past, overall demand for gold in India has remained primarily strong over the years. Although, jewellery demand may have gone down by 14% in the first half of 2014 over the same period last year, the sales have remained steady during Akshaya Tritiya and for wedding season. But, we are still expecting a stronger second half as far as jewellery demand is concerned with the onset of festivities.”

 

Rightly so, according to Diwali and Dhanteras sales figures made available by All India Gems and Jewellery Trade Federation (GJF), jewellery sales have gone up by 15% to 20% this year. Dhanteras, which is associated with Lakshmi - the goddess of wealth, and Diwali, the festival of lights in India, are both believed to be auspicious to buy gold.

 

Though gold jewellery is still very much in demand, sales of diamond jewellery have shot up manifold in comparison with previous years. Important factor behind this growth is lower gold prices this year. Sentiment is also good because the country has a stable government in the centre; all of these have helped to boost the jewellery sales. India’s authorized channels had already imported USD 3.75 billion worth of gold in September which shows 450% jump from the same period in 2013.

 

Mr. Haresh Soni, Chairman of the GJF says,

“The jewellery sales during this festive season were far better than last year. As a global trend, investors remained on the sideway and the sentiments were low till the end of September but the sales picked up during October due to festive buying. On an average across India, gold jewellery sales grew between the range of 15 and 20%. However, many jewellers in Mumbai have reported 30 to 40% increase in sales on the day of Dhanteras as compared to 2013.”

 

Strong jewellery sales in India during Diwali

 

Sales figures received from Gujarat state are quite noteworthy. Gold loving consumers of the state have purchased about 1 tonne of gold worth INR 270 crore and about 3.5 tonne of silver worth INR 27crore on the auspicious occasion of Dhanteras. Traders from the state claimed that the sales figures were lower in comparison to Pushya Nakshatra but better than Dhanteras of 2013.

 

Mr. Pankaj Parekh, Vice Chairman of the Gem & Jewellery Export Promotion Council (GJEPC) says,

“Gold prices this year were 10% lesser than last year. But in value terms, sales were up 10% that means, volume of gold sold was about 20% more than 2013. Consumers have taken good advantage of the lower price and so their appetite for gold has increased. Sales of diamonds and diamond studded jewellery have also increased because of certification."

 

Exports of India’s jewellery (both plain gold and studded) have also showed a significant growth of 36% during September 2014 reaching USD 955.13 million as against USD 699.71 million a year ago. For the first six months of the Indian financial year, cumulative gold jewellery exports stood at USD 4,570.89 million, up from USD 3,623.65 million for the same period a year ago.

 

So, Diwali has surely brought back glitters on India’s jewellery industry. Of course the major gold buying festivals of the year are over here, sales could continue to be strong thanks to the wedding season that is extended till early next year.

 

 


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2014/10/23

The October Jewelers International Showcase (JIS show) in Miami Beach is the primary venue for jewellery and gift stores in Florida, The Caribbean, Central and South America to prepare for the all-important tourist season. This year was the largest show to date with around 1250 booths. New international pavilions representing Spain, Turkey, and Colombia joined the existing entries from Brazil and Hong Kong. The High-End Galleria was twice the size of last year.

 

There were some good signs of the economy getting stronger. During the recession there were dozens of booths offering to buy scrap, break-out stones and excess inventory as well as several competing refiners. This year there were a few regular refiners that have been there for years and none of the newer scrappers. That is an indication that retail jewellery stores are getting back to the business of selling instead of relying on over-the-counter buys.

 

Emeralds were everywhere this year and not just with the Colombian dealers. Coloured diamonds, both natural and treated, were strongly featured. While silver was still a strong seller, gold is making a good comeback, especially yellow gold. Fashion jewellery was abundant. Unstrung beads were scarce while finished beaded jewellery was plentiful.

There was a shift in buying patterns for the Caribbean retailers. In the past they shopped mostly for loose diamonds and generic mountings or finished goods. This year found them in designer’s booths. Designers offer consistent quality, advertising support, liberal stock exchange policies, exceptional customer service, favourable terms or memos and protected prices and territories. This adds up to less worry and hassle for the retailers. Generic goods have a greater margin but all of the risk and service problems fall on the retailer’s shoulders.

 

With a healthier economy, Caribbean jewellers seem to be backingaway from experiments with silver preferring the better cash flow associated with gold and platinum. Silver and fashion jewellery was popular with retailers from the US and The Americas.

 

Overall there is a gradual return to normal. Retailers are finally seeing steady sales and not falling back on scrapping. Lower gold prices are helping to raise sales of higher price-point goods. There is a move toward branded jewellery lines; any name is better than no name. Coloured diamonds and gemstones are adding spice to inventories. Business is moving forward. This season may not bring shouts of joy but for many retailers it will bring a long awaited sigh of relief.

 

 


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2014/10/22

De Beers recently delivered somewhat alarming report which may have disappointed the global diamond lovers. In its first annual ‘Diamond Insight Report’ (Download PDF) released in September 2014, De Beers has stated that growing diamond demand would almost outstrip growth in carat production because of the lack of major new discoveries of diamond mines in the last decade and the diminishing production in several existing mines.

 

Be Prepared to Pay Heavy Price for Diamonds!

 

The report states that a moderate growth in supply would not be able to meet the ever increasing demand up to 2020 after which unless major new discoveries are made in the coming years, the diamond supply may decline gradually. Mr. Philippe Mellier, Chief Executive of De Beers Group, commenting the findings of the report says,

"The global diamond demand remains the one true source of value for the industry. With demand prediction to increase further from 2013's record level, the opportunity for further growth is clear. But this must not be seen as cause for satisfaction. The diamond industry would continue to lose grounds to other categories if the industry players do not invest significantly in production, marketing and advancement of technology."

 

The global demand for diamond jewellery reached to a record height of USD 79 billion in 2013 thanks to the rapidly growing preferences for diamonds in China and India. China is the world's fastest growing market for diamond jewellery where the number of diamond jewellery retail doors have increased by almost 30% between 2010 and 2013, states the report. India and China both have witnessed their domestic diamond jewellery demand grow by a Compound Annual Growth Rate (CAGR) of 12% from 2008 to 2013. Market of polished diamonds in the US grew by 7% in 2013. Keeping this trend in mind, with the continuous recovery of the US, the global diamond demand is expected to keep on growing over the long-term.

 

On the other hand, the World Diamond Mark Foundation (WDM) is about to launch generic promotion of the diamond very soon to create global awareness and to increase demand of diamond. This initiative, if proved successful, would surely boost the existing growth rate of the global diamond market. But, as mentioned in the De Beers’ report, with the global diamond production diminishing and the demand increasing, a time would come in near future when the demand would almost outstrip growth in carat production.

 

So, as an obvious solution, exploration expenditure “is expected to go high with the chase to discover the next major source of diamonds,” the report states. Most of diamond exploration today takes place “in underexplored African countries like Angola, the Democratic Republic of Congo (DRC), Zimbabwe and the vast swaths of arctic Siberia and Canada.”

 

Now, as far as De Beers’ findings of widening gap between diamonds supply and demand as well as exploration of new mines are concerned, there’s nothing new about it. I have been hearing this alarm since last 3-4 years during my talk with various global industry leaders. The industry is well aware of this fact.

 

To sum up, the De Beers report indicates that diamonds would remain forever even if the production goes down drastically in comparison with the demand, but the diamond lovers will have to be mentally prepared pay a heavy increase in the prices of the ever-shining stones in future because of its short supply!

 

 


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