Abacus Jewelers (www.abacusjewelers.com) has been engaged in diamond and gold jewelry wholesale trade for over 12 years. The company introduced a new brand of exquisitely handcrafted fine jewelry - the BeverleyK Collection (http://www.beverleyk.com/), successfully survived the recession and found its niche in a highly competitive environment of narrowing margins and increasing expectations of luxury products in the 21st century. The company's partner Michael Pinn told Rough& Polished about Abacus Jewelers and shared his view on the current condition of the jewelry industry in the United States.
Please give us a brief overview of your company and your background in the jewelry industry.
We provide the link between retail jewelry stores and jewelry production. We're basically a wholesaler in the US with the production in Thailand. The company was founded in 1999.
Since immigrating to the USA from South Africa in 2000, I have worked with Carrera y Carrera, a Spanish jewelry firm that is considered one of the most prestigious in the world, as their representative in the western part of the United States.
I went on to start Branding Jewels, a division engaged in marketing and branding for mid-level jewelry distribution companies that didn't have their own in-house marketing people. We helped add perceived value, create the name for a product - it was quite a popular service about 7 years ago.
Then, in 2006 I began working with a diamond supplier from South Africa. As a part of our Clarity Collection program, we bought exclusive diamond grading equipment from GIA, we sold Ideal Cut diamonds and I did grading and provided certificates for them. I'm an HRD Antwerp certified diamond grader.
In 2008, due to the economic recession the whole industry fell apart and 2009-2010 was a very tough time. My friend from South Africa partnered with a manufacturer in Thailand to start their own jewelry production factory and now I work with them to distribute their jewelry products, as well as my own exclusive designs to my customers in the United States.
What are your key regions in the States?
The Midwest, the South and Texas. The reason for this answer is that the East and West Coasts - California, Arizona, Nevada, Florida, New York, etc. - are the hardest hit from recession, specifically the collapse of the housing market, in the end of 2008.
What is the main challenge for a diamond jewelry wholesaler in this country?
Working with good customers and getting paid. Many stores rely on a wholesaler for short term financing, they basically lean on the suppliers to carry the cost of the product. Especially these days, we have to be very careful in terms who we sell to. I incur the cost to get into the store, to manufacture the order, and I only make money after my customer has paid their bill.
As far as I know, you partner with a jewelry factory in Thailand. Could you tell our readers how this partnership works for you and what helps differentiate Thai jewelry from competition in the United States?
The biggest competition for the Thai manufacturers is the Chinese manufacturers. In the Thai factories we're mostly focused on producing very high quality products. A lot of the finishing work is done by hand. Chinese products are usually cheap but quality often leaves a lot to be desired. We mostly produce diamond and color stones jewelry. The gem stones come from the Indian suppliers based in Thailand.
Which trade shows have you attended and are planning to attend this year?
I participated as an exhibitor in Centurion Jewelry Show in Scottsdale, Arizona in January, visited the 49th edition of the Bangkok Gems & Jewellery Fair in February. My partner is doing BASELWORLD Show in March. I will also exhibit at the Jewelers Educational Conference & Show (JEC) in Kansas in March, the SMART Jewelry Show in Chicago in April, LUXURY at JCK, followed by JCK Show in Las Vegas in June and so on.
How was the visitors traffic at the Bangkok Gems & Jewellery Fair? How did you like exhibitors this year?
The show seemed quiet. Due to the ongoing uncertainty manufacturers are not investing in new ideas because everyone is terrified with recession. A lot of retailers are looking for inspiration at the shows, and are not finding it at the moment.
What is your forecast for diamond jewelry trade in the United States in 2012?
There is much less of disposable income in the economy than it was 7-8 years ago. People currently have only a little access to credit. Banks are afraid to provide jewelry stores with credit for their customers, they are just nervous about extending credit to this industry. And without proper financing, an average person is unable to make a purchase of jewelry. In my opinion, the bridal section will remain strong, people are still going to get married and buy diamonds. We decided to focus on bridal jewelry. My forecast: it would be another difficult year for the industry. In fact, I don't see a big change in the industry for the next 3 years, or so.
Do you think there's an alternative for a diamond engagement ring due to cost price and cost pressure?
No.
Why do you think that Martin Rapaport has ruined the mystique of the diamond industry?
Rapaport took romantic, mysterious, emotional part of the diamond and commoditized it by providing pricing information. It actually started with diamond certification, then Rapaport provided a price list for certified diamonds which commoditized them. These days people go online and basically buy paper (certificate), mystique is no longer there. It really hurt a lot of brick and mortar stores as their cost of doing business is a lot more than the average internet retailer.
Do you think that diamond prices will continue to rise in 2012?
Diamond prices increased by around 30%-35% over the last year. It was quite a turbulent year for diamonds and gold on top of what was happening in the economy. I don't think it's going to increase this year, I believe there will be some consistency in the prices this year, although these days it’s hard to make predictions due to the continued volatility in economic markets across the world.
Olga Patseva, Editor in Chief of the American Bureau, Rough&Polished
