As New Yorkers try to slash even the smallest splurges from their budgets, it would seem like a difficult time to try to persuade them to buy a $22,000 pair of 17-carat diamond-encrusted hoop earrings. In fact, Dalyah Duek-Flaks acknowledges that opening her new Madison Avenue diamond store, Dalyah, is about as well-timed as opening a cake shop on the eve of the French Revolution, New York Times says.
But there she was at the gala opening of Dalyah on Thursday night, as about 185 friends and fashion veterans took turns squeezing into her tiny jewel box of a shop. They sipped chardonnay and sparkling wine, nibbled on chocolate truffles and cooed over the trinkets sparkling from her jewelry cases. Duek-Flaks wore her 4.5-carat engagement ring, which she typically keeps locked in her safe at home.
Her father, Moshe Duek, who runs the parent company providing the diamonds and flew in from South Africa for the party, nervously nodded as guests congratulated him on the opening. "The timing is terrible, but we did the deal last year," he said while sipping a glass of chardonnay. "What can we do?"
Duek-Flaks's tale of unfortunate timing is one that plays out with surprising frequency across this city of small businesses. Even in the depths of the recession, new stores and restaurants open almost weekly, in neighborhoods wealthy and poor. Hers happens to be wealthy, but that does not mean that the odds for success, at this moment at least, seem greater.
Duek-Flaks, a diminutive 35-year-old, arrived in the U.S. in 2007 to work as a 47th Street diamond wholesaler just when the subprime markets showed their first signs of indigestion. She decided instead to go into the retail business, and signed the lease for her shop weeks before Lehman Brothers collapsed. Just before her opening party, several shops around her closed and the nation's largest jewelers reported major losses and bankruptcies.
"If I can just sell whatever I can through these tough times, then we will survive," she said. "It's an item that makes people happy. It's not like selling tombstones."
In recent years, many jewelry stores have arrived on Madison Avenue; they are among the few retailers who could afford the high rents. Matthew Bauer, president of the Madison Avenue Business Improvement District, said that between 57th and 86th streets, the avenue has roughly 55 jewelers and fine watch shops. Since August, a half-dozen new jewelers opened new shops or renovated existing ones. Two other jewelers are expanding, he said.
Still, the recession has been hurting even Madison Avenue. As Duek-Flaks looks out the window of her shop, she points to the deli across the street and the restaurant next door, both of which have closed since she signed her lease. She is talking with her landlord about renegotiating her rent.
Some of the most stable diamond businesses have been hurt, too. Zale Corporation announced in February that it planned to close 115 stores. Fortunoff, the engagement ring source for generations of New Yorkers, filed for bankruptcy in February. Even Tiffany & Company reported that its profits in the fourth quarter dropped by more than 75 percent.
Duek-Flaks may benefit from the theory that recessions can create opportunities for entrepreneurs. Jeffrey A. Carr, executive director of the Berkley Center for Entrepreneurial Studies at New York University's Stern School of Business, said entrepreneurs can thrive in recessions because they can bargain more on fixed costs like rent and personnel. Consumers are more willing to try out new brands when they have less money to spend, he said.
"When things are going well and you have money, customers and consumers tend to get into patterns," he said. "There's lots of reasons to start a business now."
Duek-Flaks is determined to carry on her family's role in the diamond business. Her father started working as a diamond sorter in Jerusalem when he was 14 and moved to South Africa at 23 to work for Protea Diamonds. He eventually bought the company, and Dalyah and her two brothers have followed him into the family business.
She hopes to survive by offering diamonds at the wholesale prices she negotiates by buying from her family. She is also trying to appeal to New Yorkers' preference for flashier diamonds. "The tastes are big," she said. "The small, demure, doesn't fly here."
Ann Rapp, a socialite who arrived at the Thursday night event in a brimmed hat and few baubles, said that there was a "big clash" among wealthy women about whether they should wear their big diamonds publicly in the recession. "Some people say yes. Some people say no," she said.
Cheryl Simmons, a fashion stylist who gazed into the cabinet of colored jewels, says yes — within reason. She said a recession gives women the opportunity to wear fewer diamonds, and she considers that more tasteful. "Two years ago, people had piles and piles of jewelry on. It wasn't nice," she said. "It was trashy."
