Price Increases In Existing Diamond Inventory?

[iheartscience]

I know there have been diamond price increases lately, but should that have an effect on the prices of existing diamond inventory? I like to shop different websites pretty regularly, just to see if there''s a diamond or two I might need.

So I was doing just that today and I noticed that a couple of in house diamonds that I know have been around for a while had somewhat significant price increases.

I assume this can be attributed to the fact that vendors now have the ability to charge more across the board since there have been price increases, but does it make sense to raise the price on a diamond that has been sitting in inventory for a long time just because other diamonds or diamond rough had price increases? I know in my job (retail clothing store buyer) we don''t typically raise retail prices until the wholesale cost increases, and certain vendors I work with do raise the cost on their inventory once every year or two, which causes us to raise the retail price as well.

I guess I''m just thinking out loud, but I wouldn''t mind hearing from anyone who could shed some light on this aspect of the business!

 

[strmrdr]

The turn time on inventory is way longer on diamonds than clothes which more or less forces vendors too increase prices too keep a steady supply of inventory.
I dont like it either but there isnt a lot of ways around it.

 

[denverappraiser]

For a dealer with sense and who expects to remain in business, the cost to replace inventory after they sell it is more important than the original purchase price. Margins on diamonds are way less than margins on clothes and it’s easy to get into a position where the money left over after they sell a stone and buy it’s replacement isn’t sufficient to cover their costs. They can always buy a lesser replacement but a habit of this, over time, leads to progressively crappy inventory and losing future customers because of it. That’s death for an ongoing business.

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver

 

[strmrdr]

Here is an article that is perfect timing for this thread comparing diamonds too clothes:
http://www.idexonline.com/portal_FullNews.asp?id=29869

 

[WinkHPD]

Date: 3/23/2008 11:45:16 AM
Author: strmrdr
The turn time on inventory is way longer on diamonds than clothes which more or less forces vendors too increase prices too keep a steady supply of inventory.

I dont like it either but there isnt a lot of ways around it.

Wow! I am glad I was sitting down for this.

I remember the days when you and I used to have diametrically opposed views on this. I don''t like it either, but I don''t have much choice but to do it if I want to stay in business. A diamond sold must be replaced or the value of your business goes down.

If the selling price will not cover the replacement cost, then the inventory level must go down. If your inventory is too low, or too high, you will have financial problems. Either one can ruin you, and it is a tight and difficult line to walk. Sometimes you will walk on either side of the line depending on what is best for you and your client at a given time.

Wink

Wink

 

[strmrdr]

lol Happy Easter Wink!

 

[diagem]

Date: 3/23/2008 3:05:04 PM
Author: Wink

Date: 3/23/2008 11:45:16 AM
Author: strmrdr
The turn time on inventory is way longer on diamonds than clothes which more or less forces vendors too increase prices too keep a steady supply of inventory.

I dont like it either but there isnt a lot of ways around it.

Wow! I am glad I was sitting down for this.

I remember the days when you and I used to have diametrically opposed views on this. I don''t like it either, but I don''t have much choice but to do it if I want to stay in business. A diamond sold must be replaced or the value of your business goes down.

If the selling price will not cover the replacement cost, then the inventory level must go down. If your inventory is too low, or too high, you will have financial problems. Either one can ruin you, and it is a tight and difficult line to walk. Sometimes you will walk on either side of the line depending on what is best for you and your client at a given time.

Wink

Wink

And in this volatile market..., if you wait too long between the sale and replacing..., you get lost!

Thats what happened with the large sizes..., dealers/manufacturers noticed there is NO WAY to replace a sale item with a new one of approx. same quality!
One of the reasons prices in some categories lost common sense!

 

[oldminer]

Diamonds must be sold for their current value in order to be able to keep supplied with fresh inventory which must be paid for by current value, too. The dilemma for diamond sellers has been the competitive nature of making sales, keeping up with price changes, keeping current with the effect of external forces of supply and demand, and keeping up with how their currency has changed relative to foreign currencies.

It is very complex and really very few people in the world have a really good handle on all these factors, let alone the many other factors which have an effect on what to buy and what to pay.

What tends to occur are sales with not enough profit to keep all the balls of the juggling act in the air at one time. Slowly, one by one, the balls tumble to the floor and we are left with fewer choices (balls) and eventually fewer jugglers (dealers).
One could say that the dealers are losing their........, I won''t say it.

While the price of diamonds has gone higher it is more a factor of fewer stones in the market to choose from. World demand is strong and there is nothing to do but juggle faster.

 

[diagem]

Date: 3/23/2008 5:00:28 PM
Author: oldminer
Diamonds must be sold for their current value in order to be able to keep supplied with fresh inventory which must be paid for by current value, too. The dilemma for diamond sellers has been the competitive nature of making sales, keeping up with price changes, keeping current with the effect of external forces of supply and demand, and keeping up with how their currency has changed relative to foreign currencies.

It is very complex and really very few people in the world have a really good handle on all these factors, let alone the many other factors which have an effect on what to buy and what to pay.

What tends to occur are sales with not enough profit to keep all the balls of the juggling act in the air at one time. Slowly, one by one, the balls tumble to the floor and we are left with fewer choices (balls) and eventually fewer jugglers (dealers).
One could say that the dealers are losing their........, I won''t say it.

While the price of diamonds has gone higher it is more a factor of fewer stones in the market to choose from. World demand is strong and there is nothing to do but juggle faster.

Exactly..., "fewer stones in the market" is just one factor out of numerous ones...
And in the recent volatility conditions..., it is impossible to juggle fast enough to keep the pace...

Thats why you see lots of overshooting in the price of rough Diamonds..., some call it speculation (as Rapaport "might" be suggesting)..., and some are just trying to keep up with the pace...

 

[Yekutiel]

As much as we hate paying more for diamonds, I couldn’t have said it better myself. We are in a position that we have no choice but to roll with the times.

 

[iheartscience]

Sorry to ask and run, I went to my family''s Easter lunch and ended up staying all day!

Thanks for the thoughtful replies, everyone. That makes total sense to me. Clothing definitely has a much faster turn and a much better margin, so costs don''t rise so much as to affect immediate replacement inventory costs right away. That''s really an interesting (although a little sad for me as a consumer!) aspect of the diamond business that I never thought about!