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Price hike a Hype?

F

fire&ice

Ideal_Rock
Joined
Jul 22, 2002
Messages
7,828
Nobody seems to be able to quanitify a price increase.

To me, in the real world, a price increase is such:

1c g/vs2 AGS0 5/2003 = $xxxx.xx
1c g/vs2 AGS0 5/2004 = $xxxx.xx

Thus the price increase is 5% to the consumer.

No one has been able to answer a very simple question. I''ve asked twice. This is the third. Thus far, not one single person has responded even with it''s not that simple. I''m beginning to think this is marketing hype.
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Hi F&I,

I'll see if I can dig up an old price chart from last year but there has definetely been increases to us from the wholesale to retail end. On the most recent issues of Rap (which most in the trade use) there have been 2-3 hikes within the last month or so. You see... there are a heckuva lot of numbers on that sheet and it's impossible to memorize all of them for each clarity/color. Ie. I know that in the beginning of this year a 1ct F VS2 was listing for $7200 per carat, now it is $7400 per carat.
 
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On 5/13/2004 11:03:19 AM Rhino wrote:

I know that in the beginning of this year a 1ct F VS2 was listing for $7200 per carat, now it is $7400 per carat.----------------
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Silly Rhino, you should know better...Rap is so completely useless to consumers like f&i and elmo, why in the world would you ever be quoting *list* to us?
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Thank you. It's not that I don't believe you guys. It's just such a simple question that went unanswered.

When I look on pricescope for similar 3 carats, in the two years that I've owned my diamond, this is the first time that I see a price jump. It could mean several things. One, price increases to the jeweler. Two, jeweler taking more profit (nothing wrong with this). Three, demand is higher for a larger stone. Or four - the crazy nature of the diamond market I will never understand. But, I'm beginning to think they don't want you to.

That got me wondering how much more (if any)would one pay for the same diamond they bought say last year.

The reason I am so curious is that we seem to be headed towards some serious inflation. I wondered whether diamonds would be included. But, it seems the diamond industry has their own rhime & reason i.e. instead of the trickle down effect of fuel costs- the wiley niley nature of DeBeers. Local florists are raising their rates to cover delivery (i.e. gas prices) costs.
 
F&I, I thought it was funny and possibly insightful when someone posted a few weeks ago that the diamond industry missed a couple of price hikes a few years back and they're playing catchup now.
 
F&I,

We bought my upgrade stone about a year ago. Looking at the PS search results, the price per carat is up somewhere around 10% from last year. The problem with the numbers tho is that there are only 2-4 stones in the large general range of what I looked at last year, so these prices still fall within the upper end of the range of what I saw then. There were many more stones in this range last year compared to this year, so supply and demand by itself may end up driving prices somewhat higher.
 
That's it in a nutshell lop. When we hear one supplier complaining about the prices of rough increasing that's one thing but when *ALL* of them are saying the same thing we know something is up. They felt it way before we did on the retail end making it more difficult for them to sell to us because those changes weren't reflected in pricing reports that we use. R/T pointed out in another thread that our (retailers) discounts weren't as good as we had normally been getting due to the increase in demand in rough and the supply not being there which is accurate. Only till the past month were these changes reflected in our pricing reports.
 
So Rhino,

Are you saying that the lack of supply in the consumer market right now is simply a function of mfg's waiting for the higher rough prices to trickle through the distribution chain before it is made available, or will it still be in short supply even as the higher prices hit?
 
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On 5/13/2004 12:45:15 PM lop wrote:

So Rhino,

Are you saying that the lack of supply in the consumer market right now is simply a function of mfg's waiting for the higher rough prices to trickle through the distribution chain before it is made available, or will it still be in short supply even as the higher prices hit? ----------------
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Nope. Mfg's are not waiting for prices to increase ... they are just having a tough time finding the cherry rough to cut from.
 
And that would be DeBeer's fault (or at least for around 50% of the market), right?
 
I have prices from two years ago on the complete inventories of a few online vendors (Whiteflash's A Cut Above, SuperbCert, NiceIce's B-grade hearts and arrows) and partial inventories of a few others (Blue Nile and possibly others I can't recall). It is in the form of an Excel spreadsheet complete with charts comparing the various vendor's inventories in terms of price per carat for various colors, clarities, and sizes. If you'd like, I could email this to you or could post some of the charts to this thread.

I plan on doing an updated comparison during the next couple of months. When I'm done, I'll post it to Pricescope.
 
DeBeers is in the process of changing their supply structure dramatically. The number of sight holders will be greatly decreased and those chosen to remain have new requirements about promoting and branding etc etc. Less and less of the "good stuff" is being released and cutters who are not sight holders are having a dickens of a time getting material. What they are getting is costing them more and more.

Elmo, I am not sure why you tell Jonathon that the list is useless to you but it is what we jewelers must use when buying. It is a flawed tool in many ways, but it is the best that we have available to us at this time. We often expect to pay "x" off of list for a given size stone and sell it with our markup. The discount changes from size to size. I may have to pay full list for some sizes and even over list if I really really must have the stone right now. (In the mean time someone with a "virtual inventory" may have many similar stones listed for sale for less than I am paying, but if you try to get the stone from them they tell you, "I do not have it in house but will see if I can call it in for you". They can't of course, since it was sold a while ago and not yet removed from the "inventory".) Actual list may not mean much to you, but it is the best guideline that Jonathon can throw out for a general discussion tool.

In any case, the price hikes are beginning to hit the manufacturers, and you can be sure that they will soon hit us retailers and we will be passing that off to you since the current profit structure on diamonds will not allow us to cut our margins any further. Many people are already working at below cost but do not seem to know it, as evidenced by the thread on one of the major houses being several million dollars underwater and maybe not having the operating capital to last until the end of the year when they might hope to sell some of their diamonds for Christmas.

For the next few months you will be able to cherry pick some great deals with people who actually have the stones that they are listing and who may not be as up to date as they should be about raising the price to reflect their new current costs. In short order these deals will be gone as they are snatched up by astute buyers or as the owners finally realize that they can not replace the stones for what they are selling them for.

Wink
 
P.S. Plus if Jonathon were brave enough to list his actual selling price surely someone would jump on and point out that it was cheaper at xyz.com, thus obfuscating the issue that he was trying to demonstrate the price increase. Listing the stone having gone from $7200 to $7400 per carat on the list is pretty concrete as it demonstrates a 2.703% raise since January of this year.

The actual amount paid by the dealer and then by the end consumer is much harder to pinpoint since we do not know the dynamics of the parties. Obviously, someone with the clout of Tiffanies buying millions of dollars per month will pay less of that increase than I will buying only a small fraction of that. Yet the power of the internet works as well for me as it does for you, and I pay much less than I would have ten years ago as a percentage of that list. It is not an easy answer that is being asked for!

Jonathon, I salute you for trying.
 


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On 5/13/2004 11:18:44 AM fire&ice wrote:





It's not that I don't believe you guys. It's just such a simple question that went unanswered.

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except that it's not a simple question. it's very far from being simple. there are so many variables that go into pricing diamonds at the various levels (mfr, wholesale, retail) that it would take days to explain it all, and this is without even going into the utter chaos in the rough market right now.



the reason it went unanswered is probably because no one really knows for sure.
 
Like Wink says, it is very difficult to demonstrate a raise in prices at the retail level.

At the Antwerp level, the price-hike is more than clear. In Antwerp, for a reasonably cut round, you now pay 20% more than last year.

The prices of rough have gone up even more, and most manufacturers are now buying rough at prices, that will not give them profit at the current prices of polished. It is clear that they are hoping that prices will continue to go up.

I do not think that the full price-increase has reached the retail-level yet. There is still an overhang of excess-stock between the manufacturing level and the retail level, but I expect that to be sold in the coming months.

In the past, you could get the best deals from dealers, who list stones that they do not own, and who would sell with a minimal margin. In future, the dealers, who buy their own stock, will be your best source.

For the Europeans, all this is in USD-terms. With the strong Euro and the low dollar, all these price-hikes have virtually no effect in our currency.

Live long,

Paul
 
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On 5/13/2004 2:40:46 PM Wink wrote:

Elmo, I am not sure why you tell Jonathon that the list is useless to you but it is what we jewelers must use when buying.
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You missed the devil smile, Wink. Some folks here are too quick to dismiss the usefulness of Rap to a consumer. This is a pretty concrete example of where I think it *is* useful, since I think it's perfectly reasonable for consumers to be asking whether prices increased recently. But like folks say, it certainly isn't the whole story, e.g. more limited availability than last year.
 
Prices at true wholesale levels are increasing. This is a sure thing. After that stage, all bets are off. Profits, those that still exist, are shrinking to absorb some or all of the increases. Where the increases leave nothing at all in profit, the price for those diamonds rises at that level of the market to the next user. This is seen as a lack of supply since a squeeze is on to find the right types of stones at certain price points. People who sort and grade large groups of diamonds are more carefully than ever working over the stones to select and grade more cautiously than they used to do.

Retail consumers have seen very little in the way of increased prices because of ever stronger price competition among sellers. There will be an eventual end of absorbing increased prices when there is not enough profit margin left.... This isn't hype or imaginary. It is a real happening that is slowly going on daily. There is no one day that it will just occur. It is gradual and based on what supplies exist already and what people are willing to pay.
 
The problem with trying to "quantify" a price increase is that there are so many variables.


For example- If you were looking to buy an L/I1 2.00 diamond for $5000- the price is virtually the same as last year.


If, however, you're looking to buy a D/VS1 diamond, you will probably be paying about 10% more-




that's probably what you're looking for- a concrete numerical answer- but it does not exist as a general rule.




If we were discussing the Rappaport list, I'd say that when market conditions change, this is reflected in smaller ( or larger) discounts off the sheet- this happens before the list changes in most cases.


SO the list is simply reacting to actual market forces.




The increases start at the rough level.


This too creates inequities.


Say a dealer has a stone in stock for one year.


Compare this to a "new" stone- one cut from higher priced rough, and there will be a price difference.


But it may take a while for the older stones to move- or dealers simply raise the price on exisiting stock when they feel the increases on new goods.




In the Natural Fancy Yellow category, the price increases have been quite dramatic.


I'd say a $30,000 5.00ct Fancy Light Yellow of last year is up to about $36,000




It all adds up to: BUY NOW!!!!!!!


heehhhehehehehe
 
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On 5/13/2004 4:53:17 PM oldminer wrote:


Retail consumers have seen very little in the way of increased prices because of ever stronger price competition among sellers. There will be an eventual end of absorbing increased prices when there is not enough profit margin left.... This isn't hype or imaginary. It is a real happening that is slowly going on daily. .----------------
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This makes perfect economic sense to me. And, makes me wonder if the market has been saturated w/ vendors already. Am I wrong to think that a possible correction due to some vendors dropping out, becoming more efficient or other? It seems that in a short period of time the internet diamond stuff matured rather quickly. Or, is it still an infant?
 
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On 5/13/2004 4:58:47 PM diamondsbylauren wrote:


In the Natural Fancy Yellow category, the price increases have been quite dramatic.

I'd say a $30,000 5.00ct Fancy Light Yellow of last year is up to about $36,000


It all adds up to: BUY NOW!!!!!!!

heehhhehehehehe
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I'm wondering though if this has quite a bit to do about the higher profile of such stones - marketing, celebrity choices, etc. Thus, driving the price up because of demand for an already scarce supply diamond.

Strange, I went into a one man/one store type operation. They always have a nice selection of diamonds. This time I noticed fancy colors were added to the inventory - a very pale pink & a nice yellow. They do seem to be the flavor of the day.
 
I do not doubt that prices will continue to rise.

It's one thing to try and say that consumers can 'vote' with their wallets by choosing to purchase or not to purchase. But we're not talking about cars, toasters, or houses.

None of those markets are dominantly controlled by one corporation, followed on the heels by a handful of distant runner ups.

If you don't like the sticker price of a refrigerator, not only can you go to a different store, but you can just look at different manufacturers. Even though the diamond engagement ring is a trumped up tradition dating back only really to the 50's, it's here to stay.

People will continue to purchase them, dispite the price increases. We'll just whine louder about it until lab grown white diamonds come into market.
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Lastly, we're talking about pricing and purchasing power under the fasle assumption that everyone is an edumacated [sic] consumer, which isn't true. There will be plenty of uneducated buyers that will justify continued increase of not just prices, but sub-standard quality cuts. And that's just sad.
 
Thanks Wink. Good input Capt. Aubrey (btw ...saw the DVD last night for the first time ... GREAT!!!) and you are correct in that it is not so easy to demonstrate. I'd also ditto Paul as this is what I've been hearing out of Antwerp as well and thanks for your input too Alexa. That is good info.




What's funny is that if any retailer tries to communicate this to a client an immediate cloud of skepticism is cast as quite frankly it sounds like a pitch (I understand your healthy skepticism F&I) but this is truly a reality we are all facing. All I can say is ...let's roll with the punches and keep on keepin on.




Wow.. F&I ... did you expect so many responses?
 
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On 5/13/2004 3:50:04 PM elmo wrote:

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On 5/13/2004 2:40:46 PM Wink wrote:

Elmo, I am not sure why you tell Jonathon that the list is useless to you but it is what we jewelers must use when buying.
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You missed the devil smile, Wink. Some folks here are too quick to dismiss the usefulness of Rap to a consumer. This is a pretty concrete example of where I think it *is* useful, since I think it's perfectly reasonable for consumers to be asking whether prices increased recently. But like folks say, it certainly isn't the whole story, e.g. more limited availability than last year.----------------
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Ah, I saw the devil smile, but did not know how to translate it properly. As a new poster I do not know all of the old discussions that have taken place and it will take me a while to pick up on the inside jokes. I thought you were giving Jon a little spanking for being brave enough to pipe up with solid numbers, always a dangerous thing to do. I appreciate you letting me know I was "defending" him from someone who was just yanking his chain, which as you know he needs yanked fairly regularly!

Wink
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On 5/13/2004 6:09:28 PM Rhino wrote:


Thanks Wink.
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You are welcome, I will now return you to your regularly scheduled chain yanking...
 
us the price increase is 5% to the consumer.

No one has been able to answer a very simple question. I've asked twice. This is the third. Thus far, not one single person has responded even with it's not that simple. I'm beginning to think this is marketing hype.
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F&I

There's no doubt about the price increase lately. I just sent in a stone to David Atlas for an apprasie, and Chris says the price has been inching up for the last few weeks. There's no reason for me not to believe him, since he has nothing to gain by not telling the truth. I think the best buy right now ,if you can find the right stone, that the vendor has in his inventory for a while. like a year old and he hasn't raised his price yet.
 
Average increase since January 2004 = 4.5%
(for F, G, H; 1.0-1.49 ct; GIA; Ex/Ex; 57-62.5% Dpt; 53-58% Tbl)
 
Wow... thanks for that detailed response Leonid.
 
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