How Covid-19 Is Impacting Fine Jewelry

Recent reports of sales and production from the jewelry industry show wildly different results. At the end of April, luxury online retailer Moda Operandi reported a 35% increase in sales of fine jewelry, while in August De Beers published a report stating that only 46% of consumers say their jewelry spending is at a normal level. Jeffrey, a boutique known for its impeccable jewelry selection, closed for good this summer as a result of Covid-19, making the retail landscape even bleaker for independent designers. Today, designers are faced with difficult choices to preserve their cash flows, keep their artisans employed, and find a way to connect with clients without seeing them in person. Some are closing ranks, not buying new stones or making new pieces, instead only selling their existing inventory, while others are investing in online e-commerce at the highest levels and creating affordable collections to bring in new customers.

Mining has halted due to Covid-19 shutdowns, so the supply of rough stones is limited. The De Beers Group reported that rough diamond production was down by 54% to 3.5 million carats in Q2 2020, versus 7.8 million carats in Q1, while sales dramatically decreased. In Q2 2019, there were 9.0 million carats sold and in Q2 2020, only 0.3 million carats, due to the limited production and the shutdown of polishing and cutting facilities.

Tom Heyman of Oscar Heyman, a New York-based jeweler known for the finest colored gemstones, is taking a conservative approach. In normal times, Oscar Heyman has a team that constantly travels the world finding the most incredible stones to buy. With an inventory of one to two years’ worth of sensational stones on hand, the company has been able to stop buying new stones or making new pieces to preserve its cash flow at this time. Heyman says, “Our plans to buy stones are on hold until we need them. The labor in our shop is being dedicated to orders — we aren’t building any jewelry just for our inventory. In a couple of months after we have sold pieces, we will selectively make pieces to backfill inventory. But at the moment, we think we have all of the stones we need to do that.”

Sharon Novak, a co-founder of the fine jewelry borrowing service Beekman NY and a specialist in the high-jewelry supply chain, notes that most companies don’t keep an extensive inventory of the highest quality stones on hand, so those jewelers are still looking for incredible stones. But, due to the mine closures, they are now having trouble finding the best examples. Novak says the serious high-jewelry companies and collectors know that the magnificent and rare pieces might never show up again, so they are buying them when they see them, despite the pandemic and economic uncertainty. These supply-chain problems are affecting retail as well. Jay Hartington, CEO of luxury online retailer Marissa Collections, says it has been one of the most difficult parts of doing business during Covid-19. “Jewelry brands are gun shy and some companies’ production is six weeks out because they have fewer workers. Everything is taking longer.”

With stores closed and consumers skittish, jewelry houses needed to find a new way to connect with clients. For some, this issue has been surprisingly positive. Sanjay Kasliwal has had a boutique on Madison Avenue for years, but even before the pandemic having a retail location was not a crucial part of its business.

Shalini Kasliwal, President and CEO of Sanjay Kasliwal, says, “Our main business was by appointment, or through Instagram, WhatsApp and e-mail. The walk-in business was fewer than 30% of our business. Covid-19 was a great opportunity to take that step to close the store and invest more in our website and e-commerce.” In addition to launching e-commerce, Sanjay Kasliwal renamed collections and created more affordable pieces to sell online, around a $3,500 price point. But that doesn’t mean that its most expensive jewelry is sitting idle in the vault. Kasliwal says, “The most expensive piece I have ever sold on Instagram was $250,000 — to a new client.” Hartington agrees that affordable fine jewelry is doing well.

He says, “We’ve seen jewelry under $5,000, which isn’t necessarily our focus, has done very well and actually exceeded where it was last year, especially in the gold and diamond category. Under $2,500, even more. We already had a robust online setup going into Covid-19, so those channels were all up astronomically. June was up 250%, and that was primarily driven by jewelry.” His team is doing business as usual, sending clients pictures and videos of pieces by text and direct messages, and Hartington is feeling optimistic about the fourth quarter of 2020. At Beekman NY, Novak notes that borrowing jewelry is still thriving as a way for women to try pieces and see how they work in real life before heading to the boutiques to make a purchase. Having the pieces at home and being educated on the stones actually makes buying jewelry easier as well, limiting the amount of time a client needs to spend in a store to make an educated decision, which has been delaying some women’s purchases during the pandemic.