by Morgan Beard, Editor-in-Chief

The year 2000 saw gem buyers seeking a combination of quality and value, according to a survey of wholesale gemstone dealers conducted by Colored Stone. Although the dealers were generally positive about their profits - 64 percent said their business was better than in 1999, as opposed to 20 percent who said it was worse - there was an underlying feeling that the jewelry market is cooling off.

“I believe all the stores are off in jewelry,” said Kedar Gupta of GRK Gems. “For the past few years people were doing the stock market, and everybody was making money. This year they lost money, and they don't have the spare money to spend for jewelry.”

“Jewelry is still on the bottom side of the list [of things] that people spend money on,” agreed Radha Soni of Rainbow Ratan. “I can sell my house [in this market], but I cannot sell my jewelry the second day.”

If consumers are more cautious with their disposable income, they're still very much interested in the beauty and quality of the stone.

Blue sapphire remains the number-one stone among dealers, and it continues to bring in more sales each year. 11.87-ct. sapphire, photo courtesy ICA/Bart Curren.

“I would say that the top quality stuff sells the best,” said Chris Boyd of C.B. Gems. If a customer asks for a stone in the $400 to $600 per carat price range, for example, “you bring in a stone that's $1,000 per carat. When they see how much better it looks they will spend the extra money. . . . When they have four or five stones to compare it to, if it's a question of whether they can afford [the better stone], if they can't, usually they wait until they can.”

The top 10 list this year reflects that trend. Blue sapphire, which is already number one by a large margin, was also picked as the most likely gem to increase in popularity. The reason can be traced to two trends: one, that new sources have made the gem more available, and therefore buyers can get better quality at good prices. Also, with tanzanite in short supply and prices on the increase, sapphire compares favorably.

“The price of tanzanite is going so high it increases the demand for sapphire,” said Boyd. “I don't even carry tanzanite anymore for that reason - it's so hard to buy the rough and cut it.”

In 2000, emerald surpassed tanzanite in popularity. Tanzanite photo courtesy ICA.

The relative scarcity of tanzanite dropped the gem to number four on the top 10 list after three years in the top three. Emerald climbed into the vacant number three slot, boosted by a recovering market and steady supply.

Other gems that did well were amethyst, which seems to be fashionable despite worries over synthetics, and fancy sapphire, which is in better supply due to the new Madagascan deposit. Spessartite knocked fellow garnet tsavorite out of number 10 as the tsavorite supply tightened a bit and a new spessartite discovery in Nigeria hit the market full-force.

“It's a new stone, a new color, very vibrant, and people do need something new in semiprecious [gems],” said Soni. She adds that the color of spessartite is very popular right now, especially the “pleasant medium orange” shades.

Pink tourmaline fell from number five in 1999 to number seven in 2000 as the flood of material from Nigeria slowed to a trickle. Most of the good material has already been bought up and prices are rising, although there is certainly enough in stockpile to supply the market for many years to come.

Hazardous Conditions

Crime catapulted to the top of dealers' list of concerns in 2000, with 26 percent saying it was the most serious problem facing the industry, compared to 8 percent in 1999.

“I hear about [robberies] all the time. It's truly frightening,” said Michael Randall of Gem Reflections of California. “I get guys coming in now with Burger King bags filled with sapphires. The idea of having a secure, locking bag [is pointless] - they're just going to take it anyhow. They're less likely to think a person with a Burger King bag has jewelry.”

It's something that everyone in the gem business thinks about, or should, he adds. “I have been known just to flat lie to people, say I sell some really boring thing. Or, if I don't want to lie, when people ask me what I do [related to gems], I say 'oh, just lecturing.' ”

“Crime is a big issue in this area [Scottsdale, Arizona]; so many people have been hit,” notes Boyd, who adds that he personally will no longer go out on sales calls. “It's not worth it. I'm not going to take $100,000 in merchandise out [and risk losing it]. Even if it increases my sales 30 percent, I say it's not worth it.”

Although awareness of crime rose in 2000, 1999 was actually much worse in terms of crime against traveling salespeople, according to John Kennedy, president of the Jewelers Security Alliance (JSA), which tracks crime against jewelers. “In '99 we had a big spike [in thefts and robberies], up 50 percent. There was also an increase in violence. It used to be more frequently done through tricks, and last year [robbers] became more violent.”

The vast majority of such crimes are committed by what have been dubbed South American Theft Gangs - organized groups of criminals who are brought into the United States specifically to commit these crimes. The gangs have been in operation for many years, but recently the members have tended to be younger, more reckless, and more violent.

“We've also seen a pushing out from the big cities,” continued Kennedy. “A lot of these cities have more enforcement than they had in the past; that's pushed it out into the 'burbs.” The greatest activity is seen in California, Florida, and the New York-Boston corridor.

The JSA is in the process of lobbying the U.S. Congress for more funding and more attention to these crimes from federal law enforcement agencies. As of mid-October, Kennedy said he was optimistic that those bills would be passed.

Cyberspace for Rent

In 2000, fancy sapphire rose on the top 10 list from 8th to 6th place. Pink sapphire, photo courtesy ICA.

While overall use of the Internet for business jumped from 62 percent of surveyees to 76 percent in 2000, dealers are still very tentative about buying and selling online. The majority (95 percent of those who use the Internet) use e-mail to communicate with suppliers or customers, and 50 percent of all surveyees have a Web site, up from 28 percent last year. However, only 14 percent sell their gems online.

In 1999, there were signs of a split between dealers who had embraced the Internet and those who weren't sure. This year, even dealers who have sold online in the past were showing signs of wavering resolve.

“I don't know how far we are going to go with this,” said Soni. Rainbow Ratan has its own e-commerce site, but they do very little of their sales through it. “I feel the reason [online gem sales were] successful in the beginning was that it was still new. Many people still didn't know about gemstones,” and through the site they learned about gems they'd never heard of.

Now the newness is wearing off, she continued, and buyers are getting disenchanted. “It's going to lose it. I would never buy from the Internet,” because even with the best image resolution it's hard to see what you're really getting.

Still, the growth in the use of Web sites shows that, after some hesitation, dealers are getting used to including the Internet in their business strategy. The digital realm and the gem world are far from integrated, but the influence of the Internet is not likely to go away any time soon.