The Diamond District faces its Past, Present, and Future

At peak hour, West 47th Street is a blur. Scores of vendors and shoppers zigzag the streets or stand outside stores. Groups of retailers huddle under scaffolding, murmuring among themselves. Saleswomen stand behind sparkling displays of earrings and necklaces trying to lure window-shoppers inside. And there are eyes everywhere. To linger for just a moment draws a thousand gazes. There it is a lot at stake after all; this street holds the greatest concentration of treasury in New York City. The Diamond District, a single block between 5th and 6th Avenue, just south of Rockefeller Center, is changing.

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This stretch of Midtown Manhattan is featured on Friday in Adam Sandler’s new film “Uncut Gems.” But for more than a century, the Diamond District has sat at the end of a long supply chain. Gemstones are mined from the far corners of the world. Countries are known for their most well-known products: South African diamonds, Burmese rubies, Sri Lankan Sapphires. From there, the gems are taken to cutting centers and fashioned into jewels. Wholesalers visit these cutting centers to buy material and sell them down the line to retailers or jewelry designers, who leave them dangling behind brightly lit windows. All this is responsible for $24 billion dollars in revenue per year, spread across 3,900 jewelry manufacturers, retailers, and wholesalers. Who knows how much value flows through each establishment?

“Even in this building? Impossible.” Bernard Livi is the co-founder of M. Livi & Sons, a diamond wholesaler located at 580 5th Avenue. In a way, he is another example of the industry’s timelessness. A warm, elderly man in a purple sweater vest, his yarmulke pinned to a thinning head of hair, Livi spends most of his time answering phone calls, scheduling meetings, and writing up memos. His office is littered with diamonds in small black boxes. Regardless, Livi insists that the district is not what it used to be.

“Things change almost every day,” Livi explained, “We have been here over 30 years. The entire jewelry business has been transformed.” The supply chain, he continued, has been completely upended by the Internet. “Now everybody who has a diamond, they post their diamond on the Internet.”

And, for those who make their living here, this change threatens a way of life. Freddie Feliciano is a security guard-slash-salesman at 55 West 47th Street, a large exchange floor where dozens of booths buy and sell jewelry. Rain or shine, Feliciano scans the stream of bodies, looking for potential customers. He started nine years ago as a hawker, one of dozens of nonsalaried men who ask passersby if they are interested in buying or selling jewelry.

“I was so good, now people pay me to bring customers inside.” Like all the other hawkers, Feliciano first had to rely on a five percent commission for every sale he was able to bring to one of the booths. Hawkers are one of the gears in a gem industry machine that has existed for decades.

If a hawker gets the sense that a window has caught someone’s eye, they lead them inside so the retailers can close their deals. 

In the past, retailers and jewelers had to peddle their wares in person, going from store to store to showcase what they had. Customers had no choice but to travel to the district either. But now, wholesalers have a host of online databases where they can compare finished gemstones, complete with a picture and description, and buy them with a click, as opposed to flying to cutters in Tel Aviv or Mumbai. Some retailers, like Blue Nile, have gone completely online, selling loose stones or finished pieces straight to the final customer, in sales that are called “privates” in the trade.

The transition to the Internet has had other side effects. With the movement to online transactions, people like hawkers are becoming less necessary. 

“The Internet has really taken away a lot of business from these people,” Livi said.

Feliciano has seen it unfold first-hand. Although there are more hawkers than when he first started working, their chances of success have diminished.

“They think they can just stand here eight hours and hopefully get one customer and maybe get $150 commission. But it doesn’t work like that anymore. Maybe once or twice a week, one of those guys makes a big score.”

Another consequence of the Internet is that consumers are more prepared. There have never been more resources to learn about the industry, and people use it to their advantage.

Feliciano has been frustrated by this development. 

“Customers know more than we know.”

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Not everyone on the block believes that things have changed. Avi Fertig is the executive director of the Diamond District Partnership, a non-profit entity that oversees the 47th Street Business Improvement District, believes the fundamentals of the business remain. 

“Much of it is word of mouth and relationships and that’s consistent,” said Fertig

Livi agreed. He and his brothers got started in the business with the endorsement of jewelers that they knew in the Jewish community of Great Neck Long Island. That personal touch lends itself to transactions.

“Whenever a customer calls we ask them ‘who do you deal with? Who did you buy diamonds from before?’ Once they provide you with a few names, you give them a call. It’s like you get a credit reference.” Trust, according to Livi, is the most valuable currency there is on the block. And the only way to acquire it at first is slowly, by always following through on your word.

“That’s probably the hardest part until they get to know you and until they trust you.”

A lot of Livi’s work involves lending money to other businesses. He described it as a standard practice, and every relationship has its own credit limit and deadline for payment. But with so much money at stake, this system is often tested. Livi has a sixth sense for telling when a business is trying to bite off more than it can chew. 

“Let’s say this company, we cannot give them more than $5,000 worth of merchandise. If all of a sudden they are asking you for $100,000, that’s a sign that this company cannot handle $100,000. For us, it’s a sign that we should not deal with them.”

All the wealth on the block also makes the street a target. On Veteran’s Day in 2014, two men masquerading as FedEx workers robbed Watch Standard, a watch wholesaler. Then on August 25 of this year, three men wearing fake dreadlocks robbed Avianne & Co. Jewelers at gunpoint. The first robbery was discovered to be an inside job orchestrated by someone who knew the owner, and the latter is currently being investigated for possible links to employees of Avianne & Co.

But these are statistical anomalies. Fertig insisted that the Diamond District Partnership works closely with the NYPD to make the block as safe as possible for businesses and customers alike. 

Companies also hire their own security, like Feliciano. As a security guard, he escorts potential clients from the bank to the store and sees them off in a car personally. The line between customer service and customer surveillance is blurry.

“I have to watch and make sure you don’t run out that store with that $50,000.”

Through Oct. 31, there have been 30 grand larcenies reported in the Diamond District in 2019. Fertig stated that he did not perceive an uptick in crime.

“I would say that it wouldn’t be an exaggeration to portray this as the safest block in New York City.”

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December is an important time for stores to make up for any lost revenue.

“We’re working seven days a week and up to one more hour a day,” Feliciano stated, after a particularly slow two months. 

Yet, there are headwinds. The global market value for diamond jewelry is shrinking, from a high of $81 billion in 2013 to $76 billion in 2018. Yet the costs of running retail businesses in New York have not dropped. Closed storefronts sealed with plywood now line whole sections of the street.

“ Owners are making it very very expensive to rent space here, either the booths in the exchanges or the offices above the street, and it's a challenge,” Fertig said.

Retailers are trying to find more ways to make ends meet. “A lot of people want to do a lot of things under the table,” Feliciano exclaimed. “If Donald Trump can do it, a lot of people want to do it.”

But for those working in the Diamond District, the most challenging development has been the customers themselves. According to Fertig, younger consumers have different sensibilities about the gem industry. They are more sensitive to the humanitarian and environmental costs of gem mining, and merchants are learning to accommodate those values. 

“We want people to feel comfortable with what they’re buying.” 

Another issue, Fertig claimed, was the rise of synthetic diamonds. They do not carry the stigma of mined material and are generally more affordable.

“They are becoming more and more popular,” Livi exclaimed. 

He conceded that younger people are becoming less interested in gemstones. There is the sinking suspicion that nothing, not even diamonds, lasts forever.