Some 45% of suppliers polled by JCK said retailers were buying less than they did in the past; 70% said they were buying later in the year; 60% said they were buying fewer basic styles to keep in stock; and 55% said they were more frequently looking for goods that are sold at a price point.

“I don’t think I’ve ever seen quite the level of reluctance among retailers to buy,” says Jonathan Louttit, director of operations, Imperial-Deltah, in East Providence, R.I. “A lot of companies are trying different enticements, including price, extended terms, merchandising, co-op advertising. Even those things aren’t working.”

Manufacturers say the inventory situation forced them into not-always-pleasant reactions, including restricting cash flow (50%), reducing staff (40%), and changing their marketing and advertising budgets (50%). It has also had an impact on styling, as retailers are less likely to gamble on expensive or unusual items.

“Retailers are taking fewer risks, whether it’s with inventory or designs,” says Rachel Silber, director of marketing for Silber’s in Houston. “I don’t think I’ve ever seen retailers be quite so conservative.”

This has strained the retailer-supplier relationship, say suppliers. In response to the survey, 60% of suppliers said retailers were asking for longer payment terms, 75% said they were paying slowly even without approval, 70% said retailers wanted more return and exchange privileges, and 65% said they were asking for discounts and special allowances in pricing.

David Goldstein, president of Goldstein Diamonds in Scottsdale, Ariz., says manufacturers are providing so much to their customers—including the latest carrot, free postage—that the situation can’t go on without manufacturers being hurt.

“We are our own biggest enemy,” he says. “People aren’t looking down the road. They only worry about tomorrow. Eventually we are going to cut our own throats.”

Goldstein argues that the situation holds dangers for retailers as well: “The retailer no longer looks at the value of the diamond or how pretty the stone is. It’s all about whether they can save money on postage. It kills any relationship.”

Looking ahead to this year’s fourth quarter, manufacturers hope there won’t be a repeat of last Christmas, when many retailers ran out of stock before the holidays and suppliers couldn’t meet requests.

“Ten days before Christmas, you can’t make a custom platinum wrap ring with princess cuts,” says Byran Brogan III, vice president of Philadelphia-based Byard F. Brogan. “You just get to a certain point and you can’t do it.”

Silber hopes the trend toward late buying has reached its breaking point. “After what happened last year, people will be a little more willing to be prepared upfront,” she says. “It won’t be like past years when people planned in October.”

But others warn that last-minute ordering is beginning to affect other holidays too. “We were getting orders for Mother’s Day items eight days before Mother’s Day, which was really amazing,” says H. William Pollack, president of Relios in Albuquerque, N.M. “It’s becoming a major problem. Retailers who don’t have a selection are not going to get the customers.”

A cautious mindset. Why are retailers so unwilling to buy for stock? The economy is the most obvious culprit.

“Things are unpredictable,” notes Louttit. “There’s a feeling of unsteadiness. No one knows where the market’s going. I talk to retailers, and one month they are up, and the next month they are 10% down … and they don’t know how to explain it.”

Indeed, most retailers surveyed during The JCK Show ~ Las Vegas and at the Luxury and Couture shows preceding it said they’d had a volatile spring—fairly easily explained by the war in Iraq. Most reported good rebounds through May, and if the winter and spring buying shows were any indication, they’re either getting comfortable with the up-and-down nature of the market or they’re slowly losing their fear of buying too much. The mood in Las Vegas was positive, with almost all sectors reporting significant sales and growth and more than a few exhibitors citing record-setting sales at the show.

Once burned, however, some remain twice shy and worry that, even if the economy is rebounding, this trend is here to stay.

“Business is not that bad,” maintained Goldstein. “Everybody wants to use the economy as an excuse. This is a change of mentality that has been coming for some time.”

One of the few who say this cautious mindset has helped is Michael S. Indelicato, president and CEO of RDI Diamonds, Rochester, N.Y., a short-term memo house.

“I’ve had a number of jewelers tell me it’s not worth buying for stock anymore,” he says. “They realize that they can get everything on memo, and it’s worth it to them, even if they have to pay a few percent more. And now that they have tasted it this way, I don’t think they are ever going back.”