The entire sphere of the diamond-based jewellery retail industry has hit huge speed bump and industry players are struggling to keep pace and evolve. The slogan “A Diamond is Forever” has run its course and diamond retailers are ‘stuck’ with high value inventory (natural diamonds) while new players offering lab grown diamonds slowly eat away at the traditional diamond jewellery market.
This has resulted in the destabilisation of the market significantly since and since 2018 diamond wholesalers, diamond importers and retailers have been easing off on prices for natural diamonds and incorporating lab grown diamonds as part of their product offerings.
Apart from new entrants into the market, lab grown diamonds and environmental concerns, another significant reason behind the ‘industry shrink’ is attributed to the new generation of consumers – the millennials. Based on reports from industry experts, the new generation typically shy away from buying expensive engagement rings whilst at the same time prefer bigger centre stones which has led this particular generation to lean towards lab grown diamonds as centre stones.
Lab grown diamonds which are identical to natural diamonds in terms of atomic structure offer better options at only a fraction of the cost of natural diamonds. Most diamond retailers are in fact ‘overstocked’ with natural diamonds and since 2019 diamond importers and wholesalers have taken it upon themselves to unload their inventory directly to consumers at exceedingly competitive prices which has further stumped the ability of retailers to recover from the industry’s downturn.
On the upside, despite most millennials looking at cheaper options for diamond engagement rings and jewellery, this particular generation is also the largest consumer generation ever and ‘the quantity of the generation’ is the only factor that is keeping the industry from totally collapsing as even a small percentage of this generation buying diamond jewellery equals to more than half of Generation X consumers that prefer natural diamonds.
It is not that there is no money in the sector as studies indicate that couples spend an approximate $7,000 on an engagement which is attributed to the demand for engagement rings or bridal jewellery that are custom or require complex settings with 1.5 carat or larger centre rocks. According Kathryn Money, the vice president for Brilliant Earth, the new generation of consumer (Millennials and Gen Z) account for an approximate 70 % of diamond purchases rendering them as the largest segment.
Some retailers are saying that the industry is in essence undergoing a phase that has caused turbulence and this phase will pass very soon and the industry will stabilise soon enough. Other retailers have opted to include and market lab grown diamonds aggressively in order to fill the current revenue void attributed to the low sales of natural diamonds and as far as these retailers are concerned, the move has paid off.
Embracing lab grown diamonds as far as most retailers are concerned is among the ways to ride out the current storm that has disrupted the industry from more than just a few angles.
