Diamonds, once considered as uber-luxury items that sparkled the imaginations and emotions of people worldwide, are now facing a stiff competition from other goods in the luxury segment including high-end electronics, vacations, fine wine, designer products and so on.
So much so that Jewelry no longer figures in people’s top wish list. De Beers Insight Report mentions that fine jewelry was NOT in the Top 5 gift list of US women. Holidays, electronics, home furnishings, spa ranked ahead of jewelry. Even among the young people (18 – 34 years), designer handbags and clothing took precedence over jewelry.
This has resulted in Jewelry sales growth falling far behind other goods. According to Euromonitor, Jewelry sales grew at 2% CAGR between 2004 and 2013, while electronic goods grew at 14%, fine wines at 11% and premium beauty/ personal care segment at 8% during the same period.
A major reason for the same is growing consumer inclination towards Technology products. A 2104 study of 1,335 millennials with an income above USD 100,000 by Unity Marketing found that as a group, millennials enjoyed technology purchases far more than jewelry. 46% said technology purchases gave them ‘great pleasure’, while only 25% said that for jewelry.
In this interconnected world, technology is burgeoning rapidly and this is represented in the brand recall. A study conducted by Moosylvania, a digital ad agency, finds that 3 out of 5 favorite brands are tech gadget companies.
People are falling in love with technology and other luxury products and are even using them to express their love. A recent post quoted “iPhones are the new way to say I love you.”
While consumer preferences are inclining towards technological products and other luxury items, jewelry and diamond retail is slipping. When millennials age and get more buying power, diamond sales as a share of their wallet will decrease further.
As tech gadgets, leather bags, perfumes, watches, holidays, spa, premium cosmetics, designer clothing, fine
wine, pieces of art gather in the nouveau riche’s collection, definition of luxury transcends from mere products to unique experiences and consumer preferences change away from jewelry, diamond industry will face a massive collateral damage.
Lately, diamonds have not been able to match up to other products whether in terms of ad spend, marketing initiatives or connecting with consumers. Only a stronger branding and product enhancement that meets the changing consumer desirability will arrest the possible downfall of the diamonds category.