In its current phase of slowdown, the diamond industry has started to blame millennials too for its misfortune and there is a reason for it. According to a Bank of America Merrill Lynch (BofAML) Global Research report, many millennials are getting married at later ages than their ancestors (median age of marriage for men is now 29 and for women is 27) and when they do get engaged or marry, millennials now prefer distinctive jewelry that does not necessarily involve a diamond ring.
Millennials’ preferences towards sustainable, ethical and value products are well known and given the numerous negative points attached to mined diamonds, a new tradition of wedding jewelry with either different gemstones or Lab-grown diamonds is evolving. Much of the retail jewelers’ sales are tied to wedding purchases, as in the case of Signet Jewelers where 50% of their sales come from bridal category.
The new jewelry purchase trend set by millennials has put a big dent in jewelers’ sales. Share prices of major diamond jewelry retailers including Signet Jewelers, Tiffany & Co., Blue Nile et al have fallen 19% or more, underperforming the market, in the year to date period. The BofAML report predicts that this year the global retail sales of diamonds will only grow by 2%, much below the 7% CAGR in the 2009-14 period.
Des Kilalea, Analyst – RBC Capital Market said in a research note “The Challenge is that diamond jewelry appears to be low on the buying lists among so-called millennials.”
Moreover, apart from the wedding jewelry factor, millennials now tend to spend on other luxury products including tech gadgets, holidays, designer purses, shoes etc.
To counter this trend, Diamond Producers Association (DPA) is launching a new marketing campaign “Real is rare, real is a diamond” targeted towards millennials. Though marketing campaigns by De Beers decades ago indeed had started a new trend of diamond wedding rings, what today’s campaigns fail to understand is that the new-age consumers especially millennials now have access to information and facts and try to make informed decisions. Mere slogans simply won’t cut with them and at the end of the day remain only clichés.
Millennials have though started romancing with Lab-grown diamonds because they perfectly fit in millennial’s value system – Lab-grown diamonds are 100% conflict free, eco-friendly, ethical and sustainable products and costs around 30% less than their mined counterparts. Though the research was started decades ago, it is only recently that the technology for growing Lab-grown diamonds has progressed, where growing colorless, nearly flawless diamonds is now possible.
Not just several diamond growing greenhouses (Lab-grown diamond producers) have started globally but retailers are also now taking Lab-grown diamonds with gusto. American Grown Diamonds and Smart Jewelers are just two examples of the numerous retailers worldwide who showcase Lab-grown diamonds. Recent entrants in the category include Stuller and Swarovski too.
Joel Kagan of Chicago-based Smart Jewelers mentions “They are beautiful to look at, and you save 20 to 30 percent while you’re getting something every bit as nice, if not even nicer.” He adds “We are making diamond earrings with a client who’s copying a pair from her mother that went to her sister. We’re using a 3-carat lab-grown diamonds and she’s saving over $30,000 by using them.”
A recent article on Racked “A Lab-Grown Diamond Is Forever” details the surge of Lab-grown diamonds and a public discussion on YCombinator on the topic clearly shows that many consumers are not just aware of the previous marketing tactics of De Beers, the negativity attached to mined diamonds, the upside and benefits of Lab-grown diamonds but are also buying, loving and defending them. Yes, there are many people who still prefer mined diamonds but the second school of thought is rising vigorously. See below some of the discussions on Ycombinator.
Agreed that mindset of millennials remains an enigma but a clear trend of Lab-grown diamonds uptake is noticeable. Despite ‘Lab-grown diamonds are about to be everywhere’, the traditional mined diamond industry resents them. World Jewellery Confederation (CIBJO) recently criticized Hollywood actor Leonardo DiCaprio as an investor in a California-based Lab-grown diamond producer startup – Diamond Foundry. Such oppositions are unfathomable considering Lab-grown diamonds can solve jewelry industry’s problems.