WRITTEN BY ANALUCIA BELTRAN
There is no doubt that many industries went through tremendous transformations during 2020 due to the Covid-19 pandemic.
One of the most interesting shifts, happened in the Diamond Industry. Let’s take a look at some of the most predominant facts and statistics of the significant change in the personal luxury market compared to the diamond jewelry industry and even how lab grown diamonds, the diamond of the future, is shaping an exciting new era for this industry.
The personal luxury market, which includes jewelry, watches, beauty goods, apparel and accessories was definitely one of the industries most affected due to the pandemic. Lockdowns, travel restrictions and economic uncertainty all contributed to this market to contract by 22% in 2020.
There is one industry in this market, though, that performed better than the rest: the Diamond Jewelry Industry.
The pandemic accelerated structural changes in the diamond industry, mainly in the e-commerce adoption. Online sales increased from ~13% in 2019 to ~20% in 2020. This increase has also lead to almost 70% of consumers to research and choose jewelry online prior to making an in-store purchase. This comes to show that people value being able to see and touch the jewelry. This comes to prove that even though the online platforms allow for convenience and many other benefits, consumers still value the in-person experience, specially when it comes to high-ticket items that they will wear. The in-person experience, for many people, is the final reassurance that they are making the right choice.
What were the elements that have helped the industry resist the pandemic hit? Data shows that consumers continue to value diamond jewelry as a desirable gift and an essential element of marriage. n a survey issued by Bain & Company in 2020, US consumers said jewelry and watches are among the top gifts they would like to receive; consumers in China and India ranked them in the top two. The market performance is also in big part the result of an extremely successful marketing campaign that associates diamond jewelry with important moments in life, it is still one of the biggest emotional purchases there is. This marketing efforts have being going on for many years and companies are still harvesting its fruits.
While in-store purchases are the preferred way still, initiatives such as offering discounts, seamless return policies, warranties and other trust factors will only contribute to customers feeling more comfortable with the online experience.
But if there is one segment in the diamond world that is on a rapidly growing pace is lab-grown diamonds. Thanks to the power of technology, today we are able to have real diamonds with the same DNA (99.95% carbon) as natural mined diamonds, with less environmental impact and of 100% conflict free provenance. On top of this, the retail price is on average 40% less than mined diamonds.
The process in which Lab grown diamonds are made is a result of many years of technological advances. It all starts with a thin sheet of carbon seed that grows under the same heat and pressure as the natural ones, yet instead of taking 2 billion years to be transformed by mother nature, this sophisticated process is done in a laboratory instead, using processes called High Pressure and High Temperature (HPHT) and Chemical Vapour Deposition (CVD) machinery to recreate this process in a matter of weeks. The result is a brilliant genuine diamond that is certified and measured as the natural ones (4 C’s). Real diamonds with the same DNA yet with a different conception process.
This technology has been around for several decades, yet it was not until recent years that the industry has recognized lab grown diamonds as the new way of the future.
Giant companies including Debeers and brands such as Swarovski have launched their lab grown diamond brands. Most recently “Pandora Jewelry” announced they will be only using lab grown diamonds from now on, in an efforts to keep up with sustainable luxury to help preserve the planet.
So, what is in stores for the future? Factors that will have a big impact on the jewelry industry is epidemiology, government policy response and consumer response. But in addition to this, new luxury products that offer the exact same quality at a better price point and with an environmental element are shaping consumers choice, beyond the pandemic, from the future for the future.