Jewellery retailers globally are remodelling their businesses to accommodate the growing lab grown diamond jewellery segment which has caused a stir within the ‘diamond industry’. Up to 2015, natural diamonds were the constant on diamond engagement rings and bridal jewellery however, towards the end of 2015; people’s choice to buy lab grown diamonds started gaining a foothold in the market. The ‘foothold’ was not only attributed to the much lower prices of lab grown diamond jewellery and engagement rings, but also attributed to the high quality and choices that lab grown diamonds offer consumers.
Evolving Prices
In light of the sudden shift in demand for synthetics, first movers who were consumer-oriented retailers reduced inventory intake of natural diamonds and increased inventory levels of lab grown diamonds and cashed in with profit margins that hovered at an approximate 65% over cost. This move resulted in the prices of both naturals and synthetic diamonds to fall; prices of natural diamonds fell due to lower demand, whereas prices of synthetics fell due to overstocking and stiff competition as retailers rushed to unload these lab grown diamonds before margins normalized.
Generational Change
In contrast, the retail factions that chose to keep a distance from lab grown diamonds experienced lower sales and to a certain degree, has not recovered to date. However, retailers that abstained from the trend are holding on to a positive outlook for natural diamonds to make a comeback soon enough due to the ‘cheapness element’ of lab grown diamonds that has somewhat rolled back on itself as lab stones continue to lose value. On the other hand, diamond manufacturers are certain the Millennial Generation and Generation Z will not move towards a trend to buy natural diamonds due to the high prices.
The younger generation prefer 2 or 3 carat rocks on their engagement rings simply because the sparkle is greater with bigger rocks and the price is lower. The average Joe and Jane will not be able to tell these diamonds apart unless they put it under a high-powered microscope and this is what is going on according to retail marketing managers and this is the main advantage that synthetics possess over natural stones.
The showdown between lab grown diamonds and naturally mined diamonds is far from over as far as industry players are concerned. The on-going battle has seen many firsts which include the decrease in value of natural diamonds which hit diamond investors pretty hard, and at the same time the stiff competition amongst synthetic diamond manufacturers has also had an impact on the value of synthetics as the price war within the synthetic manufacturer’s realm rages on.
The Future
Most diamond retailers attest to the fact that stability within the diamond retail, wholesaling and mining is still far away and might take years before an equilibrium within the industry is found. The winners currently due to this disruption are the new consumer generation who are enjoying lower prices on both sides of the same coin simply because both synthetics and natural diamonds are actually 99.99 % alike
