They are buying at locales other than traditional jewelers
De Beers calls the idea that millennials are turning away from diamonds a “myth” in its latest Diamond Insight Report, though it admits younger buyers—with their strapped income, later marriages, and love of technology—do pose certain challenges.
The report—which can be downloaded here—estimates that the millennial demographic purchased $26 billion in diamond jewelry in the four major diamond markets last year, more than any other age group. (Of course, it is a larger age group than all the others, too.)
“They are not a lost generation by any means,” says Stephen Lussier, De Beers executive vice president of marketing and CEO of its Forevermark brand. “There is relatively strong desire for diamonds.”
The report contends that diamond engagement rings remain a “cultural imperative” in the United States, with 26 percent of U.S. millennial brides claiming to have dreamt about their future ring four and a half years before beginning a relationship.
If millennials seem underrepresented at jewelry counters, it’s because they tend to buy in more locations than just standard jewelry shops, Lussier says.
“They are buying at nontraditional places of purchase—be it designers or boutiques,” he explains. “We are seeing places like Net-a-Porter pushing more jewelry and building significant businesses.”
This group is also coping with heavy economic pressures—their real income level is lower than Generation X’s was in 1998—and they are getting married later: Just 28 percent of millennials are married, which is 40 percent lower than the baby boom generation at a comparable stage in life. But Lussier feels that could mean bigger sales down the road: “As [millennials] advance into higher income ranges, as they get into their mid- to late-40s, we have the opportunity to covert them at higher prices,” he says.
The self-purchase market is also expanding, he says, though he warns that self-purchasing shoppers can be very discerning.
“They are accustomed to individuation, customization, and having things immediately,” he says. “Call it the Amazon effect.”
The industry is also coping with a “tougher competitive set.”
“Some of the needs that we satisfy, such as status, technology also plays an important role in,” he says. “Experiential things are competitors as a gift of love.”
The industry needs to boost its advertising if it wants to make sure this group keeps showing up at jewelry stores. Lussier adds: “We need to market effectively and hard against this group if we are going to see this opportunity materialize. They are still making up their minds, and they are exposed to lots of different messages. We have a lot of work to do.”
The report estimates that 62 percent of U.S. millennials own at least one piece of diamond jewelry, and that figure jumps to 72 percent among 25- to 34-year-olds. That compares favorably to 76 percent ownership among older generations.
Still, many of those pieces are gifts: In the United States, gifts from parents and grandparents represent 15 percent of non-bridal millennial acquisitions, and 31 percent of the acquisitions by the 18- to 24-year-old age group.
“The single greatest wealthy population in the world is the 60-plus Western market,” Lussier says. “That population has tended to benefit from the real estate boom, they own their own homes, and they don’t have the same demands that we see on the other groups with education. This is a group with a large amount of discretionary income, but after age 60, jewelry purchases tend to drop off. Still, there is the opportunity to tap that into that market with gifting from grandparents to daughter. When something is given, it tends to be something that people carry with them throughout their life.”
While ethical issues don’t dissuade most millennials from wanting diamonds, they are a factor, he admits.
“In our attitudinal studies, millennials are more likely to talk about ethics and blood diamonds, though it’s still a very small minority,” he says. “It’s single digits not double digits. But it is negligible with the boomers.”
The report says that overall global demand for diamond jewelry fell 2 percent in 2015, ending five years of growth, to hit $79 billion. The U.S. accounted for 45 percent of overall diamond demand, up from 39 percent in 2010.
The report also predicts:
– Increased volatility for diamond prices and sales.
– Diamond production will likely increase in the short term and fall after 2020.
– Continued pressure on the midstream, though “financially robust and transparent diamantaires with scale, differentiated business models, and/or strong collaborations with downstream players” are likely to survive.