At the World Diamond Congress currently taking place in Mumbai, International Diamond Manufacturers Association president Moti Ganz said the following:
“During the past three years, other gemstone categories have taken away yet another half percent from [the diamond industry’s] market share.… So if this keeps going at the same pace, we’ll lose, within the next two decades, more than 20 percent of our market share among consumers.”
His talk of diamonds losing market share rings true, at least here in the United States. Take this factlet from the Jewelers of America’s annual survey of American retailers, unearthed by National Jeweler:
Diamonds constituted 41 percent of jewelers’ sales in 2010, 31 percent of which was diamond jewelry while the remaining 10 percent was loose diamonds.
Though diamonds remain the single largest category for jewelers, this is the fourth year in a row that sales in the category have slid. The stones, both loose and set, made up 52 percent of sales in 2007, 49 percent in 2008 and 46 percent in 2009.
From 52 percent to 41 percent is a significant drop. What accounts for this? Here are my theories:
– A sizable chunk of the diamond business has migrated to the Internet. According to Ken Gassman, diamonds represent 80 percent of all jewelry sold online.
– E-tail has also significantly decreased the margins jewelers can charge on loose diamonds and diamond engagement rings. So retailers are starting to give more shelf space to higher-margin items like gemstones, as well as popular items like silver and charms.
– Diamond prices dramatically increased in 2011 (they have since settled down), just as other commodity costs were rising, and U.S. consumers lacked purchasing power. Some overseas manufacturers also closed their U.S. offices in the last few years, preferring to concentrate on India and China. This somewhat caps the supplies available to American retailers.
– The diamond business has also been hurt by the lack of generic promotion, particularly here in the U.S.
– And while social issues like blood diamonds haven’t had a huge impact on demand, it’s foolish to say they have had no impact. They have. Just look. Remember, the demographic that cares most about these issues is young and affluent—the core target for engagement rings.
Add it up and it amounts to a real shift. And I agree with Moti Ganz and Russell Mehta, if something’s not done, it will just get worse. We will have a new generation without the same desire for diamonds past generations had.
Now, an organization devoted to the generic marketing of diamonds, as discussed at the World Congress, could turn this around, if it ever comes to bear (and based on the track record, there is every reason to be pessimistic). But for now, while diamonds remain king of the jewelry hill in the U.S., their standing is looking a little shaky.