Diamonds at Retail: Steady Staples, Shrinking Margins

Margins on diamond products are getting lower, but diamond “staples” still account for most of retailers’ sales, an exclusive new JCK survey shows.

The poll of JCK‘s retail panel, which drew 195 responses, also shows widespread misgivings about brands but high acceptance and support for Ideal cuts and grading reports.

The main findings:

  • Nearly half of respondents charge a 40% or greater margin for diamond staple products. Another 27.5% say their margins are 50% or better. Even so, nearly half say their margins are lower than five years ago. Some 34% said they were holding steady, and only 16% answered “higher.”

  • With diamond fashion items, the percentages were reversed. Exactly half (50%) of respondents said that margins were the same as five years ago, while 34% said they were lower, and 16% said they were higher—almost the same percentage that answered “higher” for diamond staple items.
    According to our survey, diamond fashion items have slightly better margins than the staples. Approximately 38% said their margins were 50% or more (vs. 27.5% for the staples), while 46% answered 40% to 50% (almost the same percentage as the staples.)

  • The most common price range for diamond staples was $1,000 to $2,500, although items ranging from $500 to $999 were cited by nearly 30% of respondents. The most popular price ranges for diamond fashion items seemed split between the $500-$999 and $1,000-$2,500 categories.

  • The round cut is overwhelmingly the most popular shape for diamond rings, with princess and marquise coming in second and third.

  • “G” and “H” color and “SI” clarity were by far the best-selling diamond grades, with “SI” cited as most popular by a whopping 71% of respondents.

  • Most retailers (71%) still don’t sell branded diamonds, and an even greater percentage (82%) feel the industry doesn’t need more brands. However, 60% of the stores surveyed did sell Ideal-cut diamonds. When asked from whom, Lazare Kaplan was the most frequently mentioned name, followed closely by Hearts On Fire and Keppie/Kiger.

  • In addition, 88% of retailers said they sold diamonds with grading reports, and 88% of that group cited the Gemological Institute of America’s Gem Trade Laboratory as their favorite lab.

  • De Beers’ heavily promoted three-stone ring seems to be a hit. While 46.1% sold fewer than nine of the rings in the past year, 36.1% sold 10 to 19, and 17.8% sold more than 20.

Right-hand column indicates percentage of respondents choosing each answer.
Source: JCK Retail Panel
What are your profit margins for diamond staple items?
10-20% 3.7%
20-30% 18%
30-40% 1.1%
40-50% 49.7%
50% or more 27.5%
Compared to five years ago, are your margins …
Higher? 15.9%
Lower? 49.7%
The same? 34.4%
What are your profit margins for diamond fashion items?
10-20% 1.6%
20-30% 13.5%
30-40% 1.1%
40-50% 46.2%
50% or more 37.6%
Compared to five years ago, are those margins …
Higher? 15.6%
Lower? 34.4%
The same? 50%
What price points are your typical sales in diamond staples?
$200-$499 13.3%
$500-$999 28.7%
$1,000-$2,500 36.7%
$2,501-$5,000 17.6%
More than $5,000 3.7%
What price points are your typical sales in diamond fashion?
Less than $199 1.6%
$200-$499 19.5%
$500-$999 33.2%
$1,000-$2,500 34.8%
$2,501-$5,000 9.8%