The rapid growth of lab-grown diamonds is the most disruptive trend the jewelry industry faces today. To navigate this complex, multifaceted development, jewelers need to rethink their strategies.
RDI Diamonds can help. As one of the most well-connected suppliers in the global diamond trade, we have the experience to foresee what this kind of major shift means for our clients and their customers.
New Challenges in Lab-Grown Diamonds
Production of lab-grown diamonds has exploded, and the glut in supply is driving prices for lab-grown diamonds down sharply. At the same time, it is distorting the prices of their mined counterparts.
Jewelers who were eager to incorporate lab-grown diamonds into their business model typically did so in pursuit of higher profits or a more sustainable product. Both motivations were based on flawed underlying assumptions—and these are now presenting challenges for the industry.
Unexpected Pain Points in Lab-Grown Diamonds
One common, and costly, mistake early adopters of lab-grown diamonds made was tying prices of lab-grown diamonds to those of mined diamonds. Price depreciation now reveals the shortcomings of this approach.
Although the two products might look the same when mounted into an engagement ring or stud earrings, they are wholly different when it comes to how well they hold their value. Price depreciation of lab-grown diamonds has caught some jewelers unaware, and there is likely more pain to come.
Jewelers also underestimated the tremendous increase in lab-grown production that would occur—specifically, the entry of manufacturers in China and India. This growth has put relentless downward pressure on lab-grown diamond prices, and it is likely to intensify.
Flawed Assumptions About Lab-Grown Diamonds
Some in the industry also made the mistake of embracing a narrative of environmental friendliness as a selling point for lab-grown diamonds. An expanding quantity of lab-grown diamonds flooding the market today come from overseas production facilities with few pollution controls and copious use of coal and other dirty fossil fuels.
Consumers who buy lab-grown diamonds because they believe them to be uniformly eco-friendly will be very dissatisfied when they find out the truth: The carbon footprint of lab-grown diamond production is both larger and less transparent than people might have been led to believe.
Reevaluate to Succeed
The writing is on the wall: Jewelers would do well to reevaluate their approach to lab-grown diamonds, and the time to do it is now.
Our longstanding clients trust RDI because they know they can rely on our expertise to guide them through fast-changing market conditions. Find out how we help our customers make the most of this dynamic market by clicking here.