Jewelry Industry Is Devastated By Drop in Demand for Diamonds

Diamonds are losing their sparkle with millennial buyers — and the jewelry business is feeling it.

Although retailers enjoyed a record $5 billion in sales on Black Friday 2017, there’s one thing people weren’t buying: Diamonds. Black Friday 2018 was the worst day for mall sales of diamonds in 25 years. Sigmet, the parent company that owns Zales, Kay and Jared stores, announced that its 2017 sales have been light and it will shed 125 stores in 2018.

Jewelers, from mom-and-pop stores to the malls, are reporting dismal sales and closures. In the third quarter of 2017 alone, 165 jewelry stores (from a total of 6,752 stores closings) closed, and more will close in 2018. At the low end, Charming Charlie, a mall-based store, has filed for bankruptcy. The teen jeweler Claire’s is heavily leveraged, with $2 billion in debt that will come due in 2019. But it’s not just costume jewelry that’s hurting. Diamonds are facing their own reckoning too.

The mythology of diamond value comes from the idea that they are both valuable and rare. In recent years, consumers have become more savvy, understanding that neither of these is true.

Diamonds are sold in stores at a markup of 100 to 500 percent, which means that their value on the aftermarket is so low that jewelers typically decline to buy used diamonds — to both preserve the myth of diamonds’ value and to avoid insulting a customer.

The customer is becoming more savvy, however. The realities of the resale market have been amplified by social media and resale sites, where diamond jewelry at rock bottom prices are continuously displayed.

Customers are also learning that diamonds aren’t as rare as they once were. A variety of man-made diamonds — including those made from dead pets and loved ones — have come into the marketplace, offering unnatural perfection at better prices than natural diamonds, which typically feature some degree of flaws. In the past decade, diamond-making technology has improved dramatically. Modern man-made stones now have the same hardness and quality as mined diamonds.

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