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.
“To the naked eye, they are identical,” said Susan Jacques, the president and chief executive of the Gemological Institute of America. Atelier Swarovski is one of the high-end designers now using lab-grown diamonds in its creations.
To socially and environmentally conscious Millennial buyers, lab-grown diamonds may be ever better than natural diamonds, because they offer the same durability, color, and quality, without the issues involving warfare and slavery that are embedded in “conflict diamonds” mined in places like Africa.
After Leonardo DiCaprio filmed Blood Diamond and learned about the horrific human rights abuses and environmental destruction associated with the diamond industry, he invested in the Diamond Foundry, a lab that creates diamonds that heats carbon to temperatures as high as the outer layer of the sun.
A 2017 survey on the wedding website The Knot found that 25 percent of brides and grooms would purchase a man-made diamond as the center stone in an engagement ring. In the same survey conducted a year ago, only 16 percent said they were cool with a man-made stone.
Even more concerning to the diamond industry, Millennials are spending less money on diamonds, opting for alternative stones, or going without an engagement ring at all. "Millennials gravitate toward spending money on experiences, and not on things," said Sarah Berger of TheCashlorette, who notes that this generation is less interested in expensive material possessions.
"Older millennials could still be saddled with student loan debt, and many are trying to save for a down payment on a house.”
Another option for buyers who are concerned about the shady side of the diamond industry would be to look into those secondhand, bargain-priced diamonds — like Prince Harry did. The engagement ring he presented to fiancé Meghan Markle included stones worn by another bride: Princess Diana.