Health concerns aside, the diamond trade is in better shape than it was a year ago. In fact, the market dynamic is arguably healthier than it has been at any point in the past decade. That’s increasingly evident as polished prices continue to firm.
The positive trend may come as a surprise considering the challenges Covid-19 has presented over the past year. But it is perhaps even more remarkable given the difficult conditions that surrounded the diamond trade before the pandemic struck. It’s easy to forget that prior to 2020, the market was defined by a supply surplus that kept polished prices on a perpetual downtrend.
The industry was also coping with other pressing issues. Companies were devising traceability programs to assure consumers that natural diamonds were being produced ethically, while major manufacturers were sneaking into synthetics. Simultaneously, the industry was figuring out how to integrate digital channels into what has traditionally been a face-to-face market.
Times changed quickly with Covid-19. The supply surplus became a shortage, and the shift to digital became a necessity rather than an option, its adoption proving relatively seamless. Synthetics became more of a reality and less of a threat, and traceability programs gained momentum. Meanwhile, globalization stalled as travel shut down, and yet the world became smaller as in-person meetings and conferences became Zoom calls and webinars. The industry even learned to live without trade shows, at least for one year — possibly two.
Now, in 2021, the sector’s challenges have evolved, and its responses have matured. Supply remains the biggest short-term obstacle as India battles the surge in coronavirus cases.
But as other markets open again — particularly the major consumer centers of China and the US — more important long-term considerations have emerged for the industry. What does a digital strategy look like with consumers heading back to stores and with traders meeting in person again? How will manufacturers adjust when sights return to Botswana and as beneficiation programs keep more rough in southern Africa? Will Chinese luxury shoppers return to the fashion capitals to spend, or will they stay local? Should retailers double their bets on China? And what should the corporate social responsibility (CSR) focus be in the post-pandemic environment?