2020 was a rollercoaster year. A year in which all our certainties were shaken up. Yet, we do all we can to base our professional (and often personal) decisions on certainties, in our quest to always make the “best” decisions.
That’s what 2020 reminded us. We truly are living in a world of uncertainty. And if our businesses, all those of us that are left, are still there in these early days of 2021, it’s because we’ve been able to accept this uncertainty and adapt to it. We’ve been able to take on the events as they came and meet them head on. Agility turned out to be a key skill. To continue to move forward, in the past and in the future.
However, the year 2020 clarified the trends that we saw emerging. It’s a wise man who could say what 2021 will be like, though; I won’t be taking the risk! But it could prove useful to take a moment to review the least uncertain trends. To prepare for any contingencies and have some resources up our sleeves to show… agility!
The world of diamond jewellery still has a bright future
And perhaps more than we thought! Although March to May 2020 were challenging for us all, jewellery sales then increased and they did so to our great surprise. Diamond jewellery even performed well, actually very well, during the holiday period.
The good news is that the discretionary income invested in diamond jewellery in 2020, for both emotional and contextual reasons, will still be available in 2021. As we can see, we still have some distance to cover on our long and winding road with the coronavirus crisis. Between the curfew and returns to lockdown, investment cannot always be made in experience sharing, going to the theatre, restaurants and travel… or at least not for some months. The year confirmed it for us: diamond jewellery always bears a strong emotional load. It also carries meaning, is a long-lasting gift, enables people to celebrate important moments or relationships, “does good” and brings us a form of relief in these difficult times.
An idea that I read everywhere or heard between seminars and podcasts and which amused me greatly is that, in a Zoom meeting, for reasons of representation, displaying fine jewellery, large jewellery, with diamonds and of value, on the neck or on the ears, made sense. And that’s why we’re going to wish for many more videoconferences!
The diamond industry stayed the course
The drops and shortfalls in stock, the needs of retailers that have to be met and the strength of demand… This all benefited the entire diamond industry value chain, whose 2020 was “not so catastrophic”, even if the economic impact was significant and deep, structural changes occurred. The prices of certain diamonds even increased in the midstream and we are going to continue surfing on this wave at least in the first quarter of 2021. On the whole, gem producers favoured a strategy maintaining wholesale prices and freed their preferred clients from part of their obligations, which will have enabled many industry players (with solid foundations) to weather the storm. However, although some mines are still closed and exchanges prudent, the gem producers’ stocks have obviously increased and we’ll see how they intend to sell them. They’ve just increased the price of rough diamonds (between 4 and 7%) following strong demand during the holiday period and De Beers has also just formalized the reorganization of its contracts.
The diamond engagement ring market stands out from the crowd
As emphasized by De Beers in its latest Flash Diamond Insight report (Engagements driving diamond jewellery demand this holiday season): “US jewellers report that more couples than ever are buying diamond engagement rings”, Bridal sales have also supported diamond jewellery demand (in a period when many weddings were postponed.) And what is particularly interesting is that consumers have often preferred to “upgrade in colour, cut and clarity, rather than size.” In this instance, this trend is linked to the crisis and it’s too early to assert whether it will continue when we leave the crisis behind us. But we can expect it to last in 2021 and that’s why it’s important to highlight it.
Don’t shun your digital and omni-channel strategy
This is a trend whose upsurge we’ve been observing for several years, but it has become apparent for the jewellery market and a fortiori for the diamond markets: online sales have risen greatly. During the holidays, online jewellery sales in the United States increased by 44.6% (NRF figures). With the idea of making the right purchase, the one that really suits them, consumers study products online, conduct research, check out various social media, “test” products online and prepare their purchases on the Internet. Some will finalize their purchases online, others will do so in store, even if “seeing” a jewel for real remains important, as does the physical exchange (which we miss so much!). In any event, the quality of the purchasing experience, the information, the interaction with the advisor or the House, the proposals or the desire to belong to a brand community… these are all decisive. It is really important to give meaning to your customer relationship and to the resulting purchase. In practical terms, the basics here are showing and offering beautiful photos, having sufficient stock and supply, describing your product well, understanding demand, giving information about provenance, starting a real dialog, holding the customer’s hand, maintaining the after-sales connection, etc. The online and in-store purchasing experiences are closely interrelated.
Looking to the future means looking to Asia, above all China
The personal luxury goods market suffered in 2020 and for the first time in a decade (with a decrease of around 23%). China, however, is heading calmly and faster than planned towards becoming the main market for the luxury sector. The Asian market, with China in the lead, IS fundamental, whatever happens and more so than ever, for the luxury sector and, therefore, for diamonds. Purchases in China picked back up again very quickly, while the rest of the world was suffering the full brunt of the health crisis. According to Bain & Company, “Mainland China’s luxury goods market will likely achieve a 48% growth in 2020”, which has helped “to double China’s overall share of the global luxury to 20%.” (China’s 2020 luxury market sees invincible growth). Also according to Bain & Company: “Chinese consumers will make up close to 50% of global luxury purchasers by 2025.” (Luxury sales won’t recover for two years). QED.
Natural diamonds are not flagging in the face of lab-grown diamonds
Given the context, lab-grown diamonds also had a good year. But the two markets, natural diamond jewellery and lab-grown diamond jewellery, remain separate. Certain categories, closer to fashion jewellery, were very successful in the lab-grown diamond sector, such as stud earrings (regularly check out the Lightbox website to see for yourself.) Moreover, the number of consumers knowing and owning lab-grown diamonds has, quite logically, increased. Finally, and this is important, in the United States, Blue Nile, the main online diamond retailer, has signed a deal with Lightbox to sell its “fashion” jewellery.
CSR, traceability and commitment are a necessity for the future
It has become self-evident that companies need to make a commitment in terms of CSR! This can go from taking care of your employees to taking into account the economic and environmental impact of your product. Regardless of the level of knowledge of your clients or the understanding of the sector’s issues, get ahead in this field or hurry to make up lost time. Commitment to CSR can be a decisive factor between two equivalent products. And for diamonds, this is reflected in terms of traceability. Where does this diamond come from? If I buy it, at what point does my act of purchase weigh on the environment of the mining country, am I contributing – or not – to the well-being of the local populations? The good news is that in the diamond industry we still hold all the cards to explain, tell, inform, and increase the level of knowledge of diamonds. And you’ll note that De Beers, often a trailblazer and a trend-setter in our industry, has committed to indicating the origin and impact of all its diamonds by 2030.
Telling the right story…
…creating an emotional connection, a link. Customers need to identify strongly, particularly the younger generations, which moreover constitutes one of the strengths of the favourite big brands. They have a past, a history to fall back on. When people buy a brand, they now wear, both literally and figuratively, the values of this brand. Each brand must therefore give a proper account of itself, go back into its past to find what hits the mark and is in line with our times, tell a story that makes sense, a story we can remember, and incorporate within this story the right message in terms of transparency and CSR. The consumer needs to be able to say to themself: “This diamond jewellery is so much more than a piece of diamond jewellery, it’s going to bring something to my life, it’s a gift that affects me even more because it carries within it a history and strong values…”
Uncertainty is not a fatality. We have trends on which we can draw and which help us to reinvent ourselves.
To conclude, I’d just like to say to you: be flexible, be creative and keep the faith. Do your homework so that you can understand, or even predict, trends, at any rate work on your know-how as you do your skills, develop your niche and create your own opportunities!
To gain a greater understanding of the developments in our sector, read or listen to the following: Pandemic could be catharsis for diamond industry De Beers limits it sightholders and creates client categories China’s 2020 luxury market sees invincible growth Online jewellery sales increased 44.6% this holiday season Podcast: The year that changed the diamond market Not a 2020 wrap-up, or a 2021 prediction What it took to survive in 2020 – A worklist Paul Zimnisky attributes diamond market recovery to holiday demand Holiday demand uplifts diamond trade De Beers aims for full traceability by 2030 Engagements driving diamond jewellery demand this holiday season Luxury sales won’t recover for two years More retailers selling lab-grown diamonds
Source Rubel & Ménasché