RETAILERS WHO SELL lab-grown diamonds say their customers realize the price is falling and their engagement rings have no trade-in value.
They want them anyway.
“For a lab-grown diamond buyer, it’s all about price,” says Jeremy Auslander of Roxbury Jewelers in Beverly Hills. “The customer looks at a 1-carat natural diamond for $5,000 and a 3-carat lab grown for $2,000 and says, ‘Why would I pay more than double for something one-third the size?’”
Retailers and experts disagree about whether falling prices cause concern among consumers. James Doggett of Doggett Jewelry in Kingston, NH, says he’s grateful he decided not to sell lab-grown diamonds. “I am so glad I don’t have to explain to clients why their stones have dropped in value like stocks in the Great Depression,” he says.
On the other hand, Krystal Shiklanian of Radiant Fine Jewelry in Plymouth, MI, sells about 90% lab-grown diamonds and says her customers don’t care about future value. “Hands down, it’s all about the price. It’s difficult to change their mind from lab to natural.”
De Beers, which disrupted the lab-grown market when it launched Lightbox Jewelry with an $800 per carat standard in 2018, dropped its retail price to $500 per carat this year. The highest-quality Lightbox 2-carat lab-grown diamond now retails for around 10 percent of an equivalent size and quality natural diamond. De Beers also announced in May that Lightbox will stop manufacturing lab-grown diamonds for jewelry and convert production at its Gresham, OR, factory to industrial diamonds for technology applications.
“I initially thought that the introduction of Lightbox by De Beers was genius,” says Jon Walp, general manager of Long Jewelers in Virginia Beach, VA. “Devalue lab diamonds but sell them because there will always be a market for low cost while at the same time enhancing the value of natural diamonds. I didn’t know that the public would accept lab diamonds so readily or that other producers would quickly flood the market.”
Walp says he didn’t want to sell lab-grown diamonds at first but felt he had no choice. Now 40% of diamond sales are lab. “When you have a client looking to spend $15,000 and you can make three to four times the profit, it’s hard to turn that money down. The problem is that even though our margins on lab-grown sales are very positive, we are concerned that they will affect overall volume. I guess we’ll just have to sell even bigger ones to make up the deficit!”
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Grant Mobley, jewelry and watch editor for the Natural Diamond Council, says despite the widespread demand for lab-grown diamonds, consumers can no longer ignore how low the price is. “For me, it’s not about one thing prevailing over the other,” he says. “They are different products and their value reflects that. Fewer are seeing them as comparable options. The customer for lab-grown and what lab-grown is purchased for is entirely different in the same way that lab-grown ruby is not the same thing as natural.”
Dorothy Vodicka’s mixed feelings are shared by many of INSTORE’s Brain Squad retailers who responded to a June survey about selling lab-grown diamonds. She believes that lab-grown diamonds are an easy sale now but may come back to haunt retailers in the future. “I think they are not good for the industry, but customers want them, especially as center stones or bigger stud earrings,” she says.
She tells customers she expects the price of lab-grown diamonds to go down and the price of better-quality natural diamonds to go up. “So, purchase lab if you want something beautiful and much less expensive; purchase natural if you want a valuable heirloom for your children and grandchildren.”
Many retailers are putting their qualms in writing, while some are asking customers to acknowledge in writing that they understand the situation. Tim Bodis of Diamond Designs by Bodis in Rice Lake, WI, sells more than 90% natural diamonds. If customers opt for lab-grown, they are asked to sign a letter stating Diamond Designs will not take them back in trade, and the price may not hold over time.
Denise Oros of Linnea Jewelers of La Grange, IL, says she includes a detailed receipt with the purchase of lab-grown diamonds to avoid appraisal issues. “With the pinballing prices, we no longer offer trade-ins on any lab-grown products, but we sell the pants off of them for travel jewelry and great fashion pieces with complete disclosure,” Oros says.
To explain what’s happening to their customers, some retailers compare lab-grown diamonds to a TV, a computer or a cell phone, items that won’t hold their value after purchase.
Doug Meadows of David Douglas Diamonds & Jewelry in Marietta, GA, sells more lab-grown than natural. “We offer the lab-grown diamond challenge. We have four solitaires set up with a natural, a lab-grown, a moissanite and a CZ. Then we give the customer a loupe and ask them if they can tell. Future value is not discussed because no one knows; we just talk about the current affordability. If it is brought up, we compare them to big screen TVs and how the price has dropped. They are not only buying a diamond, they are also buying technology.”
But Cliff Yankovich of Chimera Design in Lowell, MI, says any discussion of future value is not helpful or necessary. “Why would anyone talk to customers about future value of any jewelry purchase? What industry does that? ‘Thanks, here is your new car/appliance/RV etc. Please rest assured that it will not be worth anywhere near what you paid once you use it.’ I want to provide my customers with what they want.”The drop in the price of lab-grown diamonds is reflected in the falling price of diamond engagement rings. In his June market report, Edahn Golan, CEO of Edahn Golan Diamond Research & Data, notes that the average sale price of a diamond engagement ring in the U.S. is $2,735, significantly below the historic averages of $3,200 to $3,600 and the pandemic price of $4,000.
Nearly half (45%) of the diamond engagement rings sold in the U.S. in April were set with lab-grown diamonds, according to Golan’s research. That’s an abrupt rise from 2% in 2018.
The lab-grown diamond effect is not the only factor driving down the price of engagement rings. Harold Dupuy, vice president of strategic analysis for Stuller, says that following the post-pandemic boom years of 2021 and 2022, the natural market overproduced, causing natural prices to decline as well.
“With a budget of $3,500, if you can get more than 1 carat and it’s a nicer diamond, a VS or VVS 2-carat E, and still get the semi-mount you’re interested in and still walk out with some change, the consumer thinks that is fantastic,” Golan says.
At some point, though, the customer may wonder if they are spending too little on an important item. “Is there a price below which it’s just too
cheap?” Golan asks. “Maybe below $1,000 or below $2,000?” If he buys the ring solo and she’s receiving a gift, she may well wonder, ‘Is he being cheap?’ and ‘If this is such an important purchase, don’t I deserve something nicer?’”
Auslander thinks that may well be true. He says natural diamond purchases in his store are often driven by the bride-to-be, who fears her groom doesn’t have enough “skin in the game” if he purchases a less expensive engagement ring. She wonders if he’s committed enough.
Rick Sanders of Sanders Jewelers in Gainesville, FL, thinks lab-grown diamonds will soon be equivalent to CZs in the sense of “things that are too cheap” to symbolize true love. “It’s confusing young people now. Based on experience, we tell them the truth. Two years ago, I sold a 4-carat round for $20,000. Last week, I sold a 15-carat oval of the same quality for $15,000. Same margin.”
Size can drive up price, of course, but as technology improvements allow lab-grown diamonds to get bigger and cheaper, Golan wonders how many women would choose to wear a 15-carat solitaire every day.
In 2023, the average size for lab-grown diamond engagement rings was 1.9 carats, according to a study by the Boston Consulting Group and De Beers. For lower-priced diamond simulants (lab-grown moissanite, white sapphire, or cubic zirconia), the most popular range is below 4 carats; larger sizes could be seen as fake.
Size is needed to maintain the kinds of margins retailers have counted on. But size is constrained both by budget and by limits on what consumers want. As margins decline in the consumer-preferred size range, De Beers predicts that a retailer’s incentive to focus on selling lab-grown diamonds over natural diamonds will decrease.
Golan isn’t certain what will happen. He theorizes that the decline in lab-grown diamond prices could result in their reduced interest as a center stone in an engagement ring. Conversely, he has also speculated that a declining interest in spending big money on an engagement ring could make lab-grown diamonds the gemstone of choice long-term.
Dupuy says falling prices have forced retailers to shift strategies to maintain gross margin dollars. Many, he says, are focusing on platinum mountings. Others are reducing marketing and advertising focused on lab-grown diamonds and subtly moving ad dollars back to natural. They’re taking more time to present the features and benefits of both natural and lab-grown rather than taking the easy path of selling a larger lab-grown diamond. They may also sell lab-grown diamonds as a gateway product to customers who can’t afford a natural now, but who do want the natural later as their income increases. If they build a relationship with the retailer, they may return, even without the possibility of a trade-in.
Amish Shah of ALTR Created Diamonds says the key for retailers will be focusing on lab-grown diamonds set in bolder jewelry designs and elevating lab-grown diamonds to a luxury product presented as a luxury experience. “In the traditional earth-mined business, design was important,” Shah says, “but consumers were more fixated on getting a big enough diamond. With lab-grown, they have a bigger diamond; now they ask, how do I get a beautiful piece of jewelry?”
When Dianna Rae High, owner of Dianna Rae Jewelry, Lafayette, LA, noticed the average sales price of an engagement ring dipping into $3,000-$4,000 territory from her usual average of $5,000 to $6,000, she launched a line of engagement rings called Shapes of Beauty featuring fancy cut lab-grown diamonds mounted in unique settings. “We continue to stock them because our clients are asking for them, but the lower prices have decreased our average ticket price,” she says. “To combat this, we now offer more custom semi-mounts with unique styles and lab-grown centers.” Even her lab-grown solitaires have a little something extra.
But she does stock more natural than lab-grown diamonds and carefully presents the pros and cons of each. “More and more are returning to natural once they understand the price decreases,” High says. “But if they just want a large, affordable diamond to enjoy now, we sell them a lab-grown.”
Shane Co., with 22 locations in the U.S., offers something extra, as well, in the form of specialty cuts and colors in lab-grown gemstones. “We’ve introduced pinks and blues and yellows, and we’re looking at greens,” says Kristen Vosburg, CMO. “The customer wants new, different and unique pieces, and we’re offering that in our stones across natural and lab assortments.”
Retailer Shane Co., with 22 U.S. locations, is offering lab-grown diamonds in a range of specialty colors.
Auslander is finding it increasingly difficult to sell natural diamonds. “The demand is in lab-grown. You can’t say no to it, or you’ll miss out on a lot of business,” he says.
Young couples are buying 2- and 3-carat lab-grown diamond engagement rings for an average sale of $3,500 to $5,000 at Roxbury Jewelers. Considering all of the other expenses incurred with a wedding, buying a lab-grown diamond feels like they finally caught a break, Auslander says.
While he firmly believes that a lab-grown diamond purchase is a home run for the customer, he is concerned about margins and total dollars made.
“It’s going to be hard to compete with hundreds if not thousands of suppliers who will go straight to the public with an e-commerce website,” he says.
He’s been used to working on small margins with higher sales amounts. With lab-grown, he’s had to reverse the equation: “Smaller sales amounts with much higher margins, so at the end of the day, you end up with the same amount of money in your pocket,” he says.
“But it shouldn’t affect the customer. They’re not buying the item as an investment; they’re not watching the daily fluctuations of the lab-grown diamond market. They’re buying a piece of jewelry to represent an occasion, a memory. The emphasis should be on what the item represents. Love, commitment and something that’s bright and sparkly!”
At Amber’s Designs in Katy, TX, sales are split close to 50/50. Owner Amber Gustafson tells customers that lab-grown diamonds are diamonds and will last as long as natural diamonds. “Customers know they are the hardest substance and will last a lifetime,” she says. “Knowing they have a diamond on their hand, be it lab or natural, signifies commitment.”
Selling Natural Diamonds
Fariel Zerouki, De Beers senior vice-president of provenance, ethics and industry relations, discussed natural diamonds on a JCK panel in June. She said that while De Beers believes in both category and brand marketing, no matter how much marketing there is, consumer demand is driven primarily by the retailer. “We need the retailer to talk about natural diamonds and to visit the mines. Marketing alone isn’t going to solve the problem. It’s about going beyond the 4Cs. The 4Cs help finalize the sale, but they don’t inspire the sale. Talking about rarity and the positive impact of the industry, those things make a difference. That may feel overwhelming to a sales adviser, but it shouldn’t.”
Natasha Henderson, executive director of Saxon’s Fine Jewelers (Bend, OR), where about three-quarters of diamond sales are natural, says she believes lab-grown sales are driven by both a lack of knowledge and a desire for size. “Most people who walk in our store walk out with natural because that is what we stock in jewelry and we skip over the lab-grown conversation. It’s a moot point.”
Beth Greene of Conti Jewelers in Endwell, NY, says that at the height of the store’s lab-grown boom in 2022-2023, one out of 30 diamonds she sold was natural. But in May and June 2024, she’s sold three engagement rings with natural diamond centers. So she is stocking more natural diamonds again and showing them first. She’s also actively promoting the Antwerp Diamond Trade Fair and the romance of owning a handpicked diamond. “We are going all-in for the event and hope to really bring the emphasis back to natural diamonds. Our customers who purchase natural diamonds are highly focused on commitment, history and rarity. It’s more of an emotional decision.”
Sissy’s Log Cabin, with six stores in Arkansas and Tennessee, sells only natural diamonds. COO William Jones IV says the industry is not branding natural diamonds as well as it could. “I hear too often that consumers don’t care about origin,” he says. “But talking about it gives it value.
There is a premium for natural diamonds, and I’m not scared by that. If you’re selling both, communicate exactly what you’re selling.”
Mobley says retailers need to rethink how they sell natural diamonds. “I know it’s difficult, but look at companies like Tiffany, Cartier, Harry Winston and Fred Leighton or any of these names,” Mobley says. “They have convinced their customers that their product is worth it. Even if you’re a small independent, you have that power. It’s about how you treat your customers. You have to make it worth it.”
Kristina Buckley Kayel, managing director and CMO, North America, for the Natural Diamond Council, says the NDC’s current marketing campaign, “Real, Rare, Responsible,” focuses on the natural diamond itself, its origin and the values associated with it. “Retailers have championed and welcomed a campaign that will inspire consumers and can be tangibly conveyed at the point of sale.”
An ad campaign from the Natural Diamond Council features actress Lily James going to the source of diamonds in Canada.
A study by the Boston Consulting Group and De Beers found that more than 70% of decisions to buy lab-grown diamonds happen in stores. Buckley Kayel says the NDC has found that if the retail sales professional tells the natural diamond story correctly and fully, the intent to purchase natural diamonds would go up by 94%. “It’s low-hanging fruit, and the opportunity is massive,” she says.
The key is in the training of sales staff as well as focusing on existing customers, Jones says. Instead of relying solely on the new engagement ring shopper, reach out to anyone who has bought a 1-carat diamond in the past five years, he suggests. Once a diamond shopper is in the store, “train your staff to say, ‘I have to show you this 2-carat Hearts on Fire diamond.’ The average price ticket will go up and you will rebrand yourself as a luxury retailer.”
Golan says that while consumers buying engagement rings spent less or moved to lab-grown diamonds this year, older and more affluent consumers moved to larger diamonds. “This is something to keep in mind when a client steps into the store,” he says.
Golan adds that category marketing of natural diamonds remains important and will be strongly influenced by what happens with the impending sale of De Beers by parent company Anglo American.
“Whoever buys De Beers can either elevate the diamond industry or bring it down,” Golan says. “Whoever it is must really care about the industry at large. If they spend less on marketing or don’t want to be front and center, it’s entirely possible the entire diamond industry can be negatively affected.
“If they do want to be a major player, impact the industry, and have a central channel, it will be better for the industry at large. That is the most important element that will impact the industry shortly.”
During the Las Vegas JCK breakfast in June, Martin Rapaport, chairman of Rapaport Group, urged his audience to stand by natural diamonds.
“Synthetics are not sustainable as a competitor for natural diamonds. People want something of value.
“We’re in the real diamond business for real commitment. Know who you are. If you are a jeweler, sell jewels. Position natural diamonds as the ultimate commitment. They want to spend money. It’s not the price that counts. It’s about ‘Am I getting value for money?’ The dinner can’t cost more than the diamond.”
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BURGEONING MARKET FOR RECYCLED DIAMONDS CREATES CAN’T-MISS OPPORTUNITY
Jewelry retailers need to step up their game on vintage and antiques
Independent retail jewelers who aren’t buying over the counter are missing out on an incredible opportunity as older generations of diamond owners relinquish or bequeath their diamond jewelry, experts say.
As Martin Rapaport put it during the JCK Rapaport Breakfast in June, “Diamonds are forever. Little old ladies are not. What are they going to do with those diamonds? Buy them back from consumers. Give them a good deal.”
Sixty percent of U.S. brides received an engagement ring by 1970, and according to a De Beers report, those rings are likely to be passed down to the next generation within the next 20 years, driving an increase in inheritance-based recycling volume.
In 2015, 60% of diamonds were sold outside of the original setting; in 2021, only 30% were sold that way, indicating that buyers increasingly value the unique design, affordability and sustainability aspects offered by vintage jewelry.
Grant Mobley, jewelry and watch editor at Natural Diamond Council, says buying and selling vintage and antique diamonds and jewelry can be a huge profit center for any retailer who is knowledgeable about it.
“I hate when jewelers say, ‘We don’t know much about vintage jewelry because we don’t sell it,’” he says. “Couldn’t you say that about anything? It’s no longer an excuse. If you are a full-service jeweler, you need to be an expert in these things.”
Bridal customers torn between lab-grown and natural diamonds may well be interested in vintage or antique diamonds as an alternative. “It doesn’t get more sustainable than that,” Mobley says. “It doesn’t have to be made at all. For certain consumers, yes, it’s a huge driving factor or can be an extra little push driving them in that direction.”
Melanie Grant, director of the Responsible Jewellery Council, says that by 2025, 20 to 30 percent of global fine jewelry sales will be influenced by sustainability issues, which would represent at least a three-times increase over 2019.
Gen Z will replace millennials as the dominant engagement and wedding jewelry consumers over the next decade, and for many members of that generation, ethics, authenticity and social justice issues matter as much if not more than price. They want jewelry to have meaning. Forty-two percent of Gen Z would not buy from companies whose values do not align with their own, says Grant, who spoke at the American Gem Society Conclave.
Mobley says it’s important for retailers to employ at least one person qualified to buy over the counter, to find the right mix of inventory and talk about it intelligently. “How cool is it that it was cut 100 years ago,” is one way to sell antique diamonds.
It’s important to test for naturalness when buying diamonds. Every store should have one or two diamond detection devices. “It’s the cost of doing business these days, and those machines have gotten less expensive,” Mobley says.
Diamonds cut pre-1920s and 1930s are trending. “A lot of designers are buying vintage diamonds and remounting them into cool, more modern settings,” Mobley says. “And then there are some people buying vintage stones and mounting them into vintage-inspired pieces.”
Mobley warns not to focus on Old Euros exclusively. “Focus on the very obviously old, the cushions, the open culets, that really set the cut apart from your modern cuts. If the diamond is pretty as is, don’t recut it.”
Mobley also cited a huge uptick on the red carpet in vintage jewelry from Fred Leighton and other companies specializing in signed, vintage pieces. “I think that people hearing the names of these companies is sparking an interest. It’s causing consumers to go and seek out companies that are experts in vintage. So, you as a retailer need to become an expert because they’re looking for dealers who have good taste and curate a good collection.”
Mobley offers four tips for becoming an expert.
GO TO TRADE SHOWS. “There are so many great antique shows. These are incredible ways to meet a large pool of vendors specializing in this. If you aren’t doing these shows, you’re missing out.”
TALK TO VENDORS. “Some of the best education I’ve had is walking around antique shows and talking with vendors. They can tell you about pieces and eras. Lean on your vendors. Create those good relationships.”
LEAN ON OTHER JEWELERS. “Rarely do people see each other as competition outside of a small town. Jewelers are, for the most part, very willing to help other jewelers.”
WATCH AUCTION HOUSES. “Pay attention to the auction houses and what they’re doing: Phillips, Sotheby’s, Christie’s, Heritage. You can learn the market and what people are paying for things. Otherwise, how do you know what to pay for it? If you took one year and said, ‘This year, I’m going to pay attention to these four auction houses and really look at the pieces, see what they’re selling for,’ that’s like going to college. If you combine that with going to seminars at shows, that’s really all it takes. There’s really no excuse to not get into this part of the industry.”
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