Commentary: The Business

With the Magic of Diamonds Diminished, the Trade Is Threatened

What’s causing this slippery slope?

Published

10 months ago

November 26, 2023

Barry Nicholls Instore December 2023 Issue

WE MAY BE witnessing the demise of diamonds.

Diamonds are valuable for several reasons:

They are rare. (People will argue this but try paying to get one out of the ground — it’s expensive!)
They represent emotional magic.
They confer status.

The slippery slope:

Diamond grading came along with GIA leading the charge. People started looking at grades more than magic. Greed had too many merchants selling based on paper and discounting. Salesmanship took a backseat. That eroded the magic. The internet added velocity to the equation.

Many felt they could make money via memo by selling from their kitchens. Minuscule margins but drop-shipping: easy money! They thought that they could take a $5,000 diamond and sell it for $5,200 and they were making $200. They were drastically wrong. That eventually proved out, and all those Internet sellers went under and disappeared. In the meantime, they put a pretty good ding in the diamond business.

Then came the problem that wholesalers, some out of greed, some out of desperation, started selling retail directly to the end consumer. To the dismay of many, De Beers has gone that route.

Now, many retailers are not stocking diamonds, but only getting them on memo when needed. Everyone is feeling the pinch.

But these are little problems. Now the big problem: Lab-created diamonds have come along and they’re creating a big flap.

Years ago, CZs were seen as a threat. They weren’t. This is different.

For the first time, “real” diamonds are available at very affordable prices and dropping fast. Years ago, they were expensive to produce, so they were no threat to the market. But that has changed. Production costs have dropped enormously, and so finished prices have, too.

Yes, some people are always going to want the “natural” diamond. But part of the reason people buy diamonds is because they can show them off. When people see a big diamond, they know it’s a very valuable purchase. With the advent of true synthetics, value is no longer obvious.

Prices of lab-grown diamonds have been heading for the basement. With uncertainty of origin, natural diamonds have dropped in price, too. Depending on who you talk to, 20% and more.

The magic of naturals is evaporating. It’s not a temporary blip. I saw this trend beginning over 20 years ago, and it’s going to continue. I hope I’m wrong, but it doesn’t look good.

You Wouldn’t Cut Your Own Hair. Why Run Your Own Retirement Sale?

After being in business for over a quarter of a century, Wayne Reid, owner of Wayne Jewelers in Wayne, Pennsylvania, decided it was time for a little “me time.” He says, “I’ve reached a point in my life where it’s time to slow down, enjoy a lot of things outside of the jewelry industry. It just seemed to be the right time.” He chose Wilkerson to handle his retirement sale because of their reputation and results. With financial goals exceeded, Reid says he made the right choice selecting Wilkerson to handle the sale. “They made every effort to push our jewelry to the forefront of the showcases,” he says, lauding Wilkerson for their finesse and expertise. Would he recommend them to other jewelers who want to make room for new merchandise, expand their business or like him, decide to call it a day? Absolutely he says, equating trying to do this kind of sale with cutting your own hair. “The results are going to happen but not as well as if you have a professional like Wilkerson do the job for you.”