Any diamond industry analysis today has to recognize that the shape of things is changing. The elite and exclusive groups that have controlled the supply of rough diamonds for years are showing significant cracks. They won't be able to continue the way they have. How does this change diamond demand and supply?
Separating the Industry from Its Giants
The question is difficult because those elite groups have always defined the industry. If the diamond industry is only defined by those Goliaths, then it's absolutely in trouble because those groups are facing increasing difficulty. Yet what happens if you envision a diamond industry that isn't quite as bound to these past conventions? A diamond industry that isn't defined by those exclusive groups still sees a lot of demand going forward.
This conversation centers on De Beers and its customers, who are becoming frustrated by the combination of De Beers keeping prices high and how much more difficult it is to find financing. This puts their customers in a difficult bind – continue to sell fewer high-priced stones at a profit or take a loss on their sales in order to keep business active. An increasing number of sightholders are simply refusing to buy.
Now De Beers can't be separated from the diamond industry – essentially whatever they decide is what happens. But a crisis for De Beers is an issue on the supply side. They don't dictate demand.
Look Past the Surface of Demand Conditions
This turns us to the reality that demand is slightly down. Doesn't that compound the problem? For large and less flexible sellers, yes. For smaller and more specialized companies that fill specific niches, there may actually be opportunity.
The diamond industry has coasted by on De Beers and central elite groups defining how the entire industry reacts, responds, and behaves. That's fine when it works and success can be consistently passed on alongside the stones. When that success begins to dry up, you can't coast any more.
Put another way, the diamond industry has been selling jewelry and the glamour that comes along with it for ages. Now it needs to sell other aspects: it needs to sell transparency, communication, service, support. Suppliers need to focus on these elements for jewelry stores and online sellers, and those stores and sellers need to focus on these things for customers.
Adapt Your Aesthetic to Change Demand
There's also a change happening in terms of what jewelry should represent and what diamonds can symbolize.
Diamonds used to represent the essence of wealth. Today, they evoke other qualities that should also be focused on. Wealth isn't as highly valued by Millennial and Gen Z generations coming up. What was once glamorous today risks being ostentatious.
Personal aesthetic is what speaks more to these generations. They want pieces that represent their values, their interests, what makes them different. There's less value shown on a resplendent display of wealth and more value placed on a personal statement of passion – whether that passion is another person or for something in the world they love.
That means that jewelry design needs to change as well. When speaking about diamond demand and supply, the general over-supply and the slight decrease in demand are always spoken of in economic terms. While it's important to understand that, it isn't the end of the story.
Understand that demand has been impacted by diamond industry controversy, lab-grown diamonds, general over-supply and other factors. Yet demand is also the designer's and salesperson's responsibility. There are absolutely issues to blame on the larger industry, yet they can still be compensated for by smaller, more agile sellers who focus on knowing their customer and designing and marketing toward them.
When Giants Struggle, the Adaptable Thrive
Plenty of jewelry stores and sellers are doing very well. What makes them different? They may recognize the designs and glamour of yesteryear through vintage-inspired pieces, but they aren't driven by these factors. They aren't blindly loyal to them. They aren't concerned with the value diamonds should or shouldn't convey – that decision is ultimately up to the customers.
The successful businesses in the diamond industry communicate with customers, they check in or write thank you notes, they humanize their stores without losing their professionalism, they're willing to teach about the industry warts and all, and they seek to connect on values and aesthetics in an honest and transparent way.
The diamond industry on the whole has not caught up with this, so it's no wonder that demand might slip. There are absolutely other factors at hand that impact demand negatively, but these are the ones that small suppliers, stores, and sellers can control.
Like the dinosaurs, when there's a crisis that threatens a specific environment, it's the big, lumbering giants that will struggle to keep pace. The more agile and flexible a business is, the more it engages and listens to its customers, and the more it can adapt to modern technology, values, and aesthetics, the more it can thrive even when the overall environment isn't favorable for everyone.