Diamonds are still the most desired type of jewelry, but 18 percent of diamond jewelry purchases are now made online, a new De Beers survey found. 

The survey, first presented at the JCK show in Las Vegas, found that online sales accounted for 18 percent of diamond jewelry pieces acquired in 2013—up from 14 percent in 2011. This contradicts the general wisdom—stated recently by the CEO of Blue Nile—that less than 10 percent of jewelry purchases are made online.

“It’s probably because it’s difficult to buy designer jewelry without actually trying it on,” says Forevermark CEO Stephen Lussier, who presented the research at JCK. “But it’s easy to buy a prong-set solitaire over the Net.”

He notes that while the percentage of diamond jewelry sold online is growing, the category has not seen the growth rate of other online sectors.

“It’s growing, but it’s not exploding,” he says. “It is largely a price offer. There is nothing else you can get from that particular experience. For jewelers, the challenge is the margin impact.” 

The research further says that “real diamonds” remain the most popular jewelry category, favored by 39 percent of consumers, with “real gemstones” ranking in second place with 14 percent.

Courtesy De Beers

The real diamonds category excludes lab-grown diamonds—which, gemologically at least, are considered real—as well as diamond simulants.

“One of the funny things in the research is that people don’t differentiate between a synthetic and moissanite and CZ,” Lussier says. “They see the whole lot together. There is ‘real’ and then there is ‘not real.’ They have limited awareness of what a synthetic is.” 

While the occasional bad publicity around diamonds hasn’t noticeably hurt demand, he says, data does show that responsible sourcing is more important to younger people, particularly in the bridal market.

The report also seems to contradict the talk about colored gemstones taking greater market share, which Lussier believes is “trade-led.” 

“That is a margin issue,” he says. “In some of the lower price points, the trade can get a higher margin product with a semiprecious stone. But I think that is more of a push than a pull.” 

The diamond market increased 7 percent in the United States in 2013, the survey found, and has shown increases over the last few years.

Courtesy De Beers

Still, the survey does show that the fine jewelry category is being challenged, with consumers increasingly favoring technology as well as “experiential activities,” like vacations and getaways. 

“The experiential side is the one we have to watch, as it meets a similar need set to jewelry,” he says. “It’s an opportunity to spend more time with your wife, go on a romantic weekend. That is classic jewelry territory.”

He says the bridal jewelry market remains the backbone of the industry, and it is “extraordinarily strong,” with growth in both the number of pieces acquired, as well as the average price spent. 

Some 80 percent of brides still seal their engagement with some kind of diamond piece, the survey found. The lengthening time of engagements works in the industry’s favor, he adds, as couples now have more money to spend.

Also helping is the fact that couples are getting married older—as they are now more affluent—and the increase in second and third marriages.

While the overall marriage rate is declining, Lussier expects it to rise in the next few years, as many couples postponed getting married because of the recession.

The survey also found that consumers are now five times more likely to report buying a branded diamond engagement ring than 10 years ago. While it is quite likely that not all of those consumers actually did buy branded diamonds, Lussier says the number shows “a mindset where people want their diamonds to be differentiated. Ten years back, short of Tiffany, consumers would say I am not sure what a branded diamond is. That is quite a big psychological change in the minds of consumers.” 

In addition, the single-woman self-purchase segment, which represents 13 percent of the market, has increased in volume but decreased in average price. Still, the strength of that category is a positive sign, Lussier says, since it shows younger consumers remain interested in the product.

The married-woman segment, however, saw a decline in volume, but an increase in price, which he attributed to the uneven economic recovery, which has benefited wealthy people the most. “The lower-income groups have possibly exited the category,” Lussier says. 

 

Courtesy De Beers

Overall, 8 percent of consumers—those with a household income of $150,000 or more—account for 33 percent of diamond jewelry pieces bought by value and 14 percent of pieces sold.

Lussier says: “$150,000 is above the target audience for any of the national chains. They won’t be going after those people. But for independents, this is the area where they have to win.”

The United States is still the leading market for diamonds in the world, nearly three times larger than second-place China.

 

In the end, Lussier says the results show that “the diamond dream is alive,” but, until the economy really picks up steam, independent jewelers need to target higher-income groups.

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