This has been one of the worst years for the diamond industry in a long time, but it’s not due to a lack of demand.
The gem’s worth has been dropping for the past few years, and originally, jewelers and diamond connoisseurs blamed this trend on young adults in the United States, who appear to favor trendier, more affordable stones. And while this is certainly true, it would be a stretch to argue the millennial generation single-handedly disrupted one of the world’s most profitable industries.
Indeed, recent sales data prove that Americans are buying more polished diamond jewelry than ever before. So why is the diamond industry losing money?
Not decreased demand but increased supply — and increased competition.
Last week, the diamond miner De Beers lowered its prices across the board in an attempt to boost its lagging sales. But it’s unlikely the price drop will do much to ease jewelers who have been struggling to bring in a profit for the past couple of years, according to Bloomberg.
Luxury jewelers have held their own as the crisis has grown. Brands such as Tiffany & Co., Cartier, and Bulgari still dominate the market, despite the fact that they only account for about 30% of the $80 billion industry. But other companies are being forced to cut prices as websites, such as Blue Nile and Brilliant Earth, give consumers direct access to price comparisons, cut, quality, and carat weight.
Meanwhile, the supply of rough diamonds continues to increase, forcing suppliers to stock up as sales plummet.
But don’t worry: This debacle will likely have little effect on U.S. adults looking to purchase something for their special someone. If anything, this trend bodes well for people on a budget. Prices will continue to drop as the supply of rough diamonds increases, and the only ones who lose are the suppliers who have been ripping off consumers for decades.
