Are trade-in policies sustainable if diamond prices change?

[WindyRain]

What an odd thread, I know, but I've always been fascinated by economical analysis in any industry.

My question is simple, for those of you still in the trade, how exactly do jewelry stores stay afloat during these trying times?

I purchased my .91 diamond in 2015, at a jewelers who has an upgrade policy of spending only $1 more to upgrade. Then, last week, I read an article that diamond prices have been dropping amidst changes in preferences. Curious, I checked the jewelers webpage to see what I could upgrade to with just $600.

I ended up trading in my gorgeous stone for another gorgeous stone, but almost .50 larger! A 1.40, same cut specs but slightly lower color, for exactly $600 more. When I went to check the prices today at that jewelers for a comparable stone to my .91, I found the price is HALF of what I paid in 2015, but of course I get 100% of what I paid towards current prices. I thought I was getting such a steal I pulled the trigger before they revoke the trade-in policy! So my question is....

How long can this go on this way? This can not be a profit-win for the jeweler in any circumstance.

*If this needs to be moved to another sub forum please let me know

 

[Rockdiamond]

Interesting subject for sure!
Our policy requires the subsequent purchase to be double - and it needs to be an item we have in stock.
These provisions allow us to maintain the trade up policy regardless of market tumult.
I’ve always wondered how companies that have trade ins for $1 more could sustain it. If the market changes and 100 people decide to trade up on the same day…… that could put someone out of business

 

[WindyRain]

Interesting subject for sure!
Our policy requires the subsequent purchase to be double - and it needs to be an item we have in stock.
These provisions allow us to maintain the trade up policy regardless of market tumult.
I’ve always wondered how companies that have trade ins for $1 more could sustain it. If the market changes and 100 people decide to trade up on the same day…… that could put someone out of business

My thoughts exactly! It sounds like maybe I'm not missing something, the industry just doesn't count on everyone being like me and running to trade-in as soon as diamond prices drop.

Originally I thought, it was because a large price drop for diamonds was unexpected, which may be true. I suspect the $1 more trade-ins to disappear unless the market somewhat rebounds.

When I went in to do the trade-in, they said their sales are now 60% lab, 40% natural, which really surprised me.

 

[MissGotRocks]

I am guessing those that had the old trade in policy counted on volume and not each trade on its own. Those trades always involved natural diamonds and that market always had highs and lows. Many have now changed their policy in light of developments in the diamond market. You also see that labs have no trade in value at all due to their low pricing.

 

[Patty]

I’m sure it’s been a tough time for dealers and it’s probably why WhiteFlash changed their upgrade policy a couple of years ago. The market has changed.

I will say that I upgraded my earrings from Whiteflash under the old policy and they later listed my traded-in stones for considerably less than I’d paid. Despite this, Becca was nothing but kind and professional about me upgrading them. For a long time, prices just seemed to go up but since 2020, prices have fluctuated quite a bit.

 

[Rockdiamond]

You also see that labs have no trade in value at all due to their low pricing

Not from our perspective. We've taken lab diamonds back for trade ups many times......

 

[MissGotRocks]

Not from our perspective. We've taken lab diamonds back for trade ups many times......

That is unusual from all that I have seen and read. Hasn’t the same trade-in downfalls of trade-ins hurt you in terms of falling prices?