Things looking good in diamond industry

[kmoro]

Hi All!

Today’s internet browse brought me to the below articles, which I found pretty interesting and thought I would share. These are not about cut so @Karl_K should be ok with them, lol

https://www.bain.com/contentassets/a53a9fa8bf5247a3b7bb0b10561510c2/bain_diamond_report_2018.pdf

And another one with some fun current facts ... like average engagement rings and increasing trend for online shopping (although no one really needs a study to know that is happening)

https://www.theknot.com/content/the-knot-2017-jewelry-and-engagement-study

 

[Karl_K]

5-6k average spend has been the case for 15+ years, they just get a lot less for their money these days.
Edit: That is incorrect 5-6k is/was the mode not the average.
In my area it is significant lower in the $1k to 2k range.

 

[JT123]

Interesting @kmoro ! Yeah I know most young guys here in the bay area definitely buy diamonds on-line.
I would love to see the stats on how many people upgrade their rings. I read somewhere "upgrading" your diamond is more of a generational thing,younger generations don't feel the same attachment for their engagement ring. Now it's not uncommon to upgrade at 10 and even 5 years. Not sure how true that is lol. My younger friends/family tell me a lot of 20-30 year olds now buy lab-grown diamonds, or even moissanite stones.

 

[headlight]

Kmoro, fun Saturday reading!
With regard to size, there sure have been a lot of diamonds in the 2-3ct. range being shopped here on PS!
Yes, the lab grown and moissanites are definitely finding their place in market share.

 

[Rockdiamond]

I have a very hard time believing this article. We know that Signet and it’s properties didn’t do well. Speaking with so many cutters and dealers- bascually no one said that 2017 was a good year.
Like when I hear media reports about how stong the economy is- then look around at all the vacant storefronts..... sure, if you’re Anazon the economy is booming..... but the broad based economy? It doesn’t feel stong.

 

[Serg]

Could anybody send a link to reliable statistical data on diamonds sales in last 20-50 years?
a) Consumers prices for loose diamonds
b) Manufacture prices
c) Diamond jewerly

 

[kmoro]

I have a very hard time believing this article. We know that Signet and it’s properties didn’t do well. Speaking with so many cutters and dealers- bascually no one said that 2017 was a good year.
Like when I hear media reports about how stong the economy is- then look around at all the vacant storefronts..... sure, if you’re Anazon the economy is booming..... but the broad based economy? It doesn’t feel stong.

Just to point out the article is for 2018 and not 2017 ... I assume your opinion is the same for 2018 ... also, if sales are migrating to online, it would explain why Signet took a hit ... I’m not saying that I disagree with you ... I have nothing to go on ... when I feel like more internet, I’ll look up some more things ...

 

[OcnGypZ]

Well if one were to read the Rap News..... it's a tough market worldwide and has been for quite awhile.

 

[OoohShiny]

Could anybody send a link to reliable statistical data on diamonds sales in last 20-50 years?
a) Consumers prices for loose diamonds
b) Manufacture prices
c) Diamond jewerly

I've been trawling Google Scholar but I'm not really getting anything come up that's very useful

IDEX seems to have some historical data, including analysis of low vs high quality stones:
http://www.idexonline.com/pdf_files/Diamond_Prices_and_the_Forces_That_Shap_Them-Sep2012.pdf
but it looks like one needs to be a (paying?) member of the IDEX website to look through it
http://www.idexonline.com/

The paper called 'DeBeers Diamond Dilemma' by David McAdams and Cate Reavis (not sure this link will work: https://s3.amazonaws.com/academia.edu.documents/45977830/debeers_case.pdf) references "The Global Gems and Jewelry Industry: Vision 2015; Transforming for Growth, KPMG, December 2006." under some graphs of pricing for diamond rough 1996-2005, but I can't get that reference to come up.

There seems to be some discussion around how the markets for very high quality items are distorted due to 'aspirational pricing' and similar inflationary pricing mechanisms:
https://www.tandfonline.com/doi/abs/10.1080/00036846.2015.1061645

IIRC @Wink has previously talked about the 1980s bubble and crash - I wonder if he has kept records?!


Would Rap be able to provide historical data on (recommended) wholesale prices, which could perhaps be extrapolated using various percentage profit margins to reflect a range of likely retail prices?

Will we need to consider currency exchange rates (and convert everything to USD)?

Do we also need to consider who has graded the diamonds? This paper would suggest (as we assert on PS) that certain lab grading reports result in higher prices:
https://www.tandfonline.com/doi/abs/10.1080/00036846.2014.884707

 

[Rockdiamond]

From my admittedly limited perspective - it’s going to be impossible to reliably answer this question. Stories on Rappaport seem completely out of touch to me- just like this rosy story about how great the diamond business is.
I experienced the boom/ bust of the 80’s but that won’t really give us any useful info. I also lived through the diamond business in 2008. That was a bust for many people. But even that does not compare with the challenges the industry faces today.
While economic boom/ bust cycles certainly affect the diamond business, there are specific forces at play when we consider the trends affecting sales and profitability in our field.
Until about 20 years back local jewelry stores “made a killing” selling diamonds. In many cases, getting back double on their investments. Those days are long gone- along with so many formerly successful jewelry stores.
So now we have the internet as the driving force.
While online sales overall may increase, profitability has decreased. Centralization has driven many wholesale sellers out of business. This has resulted in a loss of diversity- although we are still able to find some “niche” cutters, they are far more rare than 10 years back.
India has become predominant in the area of cutting. The Indian government played a huge role in squeezing out competition.. for this reason, the diamond cutting business in Israel is virtually dead.
Particularly sad, from my perspective, is the fact that it’s become almost impossible to image a bright future as a small(er) business today online.
The “big boys” can spend hundreds of thousands a month on things like SEO. They can spend millions on custom built websites.
I thank my lucky stars daily that I opened our site in 1999. This mean s we survive today. And from where I sit, we are in a much better position than so many other smaller diamond sellers. But as well as my company does, I don’t see a future where I can hand this business off to my kids.
So maybe it’s great for the billionaires in the diamond business, it’s not a rosy picture for most.

 

[OoohShiny]

Until about 20 years back local jewelry stores “made a killing” selling diamonds. In many cases, getting back double on their investments. Those days are long gone- along with so many formerly successful jewelry stores.
So now we have the internet as the driving force.
While online sales overall may increase, profitability has decreased. Centralization has driven many wholesale sellers out of business. This has resulted in a loss of diversity- although we are still able to find some “niche” cutters, they are far more rare than 10 years back.

There is a certain irony to the fact that the internet has given more power to consumers than ever before, but at the same time has reduced their buying options... lol

People (including myself) are so driven by / limited by their finances that 'price>everything else' is often a (the most?) common deciding factor in any given purchase, which has meant that it's only the really big boys who can 'stack it high, sell it cheap' who can survive.

Until people value other aspects of purchasing an item more highly than the lowest price, this may well be the way of the world from now on. After all, we've all seen Wall-E, with the giant store that sells everything dominating the world! lol

 

[Serg]

@OoohShiny ,
Thanks for links