When, 10 long years ago, the diamond industry began the second decade of the 21st Century, indicators of some of the changes that were to impact it during the 2010s already were apparent. Others were not. What is a definite, however, is that the industry that now enters the 2020s is greatly changed from the one that existed at the start of 2010, and many of these changes will decide its future over the coming 10 years.
How did the industry evolve? The following is the first of a three-part series, and looks at the impact of the changing of the diamond-buying generations, and how the newcomers’ values affected and will continue to affect the ways in which diamond jewelry is sold.
GENERATIONAL SHIFTS IN DIAMOND BUYING
The massive growth of the diamond market that occurred largely during the second half of the 20th Century, in the years following World War !!, was led by three generations of Western buyers, which today are known largely as the Great Generation, comprising individuals who fought or were married to soldiers who were involved in the Second World War; the Baby Boomers, who born during the economic boom period of 1950 and 1960s, and Generation X, which came into its own during the 1970s and 1980s.
These were the made of individuals who bought into the marketing concepts developed by De Beers, embodied in the company’s ongoing “Diamonds are Forever” campaigns, which were directed largely at men, although the products themselves would be bought by women. Purchases of diamond jewelry were almost always expressions of love and appreciation for ones partner, most prominently made on occasions associated with matrimony, such as with engagements and weddings, but also anniversaries, birthdays and holidays, like Christmas, Mother’s Day and Valentine’s Day.
But that was then. Today, more than two thirds of diamond jewelry sales are made to members of the Millennial generation and Generation Z.
Just hitting age 40, with its youngest members in their early 20s, Millennials make up close to 30 percent of the global population, but account for 60 percent of diamond jewelry demand in the United States and close to 80 percent in China. Coming up close behind is
Generation Z, whose member are still in its teens and early 20s. They represent 35 percent of the world’s population and despite their age already account for more than 5 percent of diamond jewelry sales.
VALUE SYSTEMS EVOLVE
Most indicators show that both Millennials and members of Gen Z like diamonds, but they are drawn to other products as well, and especially experiential travel and electronics. Competition for the consumer’s discretionary dollar has become exceedingly fierce.
At the same time, Millennial and Gem Z consumers are less enamored with traditional concepts such as marriage, meaning that the key lifetimes events that traditionally have anchored diamond marketing may not be significant today.
This does not mean that the diamond is no longer symbolic of love or commitment, but the context in which that is expressed is changing.
Th women of the Millennial and Gen Z generations are less likely to depend on a man to buy them diamond jewelry, and more inclined to use their own income to self-purchase. Diamonds are becoming less of an affirmation of partner’s commitment and more an aspirational product to express self-worth.
Furthermore, younger consumers are demonstrably more concerned about the social significance of the products they buy, and also about the impact they have on our earth’s environment. Value is not simply a monetary concept.
ADDRESSING THE DEMANDS OF THE NEW CONSUMERS
There is no magic bullet to get to Millennial and Gen Z consumers. What is certain, however, is that if the industry is planning to rely on marketing and operating concepts that were developed in the 20th Century, it is likely to come up short.
According to De Beers 2019 Insight Report, romantic love continues to be the main reason for diamond gifting and drives about half of the value of diamond jewelry demand in the United States, China and Japan, the world’s three largest markets. But at the same time De Beers acknowledges that the nature of romantic relationships and the way they are experienced is evolving, and so therefore does the way diamond need to be sold.
The primary target of a campaign can no longer only be a young man planning to propose to his fiancée. Gay couples, who are increasingly getting married, are a growing target audience, and even more so both straight and gay young people who are hitching up without getting married.
Single women, who today are likely to be financially independent, represent a massive potential audience. Here is the driving motivation to buy diamond jewelry is often of self-expression. Messages need to change.
The provenance of the diamonds being sold is also critically important. Consumers want to know that not only was no harm done during the mining and processing of the stone, but also that the economic benefits derived from the sale of the diamond jewelry filter back down the full chain of distribution, providing sustainable opportunities all stakeholders, and especially those in the developing countries where the goods were mined.