A complete analysis of the diamond industry and trend spotting
Posted by Hari Krishna
August 13, 2020
It was not a long time ago when De Beers Group declared the 2010s ‘The Diamond Decade’; because the growth in China and India was projected to drive demand in the industry while the USA would take a small step out of recession.
Well, somehow, that projection proved correct, and the era found worthy of the title ‘The Diamond Decade.’ Because the last ten years have been the most influential in the diamond industry due to the significant emergence of Chinese consumers in the diamond market.
Also, the USA continues to be the mainstay market for the diamond industry with a landmark of 16% growth in the diamond jewellery sales in the decade, according to De Beers.
But now enters Covid-19 in the arena, and its impact on the global economy has been devastating and could be long-lasting.
The silver lining is that the industry has made significant shifts in the past couple of years to smoothly navigate the volatility that still lies ahead in the diamond industry. Most notably, the diamond manufacturers and retailers of every stage should be well updated about this volatility to improve efficiency and to grow amid all the changes yet to come.
So let’s cut the crap and have a closer look at the diamond industry insights: facts, functioning, and emerging trends that every diamond manufacturer and retailer should be well aware of.
The midstream diamond market is expected to become more efficient over the next decade. As the diamond manufacturers across the globe are reducing their stock of hard-to-sell goods, they’ll only be purchasing the rough inventory of their need to fill polished orders.
Now it seems more like on-demand purchase is becoming a more preferred method of buying rough diamonds in the industry. The best example of this is Lucara’s Clara platform gaining traction.
This emerging trend will put pressure on De Beers and Alrosa in the longer run to adjust their respective contract systems with diamond manufacturers.
Financing challenges in the diamond industry are expected to persist as usual with tighter lending standards and lower availability of capital. The diamond manufacturers will need to operate under compliance with International Financial Reporting Standards.
Traditional banking institutions and most notably in India, are pulling away from financing the diamond trade. At the same time, the new alternative financing instruments are emerging and gaining acceptance, for example, crowdfunding, equity loans, cryptocurrency token exchange, etc.
These alternatives certainly won’t replace the lost bank credit but will help manufacturers in dealing with the midstream liquidity issues and drive their efficiency.
The adoption of new forms of financing in the diamond industry will also play a role in opening the way for new players in the diamond market.
Technology plays a more prominent role in streamlining the diamond manufacturing process, with artificial intelligence (AI) becoming increasingly crucial in automating the process of diamond cutting and grading.
The diamond retailers will also gain a massive benefit of using technology with an emphasis on omnichannel, meaning the harmonious interplay between online and in-store sales options.
The wholesale suppliers can make their inventory virtual featuring good images and transparent details (Just the same as what we did on hk.co which will undoubtedly be able to offer a better, sleeker shopping experience for consumers and what we did with our advanced featured hk.co application on both iOS and Android, is said to be the future of the diamond industry.
The conversation around ethics in the diamond industry has shifted from the Kimberley Process (KP) towards direct company audit programs via De Beer’s Best practice Principles (BPP) or Responsible Jewellery Council (RJC) in the last decade.
And most recently, these efforts have gone a step further intending to keep an account for even individual stones in their journey from mine to jewellery. Of course, this shift is still in its infancy, but the traceability programs will surely become an essential part of the diamond industry soon.
As millennials are becoming the dominant part of diamond consumer markets, in addition to this idea of an ethically sourced diamond, they also emphasized the companies’ Corporate Social Responsibility (CSR) activities while purchasing the diamonds from them.
So now, both the diamond manufacturers and retailers have to respond appropriately to the concerns regarding the ethical issues in the diamond industry as consumers are becoming more curious about the provenance of the diamonds they buy.
The age-old debate of natural vs. lab-grown diamonds is still there and will continue to remain in the future as synthetic diamonds will find their place in the market.
Because the technology for making these stones is improving day-by-day and prices are also softening with increased supply and also the industry giant De Beers is emerging as a critical price-setter and supplier in the lab-grown diamond wholesale market.
The retailers can benefit from this changing trend of synthetic diamonds with strong branding, but yes, the market share in this space will be limited.
The biggest challenge the diamond industry is facing in the 2020s is to make an honest assessment of its trading practice and put an authentic message in its marketing, and that’s what the modern customer is demanding from the industry.
The diamond industry needs to be more open-minded to embrace the diversity that exists in the market. Marketing in any field has already become more personalized, and we can expect the diamond trade to expand its campaigns accordingly in the future, targeting both the individual customers as well as specific groups like the LGBTQ community or Hispanic communities.
Such marketing is the only key to effectively navigating upcoming changes in the diamond industry and will help in fulfilling our long-lived dream of achieving the $100 billion sales in 2020.
At HK, we strongly believe in hard work and persistence. Our unique designs crafted with the highest quality have fetched us unanimous praise in the global market.
Our commitment towards offering innovation with quality and consistency recognized us as one of the leading Jewellery Exporters from India to the USA, Hong Kong, UK, Israel, UAE, and Belgium.
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