Editor’s Note
This article highlights the diamond industry’s remarkable resilience during a challenging year. While the pandemic initially caused a significant downturn, the sector’s swift pivot to e-commerce and shifting consumer priorities led to a robust recovery by year’s end.
Lockdowns, travel restrictions, and economic uncertainty caused diamond jewelry sales to fall by 15% in 2020, with most of the decline occurring in the first and second quarters. However, in the face of store closures, diamond retail pivoted online and benefited from consumers who, unable to spend on travel or experiences, chose diamond jewelry. Demand returned during the fourth quarter, culminating in a strong holiday season worldwide.
The industry demonstrated its resilience in the face of an economic recession as consumers continue to see its value. The momentum was driven by holiday jewelry sales, particularly in the U.S. and China, which experienced year-on-year increases of 5%-10% and 15%-20% in the fourth quarter, respectively. Diamond jewelry is expected to have performed better than the global personal luxury market in 2020, with only a 15% decline compared to a 22% decrease in luxury goods overall.
Raw diamond production continued its downward trend, falling to 111 million carats. After peaking at 152 million carats in 2017, raw diamond production has decreased by approximately 5% per year. In 2020, production fell by 20% compared to 2019 levels. Despite these changes, the diamond mix remained largely constant, with medium and large diamonds accounting for 25% of production volume in carats, but around 70% to 80% of the value in U.S. dollars.
The report has identified key trends, noting that the main markets for diamond jewelry are the United States and China. “Consumers continue to value diamond jewelry as a desirable gift and a key element of marriage. In Bain’s 2020 customer confidence survey, U.S. consumers said jewelry and watches are among the top four gifts they would like to receive; consumers in China and India ranked them in the top two. In the U.S., China, and India, between 60% and 70% of respondents believe diamonds are an essential part of the marriage engagement,” the report points out.
In this regard, sustainability and social consumerism increasingly influenced diamond purchasing decisions, with social impact being the primary sustainability concern for U.S. consumers. In China and India, consumers are more concerned about environmental preservation, conflict-free supply chains, and carbon footprint.
The second trend detected is the increase in online sales. COVID-19 accelerated the convergence of online and offline channels, forcing retailers to reorganize operations and refocus the customer engagement experience. In 2020, up to 20% of diamond retail sales were made online (compared to 13% in 2019).
Another observation in the report is that flexibility helped industry players “weather the storm.”