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Lumber, Cars, Computer Chips, and Now Diamonds In Short Supply With Prices Rising | June 14, 2021 (0 comments)
London, UK—Diamond prices are going up, to say the least. Image: Natural Diamond Council
The jewelry industry is no more immune to the laws of supply and demand than any other industry, and as the world emerges from the pandemic, we’re seeing the results of that demand on the back end of slowed production worldwide. Lumber has rocketed to three times its former price. Computer chips are scarce, making things that rely on them—like new cars—also scarce and driving up prices on both new and pre-owned cars and houses. (Image: New G.Label Earrings from Goop, courtesy of Natural Diamond Council.)
Now add diamonds to the list. While they haven’t increased threefold, Bloomberg reported De Beers has increased prices as much as 10% on some stones, namely expensive larger goods over 2.0 carat. A 5% increase is in place on other goods. Both De Beers’ and Alrosa’s stockpile of unsold goods from last year are gone, along with new production from their mines. Meanwhile, the pandemic caused bottlenecks in cutting centers, particularly in India which was ravaged by COVID just months ago. Indeed, with reports that Russia might consider selling some diamonds from its state stockpile to help boost recovery, Alrosa might even end up buying from said stockpile to be able to provide its customers with the stones they want.
Consumers want diamonds, and diamond suppliers are reporting unprecedented sales. The Natural Diamond Council last week announced some data about current diamond jewelry sales, and it’s encouraging: the first half of 2021, U.S. diamond jewelry sales grew 30% compared to 2019 (a normal year) and 300% compared to 2020. Even better, those sales were “heavily supported by millennial shoppers, both male and female.”
That’s what jewelers want to hear. The last few holiday seasons have been outstanding—including the surprise success of 2020—but many of the sales went to longtime (read: older) consumers and jewelers did not report nearly as strong sales to Millennials.
The Natural Diamond Council is less concerned with renewed competition from experiential spending than some other analysts. Diamonds are actually a part of the experience, said NDC in a recent email.
“Diamond jewelry sales also increased throughout 2020 as consumers were apt to purchase items that carry value and meaning during the pandemic. This trend has persisted in full force as the pandemic lifts and people spring back into life's celebrations and pleasures.
Consumers are keen to make new memories with family and friends after a solitary and difficult year. Natural diamonds are synonymous with marking special life moments.
A challenging year solidified many relationships, proving an uptick in engagements throughout 2020 and into 2021. The US market is currently experiencing a weddings boom as larger gatherings are reinstated throughout the country. A natural diamond engagement ring is often a gateway to additional diamond purchases for the self or others leading up to the wedding.
Consumers are excited to get dressed again and share outfits on social media channels as they indulge in activities outside of the home again. This has fostered a sense of eagerness for dressing up, travel, and experiences.”
For jewelers, the lesson is pretty basic: hit the computer and reprice your top-selling goods now, because it’s a pretty sure bet that replacing them will cost you a lot more, at least in the near future. And for slow-moving dog items, maybe it’s time to call it a day and pop out the stones and re-set them or at least keep them in your inventory for when you do need a stone quickly.