While the diamond industry experienced a strong start to 2017, overall data for the first six months of the year suggests its momentum has begun to stall.
According to diamond industry analyst Paul Zimnisky, the United States – the industry’s largest market – has seen somewhat underwhelming demand for retail diamond jewelry, despite the market’s overall strong economic performance. China, the industry’s second-largest market, however, has seen demand for diamonds improve against the backdrop of a thriving market.
The H1 2017 analysis has found that while rough prices have remained high so far this year, polished prices have dropped slightly, indicating that excess polished inventory is building up. U.S. end-market demand has been stable at best, with the bigger industry players experiencing a slight downturn.
The analysis has attributed most of this underperformance to a decline in U.S. shopping mall traffic, and has found the decline could also be partially attributed to operational performance and the shutting down of brick-and-mortar stores, a move many retailers are pursuing in favor of focusing on their online presence, which is some cases has proven more cost-effective.
New marketing strategies
In China, the diamond industry’s solid performance has been partially attributed to consumers purchasing more jewelry at home versus abroad. Early last year, the Chinese government took steps to encourage more domestic luxury spending, and the move seems to be paying out.
This development has had an impact on revenues of diamond industry players in the U.S., Europe, and Japan.
New marketing strategies, seeking to cater to the generational change in consumer preferences for luxury items like diamond jewelry, has also contributed to overall sales in all major markets, Zimnisky said on his website.
The analysis further found that among diamond industry giants, De Beers sold $2.9 billion of diamonds throughout June, a 3.6% decrease year-on-year, but 16.8% more than in the same period in 2015; while Alrosa sold $2.5 billion in diamonds, down 0.4% from last year but up 14.8% versus 2015.
De Beers and Alrosa currently represent an estimated 39% and 28% of global diamond production by value and 22% and 26% by volume, respectively.
