RESTORING THE DEMAND
The Challenge of the Diamond Consumer
Over the last five years, Ehud often discussed the need for the diamond industry to act in unison to address some of its most pressing challenges. As a first step, there is the need to ask the right question, starting with what explains the decline in consumer demand.
This past February, right after Valentine’s Day, he stated: “Consider the following: diamond jewelry sales are not as good as they used to be. The decent margins wholesalers and retailers used to have on diamonds have withered. While luxury sales are growing, diamond jewelry sales are losing market share in the category. Consumers are losing interest in traditional diamond jewelry, opting instead for alternatives such as lab-grown. Considering all this, my question to the industry is ‘what are we doing to turn this around?”
Ehud sought to enlist the diamond industry to examine the steps that brought us to this point, from the decline in marketing to the limited attention to evolving consumer needs. These trends, which Ehud explored in depth, led to a decline in consumer demand for diamond jewelry and a rise in interest in alternatives. From other luxury items such as vacations and handbags to different stones to set in jewelry, including precious stones and lab-grown. According to Ehud, our diamond industry partly brought the decline on itself.
On the positive side, he always believed that the diamond industry could change its course and generate renewed consumer interest in diamonds. In the coming weeks, we will examine that idea in light of his publications.
Ehud always believed that the diamond industry could change its course and generate renewed consumer interest in diamonds. Ehud envisaged three demand directions for polished diamonds, each fulfilling a certain need, each addressing different budgets, and each fitting different economic approaches to buying diamonds.
In Ehud's words: "The future vision of diamond consumption should have three parts: The traditional market of diamond jewelry. With a popular price point and made from the cheaper part of diamond production, can compete with other gifts in the shops. The second is that of fine and high-end diamond jewelry. These niche market items are expertly designed and are fit for the bridal and the luxury sector. The third venue, and the one with a growing importance, is diamonds for wealth perseveration - a tool to store value. These diamonds will be bought and treated specifically for that purpose and with a new methodology that is based on the economy of rarity."
This vision builds on the existing diamond markets to create a new one, to continue strengthening the current offering of diamonds as a component in jewelry, while taking diamonds beyond that point. Ehud believed that as only a component of the jewelry industry, the diamond market was not taking advantage of other opportunities. He firmly believed that the diamond industry must carve out its own destiny.
Ehud's vision for three venues was driven by his belief that their fundamental characteristics which have possessed people's admiration such as their rarity, have not changed, but have perhaps gotten somewhat lost along the way. It was also grounded deep in the co-existence of multiple venues found in other commodities, such as gold and art, which are used both as adornment and for wealth preservation.
To deliver this vision, he believed the diamond industry needed to tackle a number of issues that prevent it from reaching its full potential. These issues will be discussed in upcoming articles.