Diamonds as Investments
Diamonds have been a consistent factor within the realm of fashion from ancient times to the current era where the glitter of diamonds still appeals to the masses. However, from another perspective, times have changed and diamonds are no longer products that are reserved for the elite within societies, they are available to just about any individual that has the financial ability to buy them rendering these stones as a form of commodity that holds value due to the rarity of the rare mineral.
The diamond market is anything but stable as it belongs to a niche market that subscribes to a superficial market where price standardisation is elusive because every diamond is unique in its own way and is dependent on the 4 Cs (Colour, Cut, Clarity and Carat) for pricing. Apart from that, bigger diamonds (more than 2 carats) or diamonds that are linked to any sort of history involving notable personalities are valued differently.
It is due to these ‘issues’ that prevents investors from investing into precious stones as much as they would invest into precious metals.
Industry Disruptor – Lab Grown Diamonds
Lab grown diamonds were largely ignored by jewellers for decades since they were first created in a lab in 1954, mainly due to the fact that these lab grown diamonds were of poor quality at the initial stages and was mainly used for industrial purposes. However, as technology progressed, labs were able to create better quality synthetic diamonds to the point that currently, gem quality synthetic diamonds surpass the quality of natural diamonds in many ways.
Coupled with the fact that it is less costly to create higher quality diamonds, lab grown diamonds cost a fraction of the price of natural diamonds. Consumers are now able to place larger stones on their engagement rings and jewellery without having to punch holes in their bank accounts. Recent statistics reveal that lab grown diamonds have ‘eaten up’ 18 % of the natural diamond market share and it is still growing.
The rise in the popularity of lab grown diamonds has effectively destabilised the prices of natural diamonds as jewellers and diamond brokers/ wholesalers attempt to unload inventory quickly in order to maintain healthier cash flows. The prices of natural diamonds have dropped significantly over the past few years and a recovery is far from sight.
In order to overcome the challenges that retailers are currently faced with it is imperative that retailers adapt to rapidly evolving trends quickly by thinking out of the box and leveraging on the opportunities that come side by side with challenges.
Some retailers have resorted to ‘mixing n matching’ lab grown diamonds and natural diamonds in an attempt to reduce natural diamond inventory and at the same time maintain a healthy and robust revenue stream.
The reliance of retailers on the sales of diamond engagement rings has also posed a challenge due to the simple fact that fewer people are getting married statistically.
