The impact of millennial and Gen Z consumers on the jewellery industry has become the focus of most market studies. The existence of this new consumer group has revolutionised the way companies do business and industry giant De Beers Group is no exception. During his recent trip to Hong Kong, De Beers CEO Bruce Cleaver sat down with JNA to share his views on the future of the diamond trade.
It is not difficult to understand why the top management of a vertically integrated conglomerate such as De Beers does not worry too much about the future. Citing De Beers’ The Diamond Insight Report 2018, company CEO Bruce Cleaver said the study shows that millennials are still very much “invested in the diamond dream, and traditional things like love, commitment and relationship are very meaningful to millennials and Generation Z.”
To one of the world’s biggest diamond producers and sellers, the distinctions between millennials and Gen Z consumers in terms of social habits, aspirations and consumption patterns contribute to the development of a highly differentiated diamond market.
“There are huge opportunities for retailers and for those in the diamond businesses who get this right,” revealed Cleaver. If getting things right is the key to success, where do companies start?
Cleaver stressed that the Insight Report was meant for the whole diamond trade, and not for De Beers alone. “What it illustrates very strongly is that people who get their omni-channel strategies right, which is a combination of traditional internet platforms, and people who could make use of such offerings as seamlessly as possible, are likely to be successful,” noted the company official.
The importance of social media these days is unquestionable, more so for Gen Z than millennials, even if the target audience are trade professionals or end-buyers.
Launch of Lightbox
Cleaver emphasised that De Beers Group’s youngest member – laboratory-grown diamond jewellery brand Lightbox – was borne out of consumers’ needs.
“We didn’t just launch this; we’ve asked consumers in the US what they thought about lab-grown diamonds,” he explained, adding that majority of American buyers are clear about the differences between natural and man-made materials, and are of the opinion that each product category should have its own market.
He commented, “Lab-grown diamonds are fashionable, fun, light-hearted and affordable. They are not the same as natural diamonds. Consumers don’t see the two markets as the same at all.”
Cleaver also said that natural diamonds will still be the group’s major focus. “De Beers is a natural diamond business. We are very invested in the natural diamond business, and we will continue to be so,” he remarked.
According to him, the group is planning to spend more than US$10 billion in the exploration and marketing of natural diamonds in the next five to seven years, showing its confidence in the future of the business.
“And in the lab-grown diamond space, we will spend under US$100 million over the next four years – a small number compared to what we spend in the natural diamond business. This is indicative of where our focus is.”
A reason for Lightbox’s existence, according to Cleaver, is the ongoing competition between lab-grown and natural diamonds, which is confusing consumers. Since lab-grown diamond production involves an industrial process, pricing is binary as opposed to natural diamonds, which are valued for their rarity. “A 1-carat Lightbox diamond will cost US$800 and half a carat will cost US$400,” he added.
The US continues to be the world’s leading diamond jewellery consumer while China represents one of the largest growth engines among emerging markets such as the Philippines, Indonesia and Turkey. India’s growing percentage of millennials meanwhile has enticed De Beers to invest heavily in the country’s diamond market, explained Cleaver.
The first half of 2018 proved positive for the diamond business, thanks to continued growth in the US and China. A strong US dollar however brought about challenges to the retail market. All in all, Cleaver remained upbeat about prospects in the diamond market as the holiday season approaches.
*See JNA Oct 2018 issue page 32, 33 for the highlights of The Diamond Insight Report 2018.