13 Apr 2021
DiamondWorld Directory
Home |
News
Home
Brilliant Under Pressure: Global Diamond Market Shows Resilience In An Unprecedented Year
Research from Bain & Company shows the diamond industry suffered during the Covid-19 crisis but fared better than the personal luxury market overall; sector is poised to return to growth in 2021
By: Diamond World News Service
|
Feb 10 2021 5:14PM
|
Reference: 25406  

DecreaseIncrease

While the diamond industry suffered during the Covid-19 crisis, it still managed to keep its sparkle. Lockdowns, travel restrictions and economic uncertainty pushed diamond jewelry sales down by 15 percent in 2020 with most of the decline happening in the first and second quarters. But faced with store closures, diamond retail sales pivoted online, and benefited from consumers who could not spend on travel or experiences choosing diamond jewelry instead.  Demand returned during the fourth quarter, culminating in a strong holiday season across the globe.

The industry proved its resilience in the face of an economic downturn as consumers continue to see its value. The boost was driven by holiday jewelry sales, particularly in the US and China, which saw a 5–10 percent and 15 percent –20 percent rise in the fourth quarter, respectively, year-on-year. Diamond jewelry is expected to perform better than the global personal luxury market in 2020, with only a 15 percent drop compared to a 22 percent decline in luxury.

Rough diamond production continued its downward trend, falling to 111 million carats. After peaking at 152 million carats in 2017, rough diamond production has declined by about 5 percent per year. In 2020, production decreased by 20 percent compared to 2019 levels. Notwithstanding changes, the mix of diamonds remained largely constant, with medium and large diamonds accounting for 25 percent of production volume in carats but around 70 to 80 percent in value in US dollars.

These are among the findings of Bain & Company and the Antwerp World Diamond Centre's (AWDC) tenth annual Global Diamond Report 2020-2021.

"In 2020 the diamond industry as a whole unexpectedly benefited as consumers unable to spend on experiences or travel used those funds for items such as diamonds, which are considered a tangible physical investment," said Olya Linde, a partner in Bain & Company's Energy and Natural Resources practice. "Our research found that more than 75 percent of consumers intend to spend the same amount or more on diamond jewellery than before the crisis, indicating a strong, ongoing emotional connection with the diamond story."

Consumers continue to value diamond jewelry in key markets (US, India and China)

Consumers continue to value diamond jewelry as a desirable gift and a key element of marriage. In Bain's 2020 survey of customer sentiment, US consumers said jewelry and watches are among the top four gifts they would like to receive; consumers in China and India ranked them in the top two. In the US, China and India, 60 to 70 percent of respondents believe diamonds are an essential part of a marriage engagement.

Sustainability and social consumerism increasingly influenced diamond purchase decisions with social impact being the top sustainability concern for US consumers.  In China and India, consumers care most about environmental preservation, conflict-free supply chains, and carbon footprint.

Online sales jumped but bricks-and-mortar remains important

Covid-19 accelerated the convergence of online and offline channels, forcing retailers to retool operations and reorient the customer engagement experience.

In 2020, up to ~20 percent of diamond retail sales occurred online (up from ~13 percent in 2019). Most consumers (70 percent) use digital tools to research and choose jewelry before they make in-store purchases. Since this trend is unlikely to fully reverse after the pandemic, retailers must invest in digital capabilities, delightful online shopping experiences and seamless omnichannel or phygital interactions.

Despite the increase in online sales and a strong preference for online research before making purchases, nearly all consumers (90 −95 percent) still prefer to buy diamonds in brick-and-mortar stores and these continue to remain critical to retailers' omnichannel strategies. Consumers value the opportunity to see and touch jewelry, and they benefit from in-person advice and other personal services. The online share of diamond jewelry sales is still low compared to other luxury and consumer products.

Flexibility helped the industry players weather the storm

When the Covid-19 crisis began in the first half of 2020, major mining companies cancelled sales and allowed clients to postpone purchases. This response helped midstream players weather the worst of the storm. However upstream inventories of rough diamonds grew to 65 million carats by the end of third quarter, before decreasing on the strength of the fourth quarter sales to 52 million carats, or +17 percent to end of 2019 inventory level.

Covid-19 prompted structural changes in the diamond industry that will help it recover from the recession. Because of the crisis, midstream inventories are at healthy levels and better aligned with consumer demand. There are more partnerships between upstream and midstream players in regard to technology, go-to-market strategies and marketing. A more transparent and digitally enabled supply chain was created in the rough and polished diamond segments, and we see innovative new approaches to customer engagement. Bain is optimistic these changes will help the industry emerge from the crisis in a stronger position.

Diamond industry poised for rebound in 2021

The new year started on a strong trajectory and growing market confidence. Most miners reported ~5–8 percent improvement in rough diamond prices and sales in January, while additionally, major miners maintained a flexible sales policy which contributed to a strong start to 2021.

Bain perspective is that the Chinese diamond jewelry retail market will recover in early 2021, while other developed countries will reach pre-pandemic levels in 2022–23. Retail recovery in emerging countries will follow a year later.

There is still a lot of economic uncertainty ahead. The current crisis could be more severe than 2009, and a double-dip recession is possible. Full recovery and a return to historic growth trajectory isn't expected until 2022–24. Three factors will impact the pace and shape of the recovery: epidemiology, government policy response and consumer response.

Encouraged by the year-end performance, the long-term outlook for the diamond market remains positive. In volume terms, rough diamond supply growth is projected to be −2 percent or 2 percent annually. Following an accelerated short-term recovery growth, demand for rough diamonds is expected to fall back into its historic trajectory, growing at 1 percent to 3 percent annually.

"The diamond industry has shown remarkable agility in the face of a crisis and the pace of change has accelerated," said Ari Epstein, CEO at AWDC. "Throughout the diamond value chain, players have adapted quickly and consumers of diamond jewelry have shown that they value the final product and are willing to invest in it, even in difficult times. We expect the industry to recover and emerge stronger from the storm."

Follow DiamondWorld on Instagram: @diamondworldnet
Follow DiamondWorld on Twitter: @diamondworldnet
Follow DiamondWorld on Facebook: @diamondworldnet
Have Your Say
* Your view
* Name:
* Email:
* Town/city:
* Country/State:
*  Company:
 
*  Name:
 
*  Mobile:
 
*  Email:
 
 
Subscribe for DiamondWorld weekly Newsletter
 
Search News by City
Advertisement
Kosher 23460
Advertisement
Kosher 23460
Recent Issue
2021
AVAILABLE NOW...!
Advertisement
Kosher 23460
News in Pictures
Videos
Young Diamantaires
Pictures: 16
Stunning Jewellery from Cannes 2019
Pictures: 24
Sparkly Jewels at Oscars 2019
Pictures: 19
Golden Globes 2018
Pictures: 15
Spotted: Who Wore What (December 2018)
Pictures: 4
India Diamond Week
Pictures: 8
Spotted: Who Wore What (October 2018)
Pictures: 7
Spotted: Who Wore What (September 2018)
Pictures: 6
70th Emmy Awards
Pictures: 11
35th India International Jewellery Show 2018
Pictures: 46
JJS - IJ Jewellers Choice Design Awards 2015 powered by GIA
Views: 28955
Diamond World Expert Hour with Evgeny Agureev, Deputy CEO, ALROSA
Views: 4721
GJEPC Chairman Interview
Views: 25356
IJ Jewellers Choice Design Awards 2012 - Part 1
Views: 34051
Promo for IJ Awards 2012 at NDTV Profit
Views: 47734
IJ Jewellers Choice Design Awards 2012- Part 2
Views: 60607
Couture India 2016 - A Business Boutique Show by IJ Magazine
Views: 19701
Savjibhai Dholakiya, Surat Businessman (Diamond Merchant) speaks in Vibrant 2015
Views: 46561
IJ Jewellers Choice Design Awards 2013 - NDTV Video
Views: 45434
Advertisement
KGK_Antwepr
Advertisement
Kosher 250300
Member of:
Supporter of: