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SURVEY REVEALS MORE CONSUMERS ARE AWARE OF LAB-GROWN, BUT CONSIDER THEM DIFFERENT TO NATURAL DIAMONDS

 

A survey of 5,000 American jewelry consumers conducted by 360 Market Reach on behalf of the De Beers Group has revealed that even as affluent consumers were purchasing more high-value natural diamond jewelry, they also were becoming increasingly aware jewelry set with laboratory-grown diamonds, and also were open to buying them. But they do not place the two products in the same category.

The results of the survey were published in De Beers’ recently release Diamond Insight Flash Report.

According to the survey, while 47 percent of consumers do not agree with the statement that lab-grown stones are “real,” they will still consider acquiring them because they are “fashionable” and cost less than natural diamonds. In short, the man-made diamonds are considered to be new, modern, fun, and appealing for impulse or self-purchase.

The survey also indicated that there is a weakening in any consumer belief that has existed that lab-grown diamonds are somehow more socially conscious or environmentally responsible, with an agreement with such statements are 8 percent less believable when compared to the results of an earlier survey.

LESS ROMANTIC, MORE APPROPRIATE FOR SELF-PURCHASES

Laboratory-grown diamonds are increasingly being seen as a possibly gaudy, but certainly legitimate jewelry product alternative. As they mainstream, the De Beers survey indicated, they are becoming increasingly identified with providing “flash for cash.”

When asked who should buy the lab-grown stones,  55 percent of women say “myself,” making them a self-purchase item in serious competition with apparel and leather goods.

Meanwhile, consumers differentiate natural diamonds by attributing to them the key category territories of “authentic” (60 percent natural versus 6 percent for lab-grown), “romantic” (41 percent natural versus 6 percent for lab-grown) and “would make me feel special” (37 percent natural versus 3 percent for lab-grown).

During the two years in which the 360 Market Reach survey has been used to track consumer sentiment, the top concerns about lab-grown diamonds has remained that they “not as rare” as natural diamonds and will not retain their value over time.

$1,000 PRICE CEILING FOR LAB-GROWN

The perceived lack of rarity and intrinsic value is apparently a primary reason for 7 out of 10 of those consumers surveyed stating that they would not pay more than $1,000 for lab-grown diamond.

As of December 2020, based on De Beers Group Pricing Team data and corroborated by a recently released report by Bain & Co., the lab-grown wholesale price discount to natural polished wholesale prices was roughly 80 percent, meaning that  the lab-grown wholesale price is about 20 percent of the natural wholesale price of equivalent size and quality.

While this widening price differential may not affect consumer confidence in the lab-grown product, it could have severe implications for consumer confidence in the jewelry trade. 

*Click to enlarge photo

The just completed De Beers consumer survey shows that, in a scenario where consumers buy lab-grown diamond jewelry and the prices of lab-grown diamonds drops by 50 percent to 60 percent over two years, while natural diamonds remain priced the same or higher, 32 percent of American consumers would be less likely to trust fine jewelry from the same retailer, and 20 percent would just not buy fine jewelry from the same jeweler in future.

All in all, the survey indicated, the overall negative impact of a quick lab-grown diamond price decline would result in 52 percent of customers turning away from the jewelers who sell them the product, with the negative impact being 58 percent for women customers

“We have always sold our LGDs at a fair and transparent price, derived from a reasonable commercial margin above the actual production cost, rather than hitching it to what a natural diamond’s value might be,” said Steve Coe, CEO of of De Beers lab-grown diamond jewelry line, Lightbox Jewelry, as quoted in the Insight Flash Report. “Recent LGD price falls simply indicate that we are today where others will be tomorrow. Around or below $1,000. Exactly where the consumer wants us to be.”

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