The past year has undoubtedly been one of significant challenges for the diamond industry. It forced companies to rethink their futures and created an opportunity to reposition diamonds as true luxury items. As we move into 2025, it should be a year of recalibration and realignment.
In 2024, the entire diamond industry—from producers to retailers—found itself in turmoil. Typically, when external forces cause consumers to stop spending, the industry feels the pressure. However, the problems of 2024 were largely the result of internal misjudgments within the diamond industry, and this is what is driving the need for a major industry overhaul.
Misjudgments and Internal Challenges
Some of the key missteps include catastrophic assumptions about China’s economic recovery, mishandling the introduction of lab-grown diamonds, and poor marketing strategies. Additionally, the long-standing issue of a highly fragmented retail market in the U.S. remains a persistent challenge.
Diamonds aren’t the only luxury items facing challenges. As the world shifts away from luxury goods, many luxury companies are expected to see losses in 2024, with some even reporting double-digit declines.
However, these losses are not comforting when they hit your own pockets. They also don't absolve the industry from needing to create actionable plans to stimulate recovery. The entire industry must take part in this recovery effort.
The Urgency for Transformation
Unlike bags or perfume, the desire for jewelry is deeply embedded in our DNA. Humans have been crafting and wearing jewelry long before written language existed, meaning that jewelry is, in fact, something we truly need.
However, jewelry is not limited to diamonds alone. While overall jewelry sales in the U.S. grew in 2024, diamond jewelry sales lagged behind.
What Needs to be Done?
Let's make one thing clear: the solution is not price cuts. Instead, it is time for the industry to stand firm, especially in retail.
Here’s the challenge—very few manufacturers are also jewelry retailers. Therefore, implementing strict pricing strategies to stop heavy retail discounts or avoiding "holiday sales" signs is nearly impossible.
Furthermore, we cannot impose changes on retailers assuming they are unaware of consumer behavior. Retailers understand their customers better than anyone.
Another challenge for midstream companies is truly understanding consumer demand. Many mistakenly believe that talking to retailers is enough to understand consumers. This, however, is not the case. Fortunately, more and more midstream companies are striving to understand consumer behavior, but not enough of them are doing so.
To change this, integration is key. A long-term vision must be developed and executed. Strategic financial commitments are also necessary; otherwise, managing the pipeline will remain a nightmare.
Have We Reached the Turning Point?
Over the past year, Botswana has made significant steps toward deep industry transformation. The country decided to continue and finalize its contract with De Beers. At the November Facets conference, President Mokgweetsi Masisi emphasized the importance of the De Beers partnership, adding, "Our relationship with De Beers is strengthening, and the negotiations are nearing completion."
De Beers is taking its own actions, such as increasing marketing spend, accumulating stock to avoid overwhelming midstream companies or Botswana itself, and actually reducing the number of rough diamond customers.
The trend of reducing customers is common among both manufacturers and retailers. Smaller manufacturers and retailers have sold their businesses to larger firms, especially those focused on specific market niches. Others are quietly winding down, slowly selling off their products.
As a result, the biggest companies are growing larger and taking an increasingly significant share of industry activity.
Shifting Industry Centers
Long-term trends are already emerging, with Antwerp and Dubai growing, while at least one center is gradually closing as it fails to adapt to the changing business environment. A key change is the development of Botswana as a new center.
Repositioning Diamonds as Luxury
For the natural diamond industry to achieve its goals, diamonds must be repositioned as true luxury items—rare, well-designed, finely crafted, and expensive. By targeting diamond enthusiasts and connoisseurs, diamonds will once again become the coveted treasures they once were.
To achieve this, diamonds must undergo moderate changes over time. Before increasing prices, the craftsmanship and design of diamond jewelry must be at their peak. Jewelry must truly meet the highest standards to justify a price increase.
This transformation comes at a cost, including further consolidation and increased investments in knowledge, tools, and marketing. The future will demand change. Most importantly, we must focus on and adapt to changing consumer behavior.
Moving Forward with Consumer-Centric Marketing
To keep the momentum going, the industry needs a deeper understanding of how to use marketing to reignite consumer demand. Data analytics and consumer sentiment tracking can uncover hidden niches, discover opportunities, and measure shifts in consumer mood.
The good news is that more and more companies in the industry are realizing the need for major changes and are moving forward. These companies range from big names to smaller, quieter players, but they are the driving force behind the most crucial adjustments in the diamond industry in recent history. Hopefully, they will lead the way for others to join in this transformation.