The consumer market of the United States is a key market for the diamond industry, accounting for about 40% of global demand from a cost standpoint. At the same time, although the US is the leading market, it is good or bad - very stable. Despite the fact that sustainability in business is a valuable thing, it is difficult to create a driving force for growth in a stable environment.
It was for the American market that De Beers commissioned the advertising agency to develop its first marketing program, which gave birth to the slogan "a diamond is forever", considered the most successful in the history of advertising. With the help of this slogan, as well as advertising in print, on the radio and on TV, diamonds have become a necessity in the collection of every woman. More importantly, it became almost necessary for each engagement ring to have an insert from a diamond. Until now, the market of wedding jewelry accounts for more than 40% of demand for the value of diamonds in the US consumer market.
The trajectory of growth began after the Second World War. During the war, the American economy was focused on supporting military efforts. Freed from this economic burden, the American economy grew rapidly, the working class shrank and the middle class increased, as the cost of living decreased, access to more consumer goods increased, and discretionary income increased. Taking into account this growth, access to diamond jewelry was no longer limited to members of the royal family and wealthy people, and almost everyone had it.
The end of the war was marked by three demographic phenomena: a sharp increase in the number of marriages, a decrease in the average age of marriage and a sharp increase in the birth rate. It was a generation of baby boomers - children born during the post-war demographic explosion. In the short term, the increase in the number of weddings naturally increased the demand for engagement rings and diamonds in the form of inserts in them, but baby boomers caused long-term changes - the population growth and the constant expansion of the consumer market, and with it the growing demand for diamonds.
Having reached their middle age, baby boomers continued to cause an increase in demand for diamond jewelry when they married, and when celebrating life events, reached the top of their earnings when their children graduated from college, and today, when their children get married. They served as an excellent driving force in the sales of jewelry. But if you look at the demographic picture of the United States, baby boomers have reached the peak of their earnings and their spending is declining. Who will replace them as the biggest buyers? From this perspective, the US consumer market is worrying. Generations "X" and "Y" are not persons carrying out large expenses, and for millenials - a generation of two thousandths - has never really been affected by the slogan "The diamond is forever".
Changes in American culture, perhaps, lead consumers away from diamonds. Few of those who for 20 and 30 years, marry, as was the case with baby boomers. Taking into account the decrease in the number of weddings, the large driving force has noticeably diminished - the purchase of a diamond engagement ring. Considering the fact that there are fewer weddings and the age of marriage is postponed, wedding anniversaries are less, and this is another blow to the purchase of diamond jewelry. This change also leads to the fact that later in life give birth to children, and in turn, therefore, later the celebration of life events and the purchase of large gifts, for example, diamond jewelry to commemorate these events. These changes also lead to the creation of own capital at a later age.
One aspect of cultural change in the United States in recent years is the shift from buying "things" to spending money on "impressions and services" - by buying a more beautiful car, a home, a second home and diamond jewelry. A more careful study of the attitude towards diamonds, in particular, opens another layer of sentiment affecting the demand for diamonds. When offering diamonds, there was always an emotional aspect - this is how diamonds were presented to people. Understanding the existing attitude towards diamonds, we see that many are asking themselves why they need a diamond. Others feel that the diamond does not necessarily symbolize eternal love. Also, the opinion about the cost is growing stronger, that the prices for diamonds are inflated and they do not reflect their value.
As it was said before, the attempt to combat various social norms is not suitable for the diamond industry. We can change attitudes to diamonds, especially to expensive diamonds, and transparency is important here. The sale of diamonds as part of jewelry is likely to remain forever, or at least in the foreseeable future. But I doubt that this will be an important growth opportunity. Look at the most recent results of Signet, the largest diamond jewelery retailer in the United States and the parent company Jared, Kay and Zale: in the first quarter of 2017, the total volume of comparable sales fell 11.5%. Sales volumes at Jared decreased by 10.3%, in Zale they fell by 10.9%, while in Kay they decreased by 1.5%. The sales volume in their regional networks fell by 21.4%.
Clearly, there is a need for change. We need to move to a different way of thinking about diamonds and the one to whom we sell them. A new proposal is needed - not the one that will replace the current offer of diamonds in the form of jewelry inserts to symbolize love, but one that will coexist with it. A proposal that takes into account that consumers are smart, and accordingly, threatens them. We must give them the opportunity to quickly review the data without going deep into them, but at the same time give them the opportunity to examine in depth the data on individual diamonds. Even if they do not very closely look at the expanded data, they will feel confident knowing that there is information if they need to consider it. It's nice to realize that there are additional easily accessible data.
If we in the diamond industry are open to this new reality, then we will have a golden opportunity. In the past, I mentioned changes in other industries: for example, in taxi services. We all stood and waited in line for a taxi, sometimes for a long time, sometimes the taxi just drove through and did not stop for unknown reasons. We all suspected sometimes that the driver drove us in a roundabout way to get more for the fare. We sometimes could sit down to the driver who did not put in order the car or with which there were many other problems. There appeared Gett, Uber, Lyft and solved these problems. We know when their cars arrive, that they will take you in the shortest possible way, that the cars will be clean, etc. We see that the same thing happens in other industries in which sudden and unexpected changes created by people from outside, Were stunning for consumers, revolutionized the provision of services, and (most importantly) removed many traditional players from the game. We need to learn these lessons and avoid traps, because if we do not make changes, the change can be imposed on us. Let's not react too late.
It becomes open to consumers, solve issues that concern them, and provide them with the information they need and when they need it - this is the main in the consumer business today. This is especially true for the United States. Therefore, I propose that the industry is now making changes before it's too late. And so I developed a price list based on transaction prices, the Mercury Diamond ™ Price List. It provides not only wholesale prices for diamonds, but it is also the basis for retail prices. Why the basis? Because we add value to diamonds throughout the diamond pipeline. Including retailers. Therefore, each retailer may prefer to sell their diamond jewelry at a price suitable for them - depending on the location of the store, trust, brand, services, availability, design,
We must give consumers the opportunity to access, analyze and understand that the price of the diamond in question is the main one for making a purchase. Thus, if they want to understand how much it will cost to replace a diamond with another, they know how much a replacement for a particular diamond is worth, an update, or just selling a diamond later, they have all the information on their hands and they are armed with it. Transparency of prices equips consumers, creating a basis for making an informed decision about how much to pay for a diamond. ( ehudlaniado.com )
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