b'THE STATE OF RETAIL DIAMONDSJEWELRYCOLORED DESIGN STONESNO TURNING BACK diamond separately, and such transactions are typically recorded as a While lab-grown diamonds continue to spark debate aroundloose diamond sale. pricing, profit margins, and their position in the market, there is aDuring the webinar, Golan reported that 45 percent of engagement consensus that the category is here to stay.rings sold in 2024 were set with lab-grown diamonds, mostly sold as loose. Lab-grown diamonds accounted for 14 percent of the U.S. jewelrySmith, meanwhile, cited similar data from The Edge that shows market in 2024, according to trend analytics company Tenoris. lab-grown diamonds made up 47 percent of units sold during the year. Demand for lab-grown diamonds continued to soar in 2024,Jewelers garner their highest gross margins from lab-grown Tenoris Managing Partner Edahn Golan said in January during adiamond sales, making as much as a 70 percent margin on lab-grown National Jeweler webinar outlining expectations for the jewelryloose diamonds, significantly up from the 40 percent to 50 percent market in 2025. However, prices are declining, and consumers aremargins recorded five years ago, according to Golan. seeing them as the low-cost option. Retailer margins continue to rise as wholesale prices decline, suggest-People are coming in and asking for them,ing jewelers havent adjusted their prices accordingly. added Sherry Smith, director of businessThat makes the lab-grown diamond market ripe development at The Edge Retail Academy,OUR GOAL WASfor disruption, says Scott Berg, president of Lee during the same webinar.Michaels Fine Jewelry, which has chosen not to sell The consumer has spoken; its an offeringTO GO WITH WHATlab-grown diamonds at any of its 10 stores. thats not going away, she said. OUR CUSTOMERSWe have to consider if jewelers are adding eight That consumer demand motivated StevenWANT. THEREtimes value when they sell a lab-grown diamond, he Holtzman, vice chairman of Chicago-basedARE A LOT OFsays. Consumers will be upset when they discover CD Peacock, to launch its lab-grown diamondhow much margin the jeweler is making from them.business around 2021.YOUNG CLIENTSIt must be disrupted because theres too Our goal was to go with what our cus- WHO HAVEmuch profit; the arbitrage is too big, Berg tomers want, he explains. There are a lot ofEXPRESSEDcontinues. young clients who have expressed interest inINTEREST INAt some point, transparency is going lab-grown diamonds. to happen.LAB-GROWNSuch margins are expected to be RIPE FOR DISRUPTION DIAMONDS. unsustainable considering increasing Its a matter of giving the customer a STEVEN HOLTZMAN,supply volumes, greater levels of choice, Holtzman says, highlighting the jew- CD PEACOCKcompetition, and growing consumer awareness elers bridal offerings as the prime example.of lab-grown diamond price trends, De Beers Group projected in parent company Anglo Americans 2024 At the CD Peacock Mansion,annual report.lab-grown diamonds have their own space onATTACHED TO MARGINSthe second floor of the 21,000-square-foot store. Cracks are starting to show in the loose diamond model, with revenue in the category declining 7 percent in 2024 after years of double-digit growth, Golan said. Thats largely a result of retailers having to reduce prices, albeit not by as much as wholesale prices have declined. Jewelers are facing stiff competition from online sellers of lab-grown diamonds. Consumers are more likely to buy something that is less expensive and less special online, as it carries less risk, said another panelist on the January webinar, Jewelers of America President and CEO David Bonaparte.As prices continue to drop, many retailers would prefer to quit carrying lab-grown diamonds, but they cant because they dont want to lose the customer, Golan observed.Lab-grown diamond wholesale and retail prices declined through-out 2024 as the products bifurcation from natural diamonds pro-CD Peacock created its own bridal collection in which it doesnt pricegresses, De Beers said in its report. the product with a center stone, he explains. It sells the setting and givesWhile there are positive signs that the [negative] impact of lab-grown the customer options for the diamond according to their budget.diamonds on demand for natural diamonds is peaking, average lab-grown In our initial engagement with the customer we try to get an ideadiamond retail prices do not yet fully reflect the fall in wholesale prices, of where they want to be in terms of price or spend and then we makeso retail prices are expected to decline further, the report states.suggestions, Holtzman says. Should margins decline, retailers might have to change their approach Many jewelers follow this model of selling the setting and looseto the category. Continued on page 5754 STATE OF THE MAJORS 2025'