Rough diamonds mining giant De Beers is eager to fill spending gap left by Covid-19 travel cancellations as some consumers find themselves with additional discretionary income to spend elsewhere.
There is a potential that consumers will allocate this discretionary income to alternative purchases, creating something of a unique opportunity for diamonds.
De Beers Group last week released the third instalment of its Diamond Insight Flash Report series, which looks at the consumer perspective in the US and how it continues to evolve as the country progresses through the stages of the Covid-19 pandemic.
The latest report includes a focus on consumer discretionary spend including the potential for diamonds to capture luxury market share in light of the current reduction in travel spending, which has been the key competitor to diamond jewelry in recent years, particularly for the Millennial share of wallet.
Bruce Cleaver, CEO, De Beers Group, said: “As a product that can be both experiential and meaningful, diamonds fill the temporary void left by travel in the way few other luxury products can. Diamond marketing themes that highlight these attributes are likely to be particularly well received by consumers who have additional money to spend due to their lack of spend on travel, and are looking to create a special gifting experience this holiday.”
The latest round of this research note, conducted among 500 Americans aged 18 and above, found that 44 percent of consumers had more disposable cash due to the cancellation of travel, dining or other experiences during the year. When it came to travel specifically, more than two-thirds of Americans had cancelled travel plans for 2020 and of those, 55 percent found themselves with extra money as a result. In the absence of travel, one in eight consumers said they would instead choose diamonds to mark a special occasion.
The report also looks at how consumer confidence has changed since De Beers Group started this research in March. While consumer confidence was relatively fragile on the whole compared with previous research waves – largely due to the increased spread of the virus and uncertainty regarding the upcoming presidential election – the latest research found that almost half (46 percent) of consumers had an optimistic outlook on life overall for the next three months and more than 60 percent said the pandemic had not affected their personal finances. In addition, 46 percent said their jewelry spending was back to normal, with a further 25 percent expecting it would normalise in the next six months.
Just a fortnight ago, David Prager De Beers’ Executive Vice President, Corporate Affairs, told Sunday Standard that the company has been doing research for the demand under the tough times of Covid19.
It became evident consumers are looking for fewer things that can last, stable pieces that communicate consistency. As it is now few months away from the Christmas festivities and the Chinese New Year, Prager further indicated that the National Diamond Council will soon launch a new campaign targeting those consumers who want to express themselves through purchases that present a clear purpose of sense and connection.
“As the climate improves, consumers will have a greater respect for all things natural and seek brands that have honest mission to be truly sustainable. They will be purchasing luxury goods with greater meaning,” said Prager.
The group aims to continue to maintain strict cost discipline, while focusing on accelerating the transformation of its business that was already underway prior to the pandemic.