Saturday, October 23, 2021

Millenials: A generation re-engineering the diamond industry

Who are these extravagant millennials? They are defined as a generation born between 1980 and 2000, described among other things as people who crave experiences more than they do the need to own tangible aesthetics. They are expressive. They seek to make an impact. A Goldman Sachs Global Investment research eloquently captures the disruptive change happening with this generation: “One of the largest generations in history is about to move into its prime spending years. Millennials are poised to reshape the economy; their unique experiences will change the ways we buy and sell, forcing companies to examine how they do business for decades to come.” The foresight by Goldman Sachs seems to have come of age. It seems that not even the world’s biggest diamond producing company by value, De Beers, which preaches the eternal mark of a diamond can ignore the new patterns, weaved by the millennials.

As a matter of fact, Goldman Sachs points out that millennials have been putting off milestones on marriage and children, a factor which without doubt affects the diamond industry’s demand for jewellery. However, not all is lost as the research adds that it doesn’t mean they want to stay single forever. De Beers engaged the media on Wednesday last week on its second installment of the Media Forum Series following its launch last month. The first series focused on the company’s customer centric approach and in this second one the subject of discussion was on the 2015 Diamond-Insight flash data report released end of April.  

Gareth Mostyn, Executive Head of Strategy and Corporate Affairs at De Beers presented the consumer demand for diamond jewellery citing that the company’s largest and most mature market, being the US, surged through global growth in 2015 reaching a new record level of US$39 billion. With a five percent increase in the demand for diamond jewellery by US consumers which was supported by sustained economic recovery, higher levels of job creation and wage growth, Mostyn expects the US market to continue on its mid-single digit growth even at the backdrop of a weaker global economic growth. However what is particularly interesting about the US market is that the millennials, who according to Mostyn make up 32 percent of the country’s population, contributed 43 percent of the total jewellery market purchasing.

An even more salient trend which he said the company observed over the last 10 years is that of self purchase of diamonds, especially done by women. With millennials postponing life changing events to much later years, it is therefore not surprising that such a trend is observed. He cited that the figures indicate that self purchase grew from 17 percent to 26 percent, which he said demonstrates a real appetite to buy diamonds. Gareth mentioned that the millennials highly ranked diamonds as a desired gift to have, reflecting their love for diamonds. What should be noted however is demand is not just a component of the amount of interest shown but also speaks to the ability to buy which backs the interest.

Responding to this publication’s question on how De Beers perceives the millenials’ spending on diamonds, Mostyn said that they do not spend as much as their parents did and also that they opt for ‘slightly smaller and cheaper’ diamonds. The effect of this, he highlighted, is that the industry should adapt so as to appeal to lower price points, “it is a key point that the industry needs to respond to, and is responding to,” he said.   

From the information presented by Mostyn, it seems that the desire for diamonds is relatively stable for millennials. What is changing is the size and price of diamonds desired by this revolutionary generation. 

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