The diamond industry could grow in 2021 if promising business recovery in the latter part of 2020 is any indication, according to a joint report by Antwerp World Diamond Centre (AWDC) and Bain & Company.
The Global Diamond Report 2020-2021 – Brilliant Under Pressure revealed that the diamond sector fared better than the personal luxury market during the pandemic. Diamond jewellery sales amid lockdowns, travel restrictions and economic uncertainties dipped by 15 percent in 2020, with severe losses recorded in the first and second quarters. The luxury sector is expected to have declined by 22 per cent last year.
According to the report, buyers gravitated towards online shopping during store closures while those who were unable to travel instead spent their money on diamond jewellery.
Demand recovered further in the fourth quarter, driven mainly by holiday jewellery sales in the US and China, which recorded respective year-on-year growth of 5 to 10 per cent and 15 to 20 per cent.
“In 2020, the diamond industry as a whole unexpectedly benefited as consumers unable to spend on experiences or travel used those funds for items such as diamonds, which are considered a tangible physical investment,” said Olya Linde, a partner in Bain & Company’s Energy and Natural Resources practice. “Our research found that more than 75 percent of consumers intend to spend the same amount or more on diamond jewellery than before the crisis, indicating a strong, ongoing emotional connection with the diamond story.”
Covid-19 fast-tracked the need for retailers to offer online and offline sales channels. In 2020, approximately 20 per cent of diamond retail sales were online, up from around 13 per cent in 2019. The study said most consumers, or around 70 per cent, would research and choose jewellery online before making in-store purchases.
“Since this trend is unlikely to fully reverse after the pandemic, retailers must invest in digital capabilities, delightful online shopping experiences and seamless omnichannel or ‘phygital’ interactions,” the report said.
Brick-and-mortar stores however remain a critical aspect of omnichannel retail strategies, with buyers still placing a premium on seeing and touching the diamond jewellery and obtaining in-person advice and other in-store services.
Rebound in 2021
The report said 2021 started on a strong trajectory and growing market confidence. Most miners reported around 5 to 8 per cent improvements in rough diamond prices and sales in January while major miners maintained flexible sales policies.
China's jewellery retail market is also poised to recover in early 2021 while other developed countries could reach pre-pandemic levels in 2022 to 2023. Retail recovery in emerging countries will follow a year later. Encouraged by the sector’s year-end performance, the long-term outlook for the diamond market remains positive, according to the report.
“The diamond industry has shown remarkable agility in the face of a crisis and the pace of change has accelerated,” said Ari Epstein, CEO at AWDC. “Throughout the diamond value chain, players have adapted quickly, and consumers of diamond jewellery have shown that they value the final product and are willing to invest in it, even in difficult times. We expect the industry to recover and emerge stronger from the storm.”