One unlikely can find another product deserving the title of a challenging product more than lab-grown diamonds. From the very first days of its introduction in the 1950s, this innovative item creates challenges for the jewelry market and faces numerous challenges itself. Having emerged as a viable alternative to natural diamonds lab-grown gems have quickly diverted consumers away from a single jewelry option, consumers’ love to which seemed eternal and steadfast.
The growth of the production volumes was so streaming that the market becomes overflowed. Even though demand continues to increase, market players appeared to be in the trap of their own activeness resulting in a significant price decline. While initially, lab-grown diamonds were around 30 percent cheaper than natural gems, recently this price gap has reached an incredibly high figure – 70-90 percent. The price decline tendency continues to be a part of the jewelry market reality, which is inextricably linked to less profitability.
According to Edahn Golan, founder of “Edahn Golan Diamond Research and Data”, revenues from man-made diamonds continue to shrink even as the number of units sold increases. In March, retail sales of loose lab-grown diamonds fell 5.6% year over year, with a 20% decline in average unit price.
Does it mean that the lab-grown diamond jewelry segment has exhausted its resources?
It is unlikely to be true. We would rather say that it faced a new, not the first and not the last, challenge. What is the essence of this challenge?
It becomes evident that consumer demand for lab-grown diamonds is not enough anymore and the sector needs to figure out how to plan its path forward. The traders and producers should think about how to satisfy demand and not lose. There is an urgent need for new business strategies, which can help minimize production costs and create additional values to keep the price as high as possible.
Where should one look for the new solutions?
There are a few most plausible directions for further development of lab-grown diamond business to consider: revitalization of innovative concepts, brand association, and entering partnerships with non-jewelry companies. Here is why.
Innovative nature
Lab-grown diamonds emerged as an innovative product and many consumers valued them right for their innovative nature. Madestones, the company that stands on the origins of the industry, positioned lab-grown diamonds as a result of the marriage between science and social values. This is the reason for the vast majority of consumers choose lab-grown diamonds too. Many experts say that the problem of the segment is losing this glitter of innovativeness and close link to actual and fresh social values.
These two facets of lab-grown diamonds require a fresh breath to comply with the initial concept. Thus, it is most expected that the segment is approaching a new innovative breakthrough. One can see the confirmation of this idea when scrolling through the latest news.
Recently, scientists announced about new invention – they found a new way to make lab-grown diamonds in just a few hours by using liquid metals and gases, even under lower temperatures. This invention allows to grow of lab-grown diamonds in 150 minutes – just two and a half hours. This revolutionary invention means that producers will be able to minimize the use of resources – both financial and natural. Financial – less growth time implies fewer resources and increased productivity since there is a difference in electricity costs for heating material for four hours and just for two hours. The same with natural resources – to satisfy demand producers will need less water and energy resources. It will result in better sustainability parameters that comply well with current social values.
Brand associations
You might hear that different generations have different values. Currently, the Gen-Z generation is a leading purchasing social group that sets the rules on the market. These young people, who are expected to “rule” in economic processes up to 2026, prefer brand items that correspond to their values as much as possible.
It is a well-known fact that a brand creates additional value; if it is a luxury brand it also generates a financial profit. One could see how Pandora’s embracing lab-grown diamonds fueled the jewelry industry and became a push factor for market growth.
Today we have a lot of brands, that bet on the lab-grown diamonds. So, just branding is not enough for nowadays consumers. Storytelling and targeted customization are what can help to raise the concept of authenticity and create a sense of personal link with the consumer. Traders and producers need to think about partnerships with brands offering a unique concept related to current social values and offer lab-grown stones that will correspond to this concept to the highest possible extent.
Partnership with non-jewelry companies
Lab-grown diamonds are not solely a jewelry option. They were introduced as an industrial material intended to replace costly natural stones in many industrial areas like machinery, engineering, building, medicine, aviation, etc. They are the most solid material in the world with excellent conductivity. So, many industries require huge volumes of lab-grown diamonds, and it is a good niche for those who are not ready to experiment and wrestle with a creative solution. The industrial application implies the use of diamonds of the same size that could be grown without any effort in a couple of hours.
There are several practical cases of such a reshaping of a business strategy. For example, WD Lab Grown Diamonds, which is one of the largest US producers of man-made diamonds of high quality, was one step from bankruptcy in 2023 but pivoted to manufacturing lab-grown diamonds for industrial purposes. Another case – Diamond Foundry, the major US lab-grown diamonds producer accounting for 20% of the global output has diversified from jewelry to industrial applications and became a potent player in the semiconductor sector. One more example – Lusix, an Israeli being originally focused on lab-grown rough, is now moving downstream to provide premium polished gems and looking to develop high-tech applications for man-made diamonds.
These are only three possible directions for rethinking your business strategy that lay just on the surface and do not need additional resources to explore. Yet, we did not mention one of the most perspective ones that can warrant absolute success. It is placed somewhere at the crossroads between the three mentioned but requires more significant strategic efforts than all mentioned above. We mean here designing your own solution by experimentation in the area of science, industrial field, or marketing research. Exploring the ways to revitalize innovativeness can bring you fame and money as well as developing new effective marketing strategies for core players of the jewelry segment.
By the way, the demand for the latter is as great as the consumer demand for unique lab-grown jewelry.
Also Read: Friendly Diamonds: Revolutionizing The Lab Diamond Industry
