Millennials are not in love with diamond rings
A diamond is no longer forever. It’s until you get sick of it, list it for sale online and buy another one.
Modern expectations for engagement rings differ from the desire to create heirlooms for future generations. Diamond rings now frequently change hands online, far from a jeweller.
It’s still a shaky time for the diamond industry, but the ring market on eBay has grown 58 per cent over the past five years, and digital jewelry consignment has become safer and more popular.
This moment of transition makes it particularly interesting to note what happened on Monday to the longtime pioneer in online diamond sales.
Blue Nile Inc., which began selling diamonds online in 1999 and went public in 2004, cancelled its thirdquarter earnings call to announce instead an agreement to be acquired by Bain Capital Private Equity and Bow Street LLC. The all-cash deal values the diamond seller at about $500 million (U.S.), about 34 per cent over Blue Nile’s Friday closing price.
The future of engagement rings is uncertain due, in part, from the shift by millennial shoppers.
The 18-to-35 demographic is marrying older than the Gen Xers and Baby Boomers. Millennials, famously, have less to spend in their 20s than prior generations did, due to mounting student debt and having entered the job market in the wake of the financial crisis. The average cost of an engagement ring in the U.S. isclose to $6,000. Retailers are understandably con- cerned. Diamond Producers Association last year launched an $18-million advertising campaign to persuade younger buyers that a diamond engagement ring isn’t outdated. Prior to announcing privatization, Blue Nile reported an 8.5-per-cent drop in net sales of engagement rings in the U.S. during the recent quarter, from the same period a year ago.
When they do choose to settle down, today’s brides aren’t making exactly the same choices as their predecessors.
Kieron Hodgson, a commodities and mining analyst at Panmure Gordon & Co, said the traditional diamond engagement ring found at a conventional jeweller has been losing ground to vintage or bespoke alternatives.
A ring from a big-name diamond retailer where mass-produced, identical rings line displays loses some lustre in this context. Some customers are looking for colourful gemstones instead of diamonds, Hodgson added.
Competitors have flooded the market to fill this need, displacing Blue Nile’s dominance in the marketplace and helping drag shares down by 18 per cent this year. Part of the problem is that online startups with alternative inventory can piggyback on the good reputation Blue Nile helped build for the diamond e-commerce industry.
Jewelry e-consigner Gleem & Co, a startup, focuses on estate engagement rings. “We’re seeing millennials want something that no one else has,” Gleem & Co’s co-founder Casey Sullivan explained. “They want something different that they identify with.”
Independent resellers and antique stores have outlets online as well: On eBay, antique rings made up 28 per cent of the engagement ring market over the last three years.
The traditional diamond industry believes younger consumers will eventually become much like their parents.
The 2016 Diamond Insight Report from De Beers argued that millennials simply delay when they buy diamonds because they marry later. In a June report, Bank of America Merrill Lynch estimated that diamond retail sales will grow 2 per cent this year, considerably less than the 7 per cent compound annual growth in the last five years.
The De Beers report estimated that millennials spent $26 billion on all diamond jewelry across the U.S., China, Japan and India last year.
But Hodgson noted that this includes a variety of diamond purchases, like bespoke designs, not just bigname retailer diamond rings.
The reason for this, he said, is simple: The generation that doesn’t want to show up to a party wearing the same dress as anyone else also wants to put on a different ring.