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.

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